More than two weeks into the war, the Israeli vehicle market continues to operate on a low flame. Customers who have already ordered cars continue to collect them, and leasing companies continue to stock up as usual. Unexpectedly, sales to private customers also continue to be brisk, despite the situation, not at the usual pace, but still at a rate of hundreds of units per day. One reason for this is attractive sales promotions, financial discounts and indirect benefits that importers provide to customers who shop at the showrooms. This is in addition to massive ad campaigns conducted despite the war.
The optimists in the industry - and optimism these days is a relative matter - claim that this is a "temporary pothole" that will end with a rebound when the war ends. The pessimists claim that the problems the market is encountering existed even before the war began. Either way it is a buyers’ market.
In February alone, usually a "hardcore" sales month with minimal discounts, there have been at least six brand promotions. Typical discounts in promotions for new cars range from 8% to 15%, depending on the model, and much more when it comes to "zero-kilometer" vehicles - new cars that have remained in stock for an extended period, which have also become an integral part of sales promotions in recent months. In the current state of car market, the main goal of such promotions is to attract customers to the showrooms, to close deals and urgently release inventory. Sales staff with a serious customer will strive to stop them going to rivals.
Sales staff have the flexibility to make enhanced offers. In most cases, these are not direct monetary discounts, but optional accessories, charging stations for electric and plug-in vehicles, and free maintenance for several years, worth a lot of money. The greatest bargaining power is with brands that have their backs to the wall, which include veteran Japanese brands, and zero-kilometer vehicles, which must be sold fast.
But although bargaining is a good thing, it is recommended to set limits to it, because the familiar Israeli consumer method of "give me more or I'm leaving" will ultimately result in deal-breaking. Another important tip. Despite the nature of "limited-time" sales promotions, there is a good chance that the same prices will be available even after the promotion, especially for zero-kilometer vehicles.
Paying up front is no longer so important
Until recently, the best way to maximize consumer power in purchasing a new car that did not have a discount was to sell the used vehicle in a ‘tade-in’, and/or break a savings plan in order to purchase the vehicle with the full amount in advance. This way, significant financing costs were saved during periods of high interest rates in the economy, and discounts were also maximized, since many importers treated subsidized financing as another benefit, or discount, that came at the expense of others.
But in the current state of the market, partial or full financing without interest and without linkage for the purchase of a vehicle is not an "either or" but a "both". Many importers now automatically offer financing without interest and linkage, at a typical level of about 40%-50% of the value of the new vehicle, and in some cases even up to 100%, in addition to regular discounts, including on zero-kilometer cars. Such offers not only increase the accessibility to a new car for many customers but can also save tens of thousands of shekels in financing expenses in the long run.
A car is much cheaper today than the sum of its parts
There are currently three separate price curves in the Israeli car market: new vehicle prices, which has been continuously declining in recent months; spare parts and maintenance prices, which are increasing in many cases; and used vehicles, which has recently been showing an accelerated decline, but still does not encompass all models, and does not exhaust the full impact of the new vehicles’ price reductions.
At the macroeconomic level, the meaning of these gaps is an increased motivation to replace an old car with a new one, or alternatively to purchase a new car, instead of a used one that is several years old. The reason is that even if you purchase a "solid" used care that is several years old, with a typical mileage of 70-120,000 kilometers, there are still expensive prices for spare parts and maintenance, which are disproportionate to discounted prices of new cars..
These can be "small" costs, such as replacing old tires, or high costs for replacing electronic components, battery wear in hybrid and electric vehicles, etc. The bottom line is thousands of shekels.
So for those replacing a used vehicle, it is worth trying to sell it independently, or trade it in to an importer as part of the price of a new car.
Although, many new vehicle models are also exposed to accelerated depreciation in the first few years, this is offset by discounts, which are usually not priced in used price lists, and by reducing ongoing costs for repairs.
Buy instead of leasing
The Israeli leasing system contributes to the income and profits of all players in the vehicle value chain - from leasing companies to the Ministry of Finance - at the expense of the recipient of the vehicle. This situation is doubly true in current market conditions, where deep discounts and attractive promotions significantly reduce the purchase of a vehicle for private customers, but usually have no effect on leasing costs.
A list of the leasing model offerings that are currently available to employees of a large company in Israel, with a fleet of thousands of vehicles, shows that the prices, on which the cost of leasing and the monthly value-of-use tax are calculated, adhere closely to the official price lists, which are only theoretical in the current state of market discounts.
In fact, some of the models on that list are currently being offered in importer promotions at deep discounts to private customers, plus non-monetary benefits. It is quite reasonable to assume that the discounts that leasing companies receive from importers are twice as large. If these discounts were fully rolled into the official price lists, it is likely that the monthly costs of the recipients of the leasing vehicle over the years of leasing would be tens of thousands of shekels lower.
Operational leasing still has bonuses, such as high-level service and "exemption" from the headache of maintenance and depreciation, and of course the free fuel benefit of employers. But many of these lose significantly in the era of economical plug-in and electric vehicles. In short, in the long term, purchasing a vehicle outright may be significantly cheaper.
Published by Globes, Israel business news - en.globes.co.il - on March 17, 2026.
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