How Chinese Cars Took Over Israel’s Leasing Market
Last month, large companies in Israel presented employees with the various models they could lease. Although there are fewer leasing deals today than during the golden age of tech, it is impossible to ignore the fact that leasing has become more efficient since the days of “a Mazda 3 for every secretary in tech.” Today, those who take a car through a leasing deal are people who truly need a leasing car, one whose presence at home will not add too much to the gross amount on the payslip and, as a result, will not significantly reduce net pay. And this is where the big change comes in: from the model lists of several major entities in the economy that offer cars to employees through leasing, including a large financial sector organization, tech companies and even public sector bodies, it emerges that almost all of the vehicles offered are made in China. In previous years, employees at many companies could of course receive a Chinese car, but alongside it there were models from Hyundai or Kia, perhaps even a European car. Today that is no longer the case. For example, a large insurance and finance company offers its employees BYD, Omoda, Jaecoo and Chery. A large tech company also offers employees MG, Omoda, Jaecoo and BYD. Unlike in previous years, there is no Skoda there, and no Kia either.
Price wins
Chinese carmakers have a significant market share in Israel, but certainly not at a level approaching their share of fleet vehicles. According to data from the Israel Vehicle Importers Association, during January to April Chinese carmakers accounted for 42% of the Israeli car market. According to estimates by industry sources, the Chinese now hold more than 80% of the leasing market, in other words, twice as much. How did this happen? The first factor is price, leasing companies can offer cheap leasing contracts only for cars they buy cheaply. Most car importers do not disclose how much they make on cars, and even those that report their results to the stock exchange know very well how to hide that figure deep in the reports. Nevertheless, it is not hard to see from which country the cars come that generate profits for the reporting companies. For example, the annual reports of the Carasso Group state that the Chery Tiggo 8 is responsible for revenue of 1.2 billion shekels, 14% of the company’s revenue. It is followed by the Xpeng G6 with 832 million shekels, or 10% of the company’s revenue. Reports from the leasing company Albar show that the dominant brand in its fleet last year was Chery, with 16% of the volume of purchases for its fleet, compared with 10% in 2024. One does not need to be a car industry analyst to understand that there are probably big discounts on Chinese cars.
In addition, the fiercest competition among car importers is now taking place on a “battlefield” where one manufacturer, Chery, sends “soldiers” from rival armies into the fray. In this case, the reference is to Omoda, Chery and Jaecoo, three manufacturers that are subsidiaries of the same parent company. The engines are identical, the chassis are identical, the nonsense in the passenger compartment is different. In this case, when two fight, the third wins. In other words, Carasso is competing with Colmobil in the fleet market, while the two importers represent the same manufacturer. Leasing companies are not stupid, they know it is of course the same manufacturer, the discounts are significant, and given the current dollar exchange rate, many leasing companies have already signed forward contracts for orders of Chinese cars. And of course, alongside the two who are fighting there is a third that wants to win. Whether it is BYD or MG, the battle for fleet vehicles is being fought almost entirely among Chinese carmakers.
In addition, Israeli regulation strongly favors anyone with several technologies in a car, hybrid drive, plug in hybrid drive and electric vehicles. A hybrid car gets a monthly usage value benefit of about 550 shekels, a plug in hybrid about 1,100 shekels, and a full electric car about 1,300 shekels. It is no secret that most Western carmakers, and in truth also the Koreans and Japanese, do not have in Israel the technologies that qualify for a usage value benefit, meaning they have almost no electric cars and not many plug in hybrids either. The current trend in fleet vehicles is to offer a wide range of plug in hybrids, and only the Chinese have that technology. In fact, the differences among Chinese plug in hybrid cars are so great, and the technological range is so significant, that one can offer a plug in hybrid that travels 100 kilometers before the battery runs out, and another that travels 40 kilometers before the battery runs out, knowing full well that both will receive the same usage value benefit from the state. The manufacturers have adapted so quickly that brands such as BYD are introducing cars in Israel whose pricing clearly and beyond doubt is not derived from the private market at all, but only from the dry calculation of how much money the owner of such a car will have to pay because of the usage value benefit received from the state. Under such conditions, anyone without plug in hybrid technology simply cannot win the fleet game.
At the same time, in a market where products and brands do not matter, what interests employees are the gadgets, the size of the screen, the number of speakers in the audio system, the ability to get a massage function in the seats, and of course changing interior lighting. Western carmakers, as well as the Koreans and Japanese, do not offer such gimmicks, which have turned out to be important for company car holders.
Leasing hurts the used car market
So Chinese control of the leasing market is not surprising: regulation supports it, the price is right and end customers are satisfied. But it is impossible to ignore the fact that Chinese cars are losing value at an accelerated pace. A German study published last week says one of the main reasons is the massive penetration of Chinese carmakers into fleet markets. As far as value retention is concerned, a kind of vicious circle exists in Israel: leasing companies buy cheaply, but at the time of sale receive impressive prices, especially given the fact that leasing cars drive more than regular cars. The reasons are clear, they have advertising mechanisms, financing, and perhaps also the ability to “balance” prices in price lists. But the real market is not the price list, and here an anomaly exists. Let us assume that a leasing deal lasts three years. During those three years, the leasing car will travel more than a privately owned car, and then it will be sold to the general public. Because it has driven more, and because the market is in any case flooded with Chinese cars in promotions and discounts that severely hurt their value, the leasing company will offer financing. It will offer trade in, warranty, vehicle refurbishment and more, and private customers will find themselves facing huge entities with well-oiled advertising and marketing mechanisms.
And there is another problem here, the Chinese have no brand value. This is not Toyota, and not Mercedes, what matters to customers is not the car’s reputation, but the fact that it is cheap and available. In other words, there are payments, there is a large inventory in one place, and of course there are advertising mechanisms too. In such a situation, private customers who want to sell their Chinese car may insist on list price all the way to 2030, but their chances of getting it are zero. And all this, of course, concerns more complex cars, some of which are already “starring” in owners’ groups online complaining about electrical problems, exploding radiators, cracked windshields and other misfortunes, all of which will in any case hurt the price of these cars in the future used car market.
