Luxury Car Agency Faces Financial Collapse Amid Market Shifts

In June 2021, Uri Degani, a veteran Israeli car dealer, inaugurated a lavish car dealership in Netanya, representing an investment of tens of millions of shekels. The facility, described as unparalleled even in Europe and the US, featured three floors, a cafe, a prayer room, and a transparent elevator for displaying vehicles. However, by early 2026, signs of financial distress began to emerge for the company, By & Drive.

By & Drive, a company with 30 years of experience, specialized in marketing luxury vehicles for importers, offering leasing services, and parallel imports. At its peak, its annual turnover exceeded half a billion shekels, and it managed a fleet of approximately 1,100 vehicles. It served as a significant channel for selling "zero kilometer" cars for importers who were left with unsold inventory, partly due to wartime conditions.

In January of this year, the company's bank accounts and credit lines were restricted. In a recent filing for a stay of proceedings, By & Drive attributed its crisis to a sharp rise in financing costs, decreased demand, structural changes in the automotive industry, and the war's impact, which led to significant erosion of profits and mounting pressure from lenders.

The company stated that the interest rate hikes starting in late 2022 significantly increased financing costs for its vehicle inventory, leasing fleet, and property. These financial pressures coincided with a decline in demand, shifts in the leasing market, the rapid introduction of electric vehicles, and fluctuating car prices, all contributing to reduced sales and profitability.

The October 7th massacre and the subsequent war caused public demoralization, economic anxiety, and a sharp drop in vehicle purchases. By & Drive held a substantial inventory at the war's outset, and while demand plummeted, financing and maintenance costs continued to accrue. The company was forced to liquidate inventory rapidly at lower prices and profit margins, reducing its fleet to 98 vehicles for leasing and rental, some of which also served as sales inventory.

Recognizing the unsustainability of its previous operating model, the company initiated a restructuring process, reducing its scale of operations, leverage, and liquidating assets. This included staff reductions, cutting operational expenses, and selling portions of its leasing portfolio for millions of dollars. In May, the company agreed to sell its Netanya showroom for 51 million shekels, with 5 million paid as a down payment. However, a tax authority lien for approximately 10 million shekels paralyzed its operations, leading to the September filing for a stay of proceedings due to accumulated debts of about 97 million shekels. A receiver has been appointed, and the company is seeking court approval for the ongoing sale process under supervision.

Industry insiders suggest that the decline in the luxury segment was driven by capital flight among affluent clients or a shift towards smaller, less regulated importers. The case highlights the cyclical nature of the Israeli car market and the increased risks for companies reliant on external financing, especially with the influx of Chinese brands. Key lessons include the danger of combining expensive credit with large inventories during market downturns and the inadequacy of impressive real estate as a substitute for stable cash flow during financial difficulties.

By & Drive issued a statement asserting responsible and transparent management of the process with relevant parties and the court, aiming to protect the interests of its clients, employees, and creditors, and to establish a stable foundation for the future.