Israel’s Vehicle Safety System Reform Sees Low Adoption Nine Years After Launch

In August 2017, Israel’s Finance Committee approved a licensing fee discount to encourage drivers to install vehicle safety systems, primarily passive alert systems that warn drivers when approaching obstacles or changing lanes. At the time, these systems were innovative, with new cars now commonly equipped with active safety technologies that can brake or steer automatically. The reform targeted cars manufactured between 2000 and May 2017, offering a gradual discount on vehicle registration fees totaling 1,500 shekels over three years for those installing such systems.

Despite an initial potential market of two million vehicles, the government allocated a budget for only 120,000 installations, with the discount applied as a reduction in registration fees rather than a direct payment. Major suppliers like Mobileye priced the systems at around 2,100 shekels. However, nine years later, the uptake has been limited, with only 93,100 systems installed out of the 120,000 allocated, averaging just over 10,000 installations annually.

Installation rates have steadily declined, with only 420 systems installed in the first seven months of 2023. The peak year was 2018, with 33,600 installations. The decline is attributed to the aging vehicle fleet, as the average car age in Israel is 7.8 years, making many vehicles ineligible for the discount. Additionally, advancements in active safety technologies, which began receiving tax credits in 2018 and are often standard in newer, more expensive cars, have reduced the incentive to install passive systems in used cars. Many cheaper vehicles are also more likely to be written off rather than repaired, leaving a used car market dominated by pricier models already equipped with advanced safety features, diminishing demand for passive system retrofits.