BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Automotive Sector Of Irael

Israel's sales growth forecast for 2006 has been raised from 3.8% to 5.5%, in BMI's latest Israel Automotives Report due to a robust recovery in the car market in September and October. In the January-November period, new vehicle sales rose 6% y-o-y to 138,915 units. Israel's economy expanded robustly in H106 at 5.7% y-o-y. However, BMI has cut its 2006 growth forecast by just under one percentage point, from 4.7% to 3.8%, due to the Israel-Lebanon War. The war will continue to weigh on the economy in 2007 by adding to the fiscal deficit and posing risks to tourism and direct foreign investment. Vehicle sales growth in H206 can be attributed to a cut in VAT by one percentage point in July and a speedy withdrawal from Lebanon in September, which alleviated risk aversion among consumers and released pent-up demand.

In 2007 and 2008, we expect interest rates to be gradually reduced, assuming that domestic growth slows down after the recent post-recession boom. At the same time, the effects of the 2006 conflict in the Lebanon will not affect the Israeli economy in 2007 and beyond. As a result, BMI has raised its forecasts, with total sales set to hit 190,900 units by 2010, up from 178,400 units forecast in the previous quarterly report.

A major risk factor is the value of the shekel. With the current account situation improving, the exchange rate has stabilised since our Q306 report, and the shekel has recovered in value following depreciation in 2005. We have actually revised our exchange rate forecasts up since Q306, given the impressive resistance that the shekel has shown to political risk, and bearing in mind that we expect demand for Israel's exports to rise. Our financial markets team is confident that the shekel will remain fairly robust, though volatile, and forecasts an exchange rate of ILS4.40/US$ at end-2006 and ILS4.35/US$ at end-2007. This bodes well for the automotive market, which is almost entirely supplied by imports.

Hyundai was the market leader in November, representing 15.5% of sales, followed by Mazda with 14.0% market share and Toyota with 11.0%.

Contents

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Chapter 1 – SWOT Analysis

Israel Autos Industry SWOT

Israel Economic SWOT

Israel Business Environment SWOT

Chapter 2 – Middle East and Africa Overview

Table: Middle East and Africa Autos Production – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: Middle East and Africa Autos Sales – Historical Data & Forecasts (CBUs unless otherwise stated)

Suppliers

Table: Africa Autos Sales 2005 by Segment

Table: Middle East Autos Sales 2005 by Segment

Chapter 3 – Business Environment Rankings

Economics – Long-term Risk

Politics – Long-term Risk

CBU Output Growth

Vehicle Ownership/Penetration Potential

Regulation

Competitive Environment

Chapter 4 – Industry Forecast Scenario

Table: Israel Automotive Industry Historical Data & Forecasts (CBUs unless otherwise specified)

Chapter 5 – Macroeconomic Forecast Scenario

Table: Israel – Economic Activity

Country Snapshot: Israel Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption And Stratification

Table: Wages Per Year

Chapter 6 – Special Focus: Commercial Vehicles

Regional Market Overview

Table: Regional Commercial Vehicle Market: Country Ranking, Sales

Table: Regional Commercial Vehicle Market: Country Ranking, Production

Table: Regional Commercial Vehicle Market: Company Ranking Of Significant Regional Manufacturers

Table: Recent And Planned Investments In The Middle East And Africa

Israel Commercial Vehicle Market

Sales

Table: Israel LCV Market: Top 10 Brands By Market Share, 2004

Table: Israel Truck Market: Top 10 Brands By Market Share, 2004*

Table: Israel Bus Market: Top 10 Brands By Share Of Registered Vehicles

Table: Israel Minibus Market: Top Brands By Share Of Registered Vehicles

Table: Size of Commercial Vehicle Market: Israel

Table: Commercial Vehicle Market Forecast: Israel

Production

Chapter 7 – Competitive Landscape

Industry Developments

Table: Car Sales By Dealer, 2005

Chapter 8 – Company Monitor

Regional Case Study: Ford

Sales

Table: Ford dealers in Middle East and Africa

Production

Table: Ford assembly plants in the Middle East and Africa

Company Profiles

Delek Motors – Mazda & Ford

Colmobil Group

BMI Forecast Modelling

Automobile Industry

Sources

Appendix: Regional Demographic Data

The Long View: Data Over The Economic Cycle (2000-2007)

Table: Population

Table: Household Spending Per Capita, US$

Table: Private Consumption Per Capita, US$ PPP

Table: Market Size, GDP, US$bn

Competitive Landscape for Middle East & Africa Automotives: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Middle Eastern & African Automotive Sources

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BMI's Middle East & Africa Automotives Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include:

BMI's Affiliates and Partners in the Middle East and Africa

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