A number of importers of Japanese-made cars are set to put up the prices of several of their models from January. Earlier this week, the Tax Authority published the new price brackets, which, it emerged, are unchanged from the existing ones, although it added that in keeping with standard policy, importers would be allowed to increase prices if the currency exchange rate exceeds the base rate, and these will still be included in the relevant price brackets.
The base rate for the Japanese yen stipulated by the Ministry of Finance is correct to November and is about 7.5% lower than the current exchange rate. This will mean that once the price list for January, which falls in line with the "official" value brackets, is published, importers can publish new price lists containing prices that exceed the differential from the base rate. Importers of cars whose prices are linked to the Japanese yen will be able to add thousands of shekels to their prices without exceeding the bands set by the value use groups, assuming that the current shekel-yen exchange rate remains unchanged.
A spokesperson for Delek Automotive Systems Ltd. (TASE: DLEA) said that it would have no alternative but to raise price bands in January, if the current shekel-yen exchange rate persists.
Tax Authority sources said that while car importers may, in fact, raise prices in line with currency movements, they will have to lower prices just as fast if the currency falls below the base rate.
Published by Globes [online], Israel business news - www.globes-online.com - on December 11, 2008
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