The automotive aftermarket sector in Israel consists of original equipment manufacturer (OEM) parts and their substitutes. There are 2.3 million cars on Israeli roads of which 3.8% are made in the United States and the balance from Europe (46.6%) and Asia (49.6%) - Japan 38.7% and South Korea 10.9%. In 2007, total imports of aftermarket products amounted to $371 million, of which $23 million was from the U.S., Germany ($63 million), Japan ($45 million), France ($18 million), Italy ($23 million), China ($55 million) and the balance from Korea and Taiwan. There are presently between 600–700 importers of aftermarket products and around 20 local manufacturers of aftermarket parts and accessories in Israel.
About six years ago new legislation was passed by the Anti-Trust Authority to stop car importers from forcing garages and car owners to use only OEM parts. American spare parts are recognized for their high quality although over the years Israel has progressively adopted European standards as the bulk of cars being imported are from Europe and the Far East. The Government of Israel has recently appointed an inter-ministerial committee to review the Israeli car market in general. One of the committee’s main objectives is to open up the Israeli car market to competition and to eventually reduce taxes on cars from 90% to 65%. Taxes in Israel are among the highest in the world, which industry sources blame as the main factor preventing the car market from reaching its potential. Discounting taxes, car prices in Israel were among the lowest in the world, up to 40% less than in Europe.