West Bank’s Automotive Sector
Although the Palestinian market is relatively small, the total number of registered vehicles in 2021 was approximately 300,226 and the number of newly registered vehicles reached 30,783. Fifty-four percent of the newly registered cars run on diesel, 45% on gas, and 1% on electric and hybrid engines. In 2021, imported used cars was the highest percentage amounting to 65%, which was followed by 20% for imported new cars and 15% for cars transferred from Israel. Used car imports come mainly from the EU, South Korea, and the United States. Original Equipment Manufacturer (OEM) parts are imported directly from the relevant car manufacturing country and spare parts come mostly from South Korea, Taiwan, and the European Union. Given the expensive price of new buses, only used buses are transferred to the West Bank from Israel. European-made trucks, such as Mercedes, Iveco, and Volvo dominate the market.
Car manufacturers in the United States such as Ford, Stellantis, and GM have exclusive dealers in the West Bank while the two South Korean-made cars, Hyundai and KIA, are gaining market share. In 2021, Hyundai was the number one car sold in the West Bank followed by KIA, Skoda, and VW. Small-scale Internal Combustion Engine (ICE) models in the range of 1,200 -1,500 cc engines are best suited for the market because they consume less gasoline, are reasonably priced, and comply with environmental regulations. Currently, one liter of gasoline costs around $1.68.
The West Bank and Israel are in a customs union, which means that any product that enters the West Bank must comply with Israel’s standards and entry requirements. With respect to the automotive industry, Israel and the West Bank follow European standards but apply a different purchase tax on cars. Purchase tax on gasoline and diesel cars is 75% on engines above 2000 cc and 50% on engines under 2000 cc, 30% on hybrid engines, and 10% on Battery Electric Vehicles (BEVs). In addition to purchase tax, Palestinian automotive imports are subject to Value Added Tax (VAT) currently set at 16%. Palestinian commercial banks are active in providing loans, that are payable over a period of up to seven years, to salaried employees to purchase new cars provided that the borrower’s overall monthly payments for loans does not exceed 50% of his/her salary.
BEVs
The demand for EVs in the West Bank is growing. In 2022, the number of EVs in the market was estimated at 900. Peugeot, Citroen, Nissan, BMW, Audi, Hyundai, MG, Geely and Seres are the more prominent brands in the market. EV manufacturers in the United States can compete with Asian and EU counterparts on price, battery life, and mileage. Asian car manufacturers warrantee on EVs is either 8 years on battery or 150,000 KM - whichever comes first. The main challenge for EVs in the West Bank is insufficient electricity and infrastructure (grid, power lines, public EV charging stations, and storage).
American manufacturers of EVs, public charging stations, control and monitoring systems, storage system, and other parts of the EV supply chain interested in exporting to the West Bank are encouraged to contact Assad Barsoum at the U.S. Commercial Service in Jerusalem at Assad.Barsoun@trade.gov