Tough EU regulations removing popular cars from Israel

The automobile industry is gearing up to meet new European Union emissions and safety regulations that came into force today. The regulations oblige manufacturers selling new vehicles in the EU to “dump” polluting models, and to equip all models with new safety systems, including road sign identification, and an alcohol consumption sensor for the driver.

As a result, key models sold in Israel could disappear from the market from this year, or appear with very different specifications and with a North American standard.

The new environmental standards, called CAFE (corporate average fuel economy), set much stricter maximum levels for average CO2 emissions of all private car models of manufacturers selling in Europe. From this year, a manufacturer whose average emissions exceed the threshold will be fined €95 for every excess gram multiplied by the total number of cars sold. The fine could reach tens, and even hundreds, of millions of euros a year, depending on the degree of excess.

In order to bring down average emissions, manufacturers need to accelerate sales of their electric vehicles, or else re-examine the worthwhileness of continuing to produce models with polluting engines in accordance with European standards. At the same time, the manufacturers are preparing for the strict Euro 7 emission standards that will come into force next year, and will require the redesign of many models. In addition, many manufacturers are not succeeding in meeting the new safety standards, some of which require comprehensive changes in new models.

As a result of the environmental regulation, most diesel powered versions of European models that remain in the Israeli market, mainly in the light commercial vehicle category, will disappear in 2025. Besides them, production will cease of private cars with polluting gasoline engines, some of which are very popular in Israel.

An outstanding example is Japanese manufacturer Mazda, which has decided to stop selling versions with 1.5 and 2 liter engines in Europe. Most of the company’s models sold in Israel, such as the Mazda 2, Mazda 3, CX-3, and CX-5, are equipped with these engines.

The importer, Delek Motors (Delek Automotive Systems), is examining the possibility of closing the gap by importing some models on the basis of US or Canadian standards, which Israel recognizes alongside European standards. Most of the popular gasoline powered Mazda models sold in North America, among them the Mazda 3, are however equipped with 2.5 liter engines, and are more expensive. The CX-3, which is popular in Israel, is not sold with a US or Canadian standard at all.

In Europe, Mazda will reduce its average emissions level through the new electric Mazda 6, which will start to be sold in Europe in June at an estimated starting price of €45,000 in Germany, which is similar to the price of the equivalent Tesla 3. The car is produced in China, and is expected to reach Israel in the second half of this year.

Hyundai and Kia plan to eliminate from their offerings several engines and versions with European standards that are in demand in Israel, because of the new regulations. The two Israeli importers of these brands began to bring in models produced in Korea according to North American standards last year. The trend is expected to expand to more models in 2025.

The importation of Korean models with European standards to Israel will continue mainly for hybrid vehicles, or vehicles with small, low polluting engines.

Importers of Chinese brands with gasoline engines or hybrid models are also feeling the change. Imports of the Wey brand by Samelet have been halted until further notice, as the brand’s plug-in hybrid models have gasoline engines that do not meet the new emissions standard. Samelet said that imports “could be resumed towards May.” The company has however already started using its showroom space for the Leap brand.

Suzuki has stopped selling its popular Ignis model in Israel as it prepares to meet the new European environmental regulations. The importer, Automotive Equipment Group, says that Suzuki plans continuity with Euro 7 versions of its other gasoline models sold in Israel, alongside the import of a new electric crossover from India. Mitsubishi has already stopped importing its Space Star city car that sold in the thousands annually.

Sources in the sector say that some manufacturers are still pinning their hopes on political pressure on the European Commission to delay implementation of the regulations and the Euro 7 standard, or to introduce relaxations. But as the deadline approaches, towards the middle of this year, more manufacturers will make painful decisions.

Published by Globes, Israel business news – en.globes.co.il – on January 30, 2025.

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