Driving Instruction

Industry Data

According to data collected on the Ministry of Transportation website in 2004, the driving instruction industry in Israel includes approximately 2,513 professional managers and driving teachers, organized in 564 driving schools throughout the country. The industry includes approximately 4,902 driving instruction vehicles. An average of 440,000 driving tests is conducted each year. By the end of 2003, the number of licensed motor vehicle drivers reached 2 million and 962 thousand.

 

Market Characteristics

Any person interested in acquiring a driver’s license is required to receive driving lessons. A person interested in receiving a private vehicle license is required to take at least 28 lessons with a certified driving instructor. In addition, test allotment is usually conducted through driving schools, per instructor, who in turn transfers it to students.

A driving instructor must be associated with a driving school. As cost of operating a single instructor driving school is high, most instructors join an existing school or establish a school in conjunction with other instructors.

There are a number of common communication methods between schools and instructors.

{C}Ø The instructor is employed by the school and teaches using school-owned vehicles. In this case, the instructor receives approximately one third of lesson price.

{C}Ø Instructor is a partner at the school. In this case, the instructor has 50% of car ownership, and his salary will consist of two thirds of price lesson.

{C}Ø An instructor having full ownership of vehicle: Instructor pays the school a fee per driving test, a percentage of his earnings, or a monthly fee.

 

Customers: Defining the Target Market and Its Size, Market Segmenting

Customers include anyone interested in acquiring a driver’s license in Israel. Customers can be segmented as follows:

{C}Ø  {C}Age- most customers are young.

{C}Ø  {C}Residential zone- a student usually seeks an instructor that teaches in the same residential zone.

{C}Ø  Young students are highly affected by recommendations of friends as they all usually learn to drive around the same time.

{C}Ø  {C}Type of license- vehicles used for driving instruction are usually appropriated according to type of license- motorcycle, motor scooter, car, public transportation, truck, etc.

 

Competition:

Competition in the industry includes mainly other instructors operating in the same area, as students tend to study in their own residential zones. Competition occurs between schools and between teachers. In some areas, there is a surplus of driving teachers. This causes prices to drop below the price recommended by the National Driving Instructor’s Organization.

 

 

 

Marketing Resources

{C}Ø  Reputation and recommendations- a vast amount of students arriving to a certain instructor, do so following a recommendation. An instructor’s reputation is determined according to the rate of students passing the driving test, whether actual or perceived.

{C}Ø  Displaying signs on instruction vehicles and the office, and distributing “new driver” signs with the school’s information to students who have passed their test.

{C}Ø  Advertising in local and specialty print.

{C}Ø  Offering peripheral services such as preparation for written test.

{C}Ø  Proximity to licensing office or training lot (especially for motorcycle instruction)

{C}Ø  Promotions.

 

Future Development Options:

Integration of simulators as part of the instruction layout.

Conducting a portion of driving lessons at driving instruction lots, where issues such as parking can be practiced without interrupting traffic.

 

Entry Barriers:

Certification by Ministry of Transportation as a driving instructor.

Cost of instruction vehicle

 

Human resources:

An individual interested in acquiring an instruction license for a motor vehicle must adhere to the following conditions.

{C}Ø  Be at least 21 years of age.

{C}Ø  An Israeli resident without a criminal record.

{C}Ø  Successfully pass a medical examination and visual acuity test.

{C}Ø  Complete 12 years of schooling.

{C}Ø  Successfully pass personality test and knowledge tests.

{C}Ø  Have a valid driver’s license and proven driving abilities for the type of vehicle he wishes to be certified for.

{C}Ø  Have a driver’s license for at least 3 years for the type of certification requested.

{C}Ø  Certification is received upon successful completion of a professional driving instruction school.

 

An individual interested in acquiring a management license for a motor vehicle instruction school must adhere to the following conditions.

{C}Ø  Must be a certified instructor and have at least 3 years of practical instruction experience on the type of vehicle for which the management license is requested

{C}Ø  An Israeli resident without a criminal record.

{C}Ø  Certified by a committee of examiners.

{C}Ø  Successful completion of a professional driving instructor school manager course.

Professional manager duties include:

{C}Ø  Ensuring that instructors follow transportation requirements and regulations..

{C}Ø  Ensuring that the vehicle used or operated by the school will be well maintained.

{C}Ø  Supervising the instruction method and curriculum set by licensing authority.

{C}Ø  Inquire into student complaints.

 

Driving schools usually include a number of instructors, both employees and partners, one of them acting as a professional manager. In addition, each school is required to occupy a secretary during operating hours.

 

Required equipment:

Vehicle- according to the type of communication between the school and instructor. Driving instructors usually replace their vehicles every 3 years.

Office equipment for school operations.

If written exam lessons are taught at the school, a classroom is required along with teaching accessories.

 

Financing:

Industry Revenue and Profitability

Yearly revenue from driving lessons is determined according to the type and number of vehicles. Average revenue for 2003, in NIS thousands:

Car

Truck

Motorcycle/Motor scooter

235-296

328-413

203-256

 

 

 

 

Fuel expenses should be deducted from total revenue (2% of revenue for a motorcycle/motor scooter, 1.5-2 liters per lesson in a car, 1 liter in a car with a diesel engine, 2.7-3.3 liters for truck) and oil (5.3-6% of revenue for cars, 2.8-3.3% for trucks), as well as the instructor's share, according to the methods detailed above.

Due to the industry’s competition, payment for a car-driving lesson remains 80-100 NIS per lesson (45 minutes) Prices may vary if transactions are prepaid according to a predetermined number of lessons. In addition, there is a 10-15% disparity in prices between peripheral areas and city centers.

 

Typical Terms of Payment

Instructor usually receives payment at the end of each lesson. Occasionally an instructor allows the student to pay once every few lessons, or postpone payment.

 

Licensing and Certification:

A driving instructor and professional manager are required to be certified by the Ministry of Transportation, conditioned upon successful completion of professional studies. 

There are additional stipulations regarding the applicant’s criminal and traffic record, detailed on the Ministry of Transportation website.  www.mot.gov.il

 

Relevant Addresses:

Driving School and Instructors’ Association in Israel, P.O. 24106, Tel-Aviv. Phone: 03-7440103.

 

Tips:

{C}Ø  {C}Some areas have a surplus of driving teachers. It is recommended to thoroughly examine profitability in those areas, as well as profitability of opening a new school.

{C}Ø  {C}It is recommended that a new teacher assess the possibility of working as an employee or partner at first, until acquiring a reputation that justifies full independent work.

{C}Ø  {C}It is recommended to consult with your local Business Development Center regarding business establishment and operations.

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