Japan puts the brakes on lucrative used-car trade with Russia

Japan puts the brakes on lucrative used-car trade with Russia

Japan’s decision to prohibit the majority of used-car sales to Russia has had a significant impact on a trade that was approaching $2 billion annually. This trade had been thriving amidst sanctions related to Ukraine in other regions. The ban, implemented in early August, restricted exports of all but subcompact cars to Russia, effectively cutting off a profitable trade in used Toyotas, Hondas, and Nissans for brokers and smaller ports. Fushiki, an export hub on the Sea of Japan, was particularly affected. As a result, the prices of second-hand cars in Japan have decreased, and brokers are now scrambling to send vehicles to other regions, especially right-hand drive markets in New Zealand, Southeast Asia, and Africa.

The demand for second-hand cars from Japan in Russia surged after global automakers, including Toyota, scaled back their operations following Russia’s invasion of Ukraine. By last year, with sanctions tightening elsewhere, Russia was purchasing over a quarter of Japan’s used-car exports at an average price of nearly $8,200. This was more than double the price in 2020 when Russia accounted for about 15% of Japan’s used-car exports. Trade data indicates that these sales were projected to exceed $1.9 billion for the entire year of 2023 before Japan imposed stricter sanctions.

According to data from Russian analytical agency Autostat, over half of the 303,000 used cars imported by Russia in the first eight months of the year came from Japan. In comparison, Autostat data showed that 606,950 new cars, primarily Russian and Chinese brands, were sold during the same period. SV Alliance, a car export business based in Toyama, had been heavily involved in this trade, sending an average of around 6,500 used cars to Russia every month through Fushiki. However, due to the sanctions, their business has declined by approximately 70%, leading to job cuts.

Japan has been a leading exporter of used cars for many years. The cost of maintaining used cars in Japan is higher due to mandatory inspections, while financing costs for new car purchases are lower. This has resulted in a thriving export industry that has seen hundreds of thousands of cars purchased in Japan being driven in countries such as Malaysia, Mongolia, Pakistan, and Tanzania. The Japanese Ministry of Economy, Trade and Industry is closely monitoring the impact of the new sanctions on this industry. Luxury vehicles were initially banned from export to Russia in April last year, and heavy trucks were added to the prohibition in June. However, smaller cars like the Toyota Yaris and Honda Fit are still allowed to be exported to Russia under the new sanctions.

The impact of the sanctions can be seen in the business of Element Trading, a used-car dealer in Niigata prefecture. The share of Russia in their business has dropped from over 50% to below 20%. Preliminary data from auto auction house USS shows that the number of used cars available for sale increased by more than 20% in August compared to the previous year, while average selling prices decreased by 7%. This price decline has been beneficial for battery recycling firm 4R Energy, as it has allowed them to secure supplies of used cars, including the Nissan Leaf, at lower prices. The joint venture between Nissan and trading house Sumitomo sees this as an opportunity to expand its operations.

In conclusion, Japan’s decision to restrict used-car sales to Russia has had a significant impact on a trade that was valued at nearly $2 billion annually. While it has wiped out Russia’s largest source of used cars, it has also led to lower prices for second-hand cars in Japan and a scramble among brokers to find alternative markets. The ban has affected businesses and trade dynamics, with Russia now seeking cars from other regions. The impact of these sanctions on the used-car industry and the broader automotive market is being closely monitored.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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