TOKYO, Oct 2 (Portal) – Japan’s move to ban most used car sales to Russia has put the brakes on a nearly $2 billion-a-year trade that was booming elsewhere in the shadow of sanctions against Ukraine, according to trade data and market participants .
In early August, the Japanese government banned the export of all cars except small cars to Russia, cutting off a lucrative back channel for trading in used Toyotas, Hondas and Nissans for a network of brokers and smaller ports, particularly Fushiki, an export hub on the Sea of Japan, away .
While the sanctions devastated Russia’s largest source of used cars, they pushed down used car prices in Japan and led to brokers scrambling to send vehicles to other regions, particularly right-hand drive markets in New Zealand, Southeast Asia and Africa.
Russia’s demand for used cars from Japan surged after global automakers including Toyota pulled out of business following Moscow’s invasion of Ukraine.
Last year, as sanctions tightened elsewhere, Russia bought more than a quarter of Japan’s used car exports at an average price of nearly $8,200. That was more than double the price in 2020, when Russia took about 15% of Japan’s used car exports.
Trade data shows those sales would have topped $1.9 billion in all of 2023, before Japan imposed its own tougher sanctions.
According to Russian analytical agency Autostat, more than half of the 303,000 used cars imported by Russia in the first eight months of the year came from Japan.
According to Autostat data, 606,950 new cars of mainly Russian and Chinese brands were sold in the same period.
Toyama-based SV Alliance, a two-year-old car export company, was part of the wartime boom, sending an average of about 6,500 used cars from Fushiki, Japan, to Russia each month through July. The port is about 800 km (500 miles) from Russia’s Vladivostok, within two days’ journey for a cargo ship.
“Business dropped by about 70% and we had to lay off a few people because there was not enough work,” said Olesya Alekseeva, logistics coordinator at SV Alliance.
CHEAPER CARS FOR RECYCLERS
Japan has been a leading used car exporter for decades. A system of mandatory inspections is driving up the cost of servicing used cars for customers in Japan. The financing costs for buying a new car, however, are low.
The result: an export industry that has sent hundreds of thousands of cars onto the road from Malaysia to Mongolia and from Pakistan to Tanzania, first purchased in Japan.
Takanori Kikuchi, director of automotive trade policy at Japan’s Ministry of Economy, Trade and Industry, said the government was monitoring “what impact” the new sanctions would have.
Japan originally banned the export of luxury vehicles to Russia in April last year. An export ban on heavy trucks was introduced in June.
Under the new sanctions, dealers are still allowed to export smaller cars such as the Toyota Yaris or the Honda Fit to Russia.
Element Trading, a used car dealer in Niigata Prefecture bordering Toyama, has seen Russia’s share of its business fall from a peak of over 50% to below 20%, Chief Executive Wataru Nishiwaki said.
The number of used cars on offer rose more than 20% in August compared to a year earlier, while average vehicle sales prices fell 7%, preliminary data from auto auction house USS showed.
The price drop was welcomed by some. Battery recycling company 4R Energy has seen “significant” tailwinds from falling used car prices, including the Nissan Leaf, Chief Executive Yutaka Horie said.
Lower prices give the joint venture between Nissan and trading house Sumitomo greater ability to secure supplies, he said.
($1 = 149.3000 yen)
Reporting by Daniel Leussink; Additional reporting by Gleb Stolyarov; Editing by Kevin Krolicki and Sonali Paul
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