Japan puts the brakes on lucrative used-car trade with Russia
02/10/2023 24:00
By Daniel Leussink
TOKYO, Oct 2 (Reuters) - Japan's move to bar most
used-car sales to Russia slammed the brakes on a trade nearing
$2 billion annually that had boomed in the shadow of sanctions
over Ukraine elsewhere, according to trade data and market
participants.
In early August, Japan's government banned exports of all
but subcompact cars to Russia, cutting off a lucrative
backchannel in trade in used Toyotas, Hondas and Nissans for a
network of brokers and smaller ports, especially Fushiki, an
export hub on the Sea of Japan.
While wiping out Russia's biggest source of used cars, the
sanctions have driven down prices for second-hand cars in Japan
and left brokers scrambling to send vehicles to other regions,
especially right-hand drive markets in New Zealand, Southeast
Asia and Africa.
Russia's demand for second-hand cars from Japan jumped
sharply after global automakers, including Toyota, pulled back
from operations following Moscow's invasion of Ukraine.
By last year, with sanctions elsewhere tightening, Russia
was buying more than a quarter of Japan's used-car exports for
an average price of almost $8,200. That was more than double the
price in 2020, when Russia took about 15% of Japan's used-car
exports.
Those sales had been on track to top $1.9 billion for all of
2023 before Japan imposed its own tougher sanctions, trade data
show.
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 figures from Russian analytical agency Autostat.
That compared to sales of 606,950 new cars of mainly Russian
and Chinese brands over the same period, Autostat data showed.
Toyama-based SV Alliance, a two-year-old car export
business, had been part of the wartime boom that sent an average
of some 6,500 used-cars to Russia every month through July from
Japan's Fushiki. The port is about 800 km (500 miles) from
Russia's Vladivostok, within two day's sailing for a cargo ship.
"Business is down about 70% and we've had to let a couple of
people go because there isn't enough work," said Olesya
Alekseeva, a logistics coordinator at SV Alliance.
CHEAPER CARS FOR RECYCLERS
Japan has been a leading used-car exporter for decades. A
system of mandatory inspections pushes the cost of maintaining
used cars higher for customers in Japan. Financing costs for new
car purchases, by contrast, are low.
The result: an export industry that has sent hundreds of
thousands of cars on the road from Malaysia to Mongolia and
Pakistan to Tanzania that were first purchased in Japan.
Takanori Kikuchi, a director for automotive trade policy at
Japan's Ministry of Economy, Trade and Industry, said the
government was "watching to see what kind of an impact" the new
sanctions would have.
Japan had originally banned exporting luxury vehicles to
Russia in April last year. It added a prohibition on the export
of heavy trucks 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
that borders Toyama, has seen the share of Russia in its
business slide from a peak of above 50% to below 20%, chief
executive Wataru Nishiwaki said.
The number of used cars on offer surged more than 20% in
August from a year earlier, while average vehicle selling prices
posted a 7% drop, preliminary data from auto auction house USS
showed.
The price decline was welcomed by some. Battery recycling
firm 4R Energy has seen a "significant" tailwind from declining
used-car prices, including the Nissan Leaf, said chief executive
Yutaka Horie.
Lower prices give the joint venture between Nissan and
trading house Sumitomo wider opportunity 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)
((daniel.leussink@thomsonreuters.com; Twitter:
@danielleussink))