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Japan Halts Profitable Used-Car Trade With Russia

Japan Halts Profitable Used-Car Trade With Russia
According to trade data and market players, Japan's decision to prohibit the majority of used-car sales to Russia put the brakes on a $2 billion-per-year industry that had exploded under the shadow of other countries' sanctions related to the Ukraine.
A network of brokers and smaller ports, particularly Fushiki, an export hub on the Sea of Japan, lost their profitable backchannel in trading in old Toyotas, Hondas, and Nissans when the Japanese government banned the export of all but subcompact automobiles to Russia in the early days of August.
The restrictions have reduced used car prices in Japan while eliminating Russia's main supplier of used automobiles. Brokers are now scrambling to ship autos to other countries, particularly right-hand drive markets in New Zealand, Southeast Asia, and Africa.
Following the withdrawal of major automakers from operations in the wake of Moscow's invasion of Ukraine, particularly Toyota, demand for used vehicles from Japan in Russia increased significantly.
By the end of the previous year, Russia was purchasing more than 25% of Japan's exports of old cars at an average cost of close to $8,200 as other countries tightened their sanctions. That was more than twice as expensive in 2020, when nearly 15% of Japan's exports of secondhand cars went to Russia.
Before Japan enacted its own stricter penalties, the sales were on course to surpass $1.9 billion for the entire year 2023, according to trade data.
According to data from the Russian analytical organisation Autostat, more than half of the 303,000 used cars that Russia imported in the first eight months of the year originated from Japan.
According to data from Autostat, over the same time period, 606,950 new automobiles, mostly from Russian and Chinese companies, were sold.
SV Alliance, a two-year-old automobile export company established in Toyama, participated in the post-war boom that saw Fushiki, a Japanese automaker, export an average of 6,500 used cars to Russia each month through July. Vladivostok, Russia, is around 800 kilometres (500 miles) away from the port; a cargo ship may reach it in two days of sailing.
"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.
For many years, Japan has been a top exporter of secondhand vehicles. Customers in Japan pay more for used automobile maintenance due to a system of required inspections. By comparison, financing charges for new car purchases are modest.
The end result is an export sector that has put hundreds of thousands of automobiles that were originally purchased in Japan on the road in Malaysia, Mongolia, Pakistan, and Tanzania.
The Japanese Ministry of Economy, Trade, and Industry's Takanori Kikuchi, director for automotive trade strategy, said the administration was "watching to see what kind of impact" the new penalties will have.
In April of last year, Japan first forbade the shipment of high-end vehicles to Russia. In June, it put a ban on the export of large trucks.
Dealers can still sell more compact vehicles, like the Toyota Yaris or the Honda Fit, to Russia despite the new sanctions.
According to Wataru Nishiwaki, chief executive of Element Trading, a used automobile dealer in the Niigata prefecture that borders Toyama, the proportion of Russian customers has dropped from a high of over 50% to under 20%.Preliminary statistics from auto auction firm USS showed that the number of used automobiles available increased by more than 20% in August compared to the same month last year, while average vehicle selling prices decreased by 7%.
Some people cheered the price drop. According to CEO Yutaka Horie, the Nissan Leaf's price decline and other factors have given the battery recycling company 4R Energy a "significant" boost.
According to him, lower prices provide the Nissan and trading company Sumitomo joint venture more opportunities to source suppliers.

Christopher J. Mitchell

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