Japan's booming used car exports tackle Moscow, recession (Feature)

By Takehiko Kambayashi Jan 9, 2011, 3:25 GMT

Tokyo - Japanese traders turned secondhand cars made in Japan into a global presence, exporting to 180 countries from Suriname to Uganda and Bangladesh, boasting of the vehicles' performance and durability

The thriving business in Russia came to a screeching halt about two years ago, when the global economic crisis started to hit the industry hard and Moscow raised custom duties on imported vehicles.

Until then, hundreds of thousands of pre-owned Japanese cars had been exported every year to Russia. But Prime Minister Vladimir Putin curbed the influx of Japanese imports to protect the domestic auto industry, which had been badly bruised by the economic fallout.

The number of used car exports to Russia fell 90 per cent from 563,369 in 2008 to 53,180 in 2009. In 2008 Japan exported 42 per cent of its secondhand cars to Russia.

The plunge dealt a devastating blow to many traders, some of which went under, said Yutaka Shiota, executive director at the Japan Used Motor Vehicle Exporters Association (JUMVEA).

Some Japanese blamed close ties between Russian political leaders and major corporations.

Used Japanese vehicles have been exported for the past 30 years. When the government's deregulation of trade in 1995 eased their export, the number of used car exports tripled, surpassing 1.3 million in 2007 from 429,331 in 1997.

The number plummeted nearly 50 per cent to 675,858 in 2009 year on year due to the recession and Moscow's customs hike.

However, exports to Africa have has continued to grow. African countries imported 79,084 secondhand Japanese cars in 2004 and the number was expected to rise to about 190,000 in 2010.

Major markets include South Africa and Kenya, but also the United Arab Emirates, Chile and New Zealand.

Auction prices vary, an official at JTM Used Car Export in Yokohama said, with the most popular models fetching between 300,000 and 400,000 yen (3,590 to 4,790 dollars).

Not only secondhand passenger vehicles but also used bulldozers, trucks and buses come under the hammer owing to high demand in developing countries, said Masami Kato at Arai Shoji Co Ltd, which operates used car auctions in four locations in Japan.

'Some export-bound used cars even fetch a higher price at an auction than in the domestic market,' Kato said.

But prolonged slumps in new car sales in Japan made it difficult for traders to line up quality used vehicles, according to JUMVEA.

Also, in hard economic times like this, there has been a sharp increase in illicit activities, including the export of stolen cars and illegally rebuilt or remodeled vehicles, Shiota said. 'That could hurt Japanese cars' image and reputation.'

Some shady dealers even disappeared with 50 to 100 vehicles without paying a cent, Shiota said.

Despite the difficulties, traders still expect sufficient demand from abroad especially from some Asian and African countries because of the quality and reliability of Japanese cars.

Kato said their business recovered from the recession earlier than domestic car sales.

Moreover, exports to Russia was expected to double to more than 100,000 in 2010 from the previous year, becoming the top destination for secondhand Japanese cars once again, despite the punishing custom duties, JUMVEA said.

The recovery did not surprise JUMVEA's Shiota.

'We believe they do need Japanese cars given such a frigid climate,' Shiota stressed. 'They can start the engine of a Japanese car without any problems even at 20 degrees below zero.'

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