TOKYO – Amid global sanctions against Russia due to the Ukraine situation, Japan has taken a step to halt most of its used-car sales to Russia. This decision swiftly brought to a stop a trade that annually approached a whopping $2 billion, as indicated by trade statistics and market insiders.
Regulations Impacting Japanese Export
As of August, the Japanese government prohibited the export of most car types to Russia, effectively cutting off lucrative trade channels through which used Toyota, Honda, and Nissan vehicles made their way to Russia. This shift notably impacted smaller ports, such as Fushiki on the Sea of Japan.
Simultaneously, while these sanctions dramatically decreased Russia's import of used cars, they have caused a drop in used car prices in Japan. Many brokers are now eagerly seeking new markets, especially right-hand drive regions like New Zealand, Southeast Asia, and Africa.
Rising Russian Demand
The Russian appetite for used cars from Japan saw a surge after numerous global car manufacturers, including Toyota, scaled back operations following Russia's intrusion into Ukraine.
By the previous year, as other countries' sanctions started getting stringent, Russia was purchasing over a quarter of Japan's exported used cars at an average price of nearly $8,200. This price was over twice the amount in 2020, when Russia accounted for about 15% of Japan's used car exports.
Before Japan introduced its stricter sanctions, projections estimated a used car sale amounting to more than $1.9 billion for 2023.
Effect on Businesses and the Market
Toyama's SV Alliance, a car export enterprise founded two years ago, shipping an average of around 6,500 used cars to Russia monthly via the Fushiki port. "Business has plummeted by 70%, and we've had to lay off a few individuals due to the lack of work," stated Olesya Alekseeva, a logistics coordinator at SV Alliance.
Declining Prices for Recycling Cars
For decades, Japan has stood as a leading exporter of used cars. This has resulted in an export industry that has seen hundreds of thousands of cars journey from Malaysia through Mongolia to Tanzania, initially bought in Japan.
However, owing to the sanctions and subsequent decline in used vehicle prices, some companies are finding silver linings. 4R Energy reported a "significant" boost from the drop in used car prices, especially for the Nissan Leaf model.
Conclusion
These sanctions deeply impact the Japanese automotive industry and the Russian used car market. However, it seems that some companies are uncovering new opportunities amid the current scenario. The future direction of these events remains uncertain.
