Tokyo has added used vehicles to its automobile ban in line with G7 sanctions
Japan’s decision to include used vehicles in its ban on car exports to Russia will cost the country nearly $2 billion, Reuters reported on Monday, citing trade data and market participants.
The ban on sales of all but subcompact vehicles to Russia came into effect in early August, having cut off a lucrative sales channel for secondhand Toyotas, Hondas, and Nissans for a network of brokers and smaller ports.
Tokyo had originally barred exports of luxury vehicles to the sanctions-hit country in April 2022. A further prohibition on sales of heavy trucks was added in June.
Japan has long been a prominent exporter of used cars. The local requirement for mandatory inspections significantly escalates the maintenance expenses for these vehicles, whereas the financing costs for new car acquisitions remain low.
Before the sanctions introduced by Western countries and their allies over Moscow’s military operation in Ukraine, sales to Russia covered over a quarter of used car exports from Japan.
The average price for secondhand Japanese vehicles reportedly neared $8,200 by 2022, more than double the price in 2020, when Russia took about 15% of Japan’s used-car exports.
Nearly 150,000 used Japanese vehicles entered the Russian market in the first eight months of the current year, marking half of the country’s total imports of secondhand automobiles, according to figures from the Russian analytical agency Autostat.
According to trade data cited by Reuters, the price tag of these sales had been projected to exceed $1.9 billion by the end of 2023 before Tokyo opted to impose tougher sanctions.
As a result of the ban, Japanese companies focused exclusively on exports to Russia suffered losses of nearly 70%, according to Olesya Alekseeva, a logistics coordinator at SV Alliance, who spoke to the outlet.
Element Trading, a used-car dealer in Niigata prefecture that borders Toyama, has seen its share of business in Russia slide from a peak of above 50% to below 20%, chief executive Wataru Nishiwaki told the wire service.
According to preliminary data from auto auction house USS, the number of used cars for sale in Japan saw a massive year-on-year increase of more than 20% in August as average vehicle selling prices scored a 7% decline.
Local recyclers have become one of the only beneficiaries of the price decline, according to Nissan Leaf chief executive Yutaka Horie, who told Reuters that battery recycling firm 4R Energy saw a “significant” tailwind from declining used car prices.