Who would think there is a war on with this booming trade with Russia:
Perhaps out of embarassment or pressure to actually put substance to their official stand, the Japanese government has made some concrete steps to curb the constant flow of used vehicles to Russia.
A new law limiting car engine size to 1900cc or less as well as no hybrids will come into play in this month (August 2023).
Since April of last year, Japan has prohibited the export of luxury cars exceeding ¥6 million to Russia. In this latest measure, in addition to gasoline and diesel cars with engine displacements over 1900cc, all hybrid cars, plug-in hybrid cars, and electric vehicles (EVs) will also be subject to the ban.
According to trade statistics from the Ministry of Finance, the export value from Japan to Russia in 2022 was approximately ¥600 billion, marking a decrease of about 30% from the previous year. Among these exports, around 200,000 used cars accounted for approximately ¥250 billion, representing a quarter of the total export value from Japan (approximately ¥960 billion).
With the tightening of regulations, the types of used cars that can be exported to Russia will be narrowed down to some small vehicles and the export value is expected to decrease to around ¥100 billion or less, which is less than half. If exports to Russia decrease, there is a possibility that the increase in the supply of used cars circulating in Japan could lead to a long-term decrease in selling prices.
The Group of Seven (G7) Summit, held in Hiroshima in May, stated in its leadership declaration concerning Ukraine that it would “expand actions to ensure the restriction of exports of all critical items related to Russia’s aggression.”
In response to this movement, the United States decided in May to expand the embargo to include all passenger cars. The European Union (EU) also announced in June that it would extend the scope to passenger cars exceeding 1900cc.
The Japanese government has so far restricted exports mainly to luxury cars as a means to increase pressure on key figures within the Putin administration and emerging financial conglomerates known as “oligarchs” that financially support the regime. However, it is believed that an expansion of the targets was deemed necessary.
As Ukraine’s invasion began, car manufacturers from various countries have been making decisions to halt production and withdraw their businesses from Russia, leading to a notable shortage of new cars within the country. According to Japanese government sources, there were concerns that Russia might be utilizing used Japanese cars for military purposes.
source: Yomiuri Shinbun
While tightening of the used car exports is perhaps good news for other importing countries. Russia imports cars that are focused between 3 to 5 years old. The reduction in demand for these vehicles will push the auction prices down, especially for hybrid vehicles.