The 2nd half of the newsletter from JUMVEA, detailling out the restrictions on imports of used vehicles into Russia as well as the impact the crash of Big Motors will have on the price of cars in the auctions.
In the first half of the year, the number of used cars exported from Japan to the world increased by 22.3% to 725,082 vehicles. By region, exports to Asia increased by 18.0% to 232,967 vehicles, while exports to Africa increased by 9.3% to 162,281 vehicles. This increase is a rebound from the temporary decline seen in the previous year’s first half results due to factors such as the semiconductor shortage, which caused significant delays in the delivery of new cars, making used vehicles less available in the market and resulting in rising domestic prices.
Russia, the top destination for exports, saw a 57.7% increase to 123,579 vehicles. In April of the previous year, the Japanese government implemented economic sanctions against Russia, but the ban on automobile exports was limited to luxury cars with prices exceeding 6 million yen. However, starting from August 9 of this year, exports of vehicles with an engine displacement exceeding 1,900 cc, including used cars, as well as electric vehicles (EVs) and popular hybrid vehicles (HVs), were prohibited.
Mr. Nakao pointed out that regarding Russia, not only could exports to the country decline in the short term, but there is also the possibility of implementing measures that would effectively prevent the import of vehicles from “non-aligned countries” in the long term. Russia has increased recycling fees for imported passenger cars by 1.7 to 3.7 times since August. For small passenger cars, this increase translates to a range of 300,000 to 500,000 Japanese yen. In place of withdrawn Japanese and European cars, the production of Russian and Chinese cars has intensified in Russia. Mr. Nakao sees this as the beginning of the exclusion of vehicles from non-aligned countries.
Mr. Nakao also mentioned that concerns are spreading within the industry about the “dumping” of Big Motor’s owned vehicles as well as 200,000 used cars for Russia annually face a lack of outlets and financial difficulties due to exposed fraudulent activities. If the used car market declines, it could also lead to lower trade-in prices when purchasing new cars, affecting the sales of new cars. The competition with China, which began exporting used cars in 2019, could also pose a potential challenge to Japan’s used car export market, and if the second half of the year sees a downturn in the used car market, it may have an impact on Japan’s automotive industry.