Three years ago, Michiya Ogawa bought a new Toyota Corolla station wagon for US$15 800 to commute to his office in Japan’s mountainous Yamagata prefecture. A year later, the 47-year-old graphic designer got in an accident and sold the damaged car. Since then, his white Corolla wagon has traveled 7 000 miles around the world, first to a massive used-car market in the deserts of Dubai and now to the rugged streets of Nairobi, Kenya.
Its new owner, 30-year-old Wilfred Gathai, bought the car for US$3 400 to deliver fresh fruits and vegetables.
Between these two owners lies a booming US$2,7 billion industry built around exporting second-hand Japanese vehicles.
Fueled by Japan’s increasingly sophisticated used-car market and a hunger for cheap, reliable vehicles in developing countries, an auto-export revolution is taking shape.
The value of second-hand car shipments from Japan continues to jump each year and raking in billions to the Japanese.
Used-car exports from Japan will likely top a record one million vehicles per year for countries like Kenya and South Africa, according to the Japan Used Motor Vehicle Exporters’ Association.
While South Africa has banned the use of second-hand Japanese vehicles on its roads, the vehicles end up in Zimbabwe or Zambia.
One reason the Japanese have come to dominate used-car exports is that the other big new-car markets, the European Union (EU) and the United States, each has huge domestic used-car markets.
Some 43 million used cars are sold in the United States, the world’s largest car market.
With strong local demand for used cars, there is little incentive to ship cars in large numbers from the States or the EU.
In Japan, quirks of the market and the consumer have created a glut of saleable used cars.
Strict and expensive vehicle inspections in Japan discourage people from holding on to cars as they age.
Moreover, there is a strong cultural aversion among the Japanese to buying almost anything second-hand.
The result: Ships filled with low-priced cars. Everything from sports cars to high-mileage vehicles, damaged cars and patched up wrecks, leave Japanese ports for emerging markets.
The cars end up in Africa, the Middle East, the Caribbean and Asia, accelerating motorisation in areas where new cars are still beyond the reach of many consumers.
The global auto industry is waking up to the repercussions, as Japanese brands, particularly Toyota, find their way to first-time buyers.
Many African cities are already teeming with Toyotas, even though very few new cars have been sold there.
That’s troubling for Detroit car makers, which have been eyeing new markets to spur sales as developed nations become saturated with cars.
Exports of used cars from Japan have an impact on “our bottom line, because each used-car sale is a new-car sale lost,” says Jay Cooney, a General Motors spokesman in Singapore who is responsible for Asia.
The rapid surge in used-car exports is also triggering trade tensions.
Pacific Island nations have asked Tokyo for aid to dispose of the junked cars piling up as people replace clunkers with newer used cars from Japan.
Australia began limiting imports of used vehicles after lobbying by new-car dealers.
Hiroshi Sato, the chairman of the used-vehicle-exporting group, travelled to Dhaka, Bangladesh, trying to persuade the country to delay imposing a ban against older used cars. “It was our first lobbying effort and it was a success,” says Mr Sato. Dhaka hasn’t relaxed any of the restrictions yet, but the policy is under review, said Hussain Ahmed, commercial councillor in the Bangladesh embassy in Tokyo. — The Wall Street Journal.
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