Japan cuts off nearly $2 billion a year in trade with Russia

In early August 2023, the Japanese government banned the export of all cars except minicars to Russia, cutting off a lucrative trade channel for used Toyota, Honda and Nissan cars.

Japan stops selling used cars to Russia. Toyota Mirai sedan. (Source: Bloomberg)

The ban has driven down prices in Japan, leaving brokers scrambling to sell cars to other regions, especially markets where the steering wheel is on the right side, such as New Zealand, some Southeast Asian countries and Africa.

Russia's demand for used cars from Japan has surged after global automakers, including Toyota, withdrew their operations from Russia following the Russia-Ukraine conflict.

In 2022, Moscow bought more than 25% of Tokyo's used car exports at an average price of nearly $8,200 per car, more than double the price in 2020, when Russia bought only about 15% of Japan's used car exports.

Trade data shows that Russia's imports of this item from Japan could reach $1.9 billion for the whole of 2023 before Japan imposes the above-mentioned stricter ban.

More than half of the 303,000 used cars Russia imported between January and August this year came from Japan, according to data from Russian analytics company Autostat. That’s equivalent to half of all new cars sold by Russian and Chinese brands in the same period.

Japan has been the world's leading exporter of used cars for decades.

The reason for this is that the mandatory inspection system for used cars in Japan has made the cost of using a used car higher than the cost of buying a new one.

Japan initially banned exports of luxury cars to Russia in April last year, then added a ban on heavy trucks in June. After the new ban, brokers are still allowed to export small cars, such as the Toyota Yaris or Honda Fit, to Russia.

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