Asia's used-car market revives

SUN JOURNAL

Trade: As the region's economies stabilize, once again Russians are snapping up Japan's middle-aged automobiles.

August 26, 1999|By Russell Working | Russell Working,SPECIAL TO THE SUN

TOYAMA, Japan -- Just outside the port of Toyama-Fushiki is a day parking lot whose owners have grown tired of shooing away would-be buyers of automobiles. So they posted a sign in Russian that reads, "This is a Parking Lot. These Cars are Not for Sale."

Errant buyers can be a regular nuisance when Russian ships call at Japanese ports. In Toyama-Fushiki, when the Russian ship visits once a week, dozens of Russian passengers and sailors fan out across town, their pockets stuffed with U.S. $100 bills.

The ship stays for two days -- just long enough for its passengers to buy 50 or 60 used cars, vans and trucks that will crowd the decks on the way home.

They end up negotiating the potholed roads of Siberia and the Russian Far East. Never mind that the Japanese cars are designed to drive on the left -- for several thousand miles of far-eastern Russia most of the cars are Japanese.

"These Japanese cars are much better than ours," says Nikolai, a 29-year-old sailor. Like many car buyers, who often use bribes to speed their purchases through Russian customs, he declines to give his last name. He has imported more than 100 Japanese cars into Russia. "Would you buy a Russian car?" he snorts.

Russia is one of the largest buyers of used Japanese vehicles, which suits both parties.

Japanese tend to replace their cars within a few years, so there is little market for used cars within the islands. Russians in the Far East, 6,000 miles by rail from Moscow, prefer to buy Japanese automobiles rather than the clattering Ladas and Moskviches made in their nation's industrial heartland. Russian ships regularly visit Japan, 384 miles from Vladivostok, and sailors carry special passports that allow them to import cars duty-free for personal use.

And although last August's economic crisis in Russia temporarily obliterated the market for Japanese cars, a stable exchange rate has once again encouraged automobile entrepreneurs to cross the Sea of Japan.

In Vladivostok, in far southeastern Russia, perhaps 90 percent of the cars and vans are Japanese. Bread trucks sport the names of Tokyo coffee companies; buses carry the names of Japanese universities or tour firms.

Seated on the right-hand side of their cars and driving on the right side of the road, drivers make hair-raising maneuvers, passing each other on blind curves while leaning across front-seat passengers to see what's coming in the opposite lane.

In 1997, reports the Far Eastern Customs Administration in Vladivostok, 125,400 used Japanese cars entered the Primorye region, which lies between China, North Korea and the Sea of Japan. In 1998, despite an economic crisis that all but cut off imports for three months after the Aug. 17 ruble devaluation that made all imports more expensive for Russian buyers, imported Japanese cars (almost no other vehicles enter Russia) totaled 116,336.

This year, the imports have been significantly lower, a lingering effect of the economic crisis. But because transcontinental rail costs are high, almost no Russian cars have been shipped to the Far East. And so, with Japan a short boat ride away, the auto trade has begun to revive.

In contrast to periodic American fretfulness over Japanese imports, Russia's Far Eastern Customs Administration would like to encourage more trade in Japanese cars. It has asked Moscow to reduce the import duty. The motivation is not simply consumer demand. Customs officers charge a fee per car and accept bribes to speed the import process.

For one kind of car, however, customs officials want to increase the import fee. Japanese police have reported a rash of stolen sport utility vehicles, most of which are being shipped to Russia. They have asked that Russia increase tariffs on such vehicles in order to discourage their import.

In the Japanese port of Niigata, Nobutaka Watanabe, a used-car salesman, buys his cars at auctions and sells to Russians. His prices were undercut by the arrival of Pakistani car salesmen in Japan, and now it is possible to buy a 1989 or 1990 Toyota Corolla or Nissan-ADI for $300 to $500 -- half the price of five years ago.

But Russian customers started complaining about bad buys from some fly-by-night Pakistani dealerships, Watanabe says. "The Russians who started buying cars from the Pakistanis very cheaply are now coming back to us."

Russia isn't the only market for used Japanese cars. Brazil also snaps up the relatively cheap used Mitsubishis and Isuzus. And used Japanese cars have been shipped to Australia.

But few countries have such easy access to Japan, allowing a person of moderate means to catch the boat over and return with a car. The fare on the Antonina Nezhdanova is $350 round trip, plus a $350 shipping fee for the car.

Used Japanese automobiles for a time became a thriving part of Vladivostok's municipal economy. A year ago, the sprawling hillside market Admiral Kuznetsov Street, known as Green Corner, was home to 4,000 cars.

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