Tariff sinks Japan used car biz in Vladivostok

VLADIVOSTOK, Russia (Kyodo) Russia's used vehicle import business has been hit hard by an increase in the tariff on imported vehicles to protect the domestic automobile industry.

In Vladivostok, where most Japanese used vehicles enter Russia — the secondhand vehicle business is regarded as the city's largest industry — unemployment and bankruptcies are mounting.

"The time of the Japanese-made used vehicle business is over," said Igor Lyakhta, 42, president of a company that has sold vehicles in Vladivostok for more than 10 years. His company sold 300 vehicles a month on average last year, but this year the number has plunged to 30 after the tariff was raised last January.

The number of used vehicles imported from Japan in the first eight months of this year plunged around 90 percent from the year before. In major cities in the Russian Far East, almost all of the vehicles running are Japanese made, unlike in Moscow, where vehicles produced by European and American automakers are conspicuous.

According to Lyakhta, the tariff hike and the global financial crisis since last fall in combination with a strong yen and weak ruble have raised the open market price of used Japanese vehicles by 30 percent to 60 percent. Secondhand Japanese vehicles, which have been highly popular, are now out of reach for ordinary people.

The spacious Green Corner used vehicle lot on a hill overlooking Vladivostok port displayed 10,000 vehicles in good times. Now there are only around 4,000. Potential buyers are rare and dealers are at their wits' end.

A man identifying himself only as Iliya, 37, who sold secondhand vehicles for eight years until last December, became a taxi driver after the tariff hike.

"Vehicles bring happiness to people. The rise in the tariff rate only destroys life in the Far East," he said.

During the Soviet era, Vladivostok was closed to foreigners. The largest industry in the area is said to be the Japanese used vehicle-related business, which developed after the collapse of the Soviet Union.

Of the city's population of about 600,000, around 100,000 are believed to be engaged in vehicle-related businesses, including sales, transportation, repairs, parts and washing. Since the tariff was raised, unemployment has shot through the roof.

The Russian government is planning to introduce a technical standard that will virtually ban imports of right-hand drive Japanese vehicles next September. Imports of left-hand drive European and American vehicles will continue.

A government official said that in Russia, where traffic drives on the right, right-hand drive vehicles are liable to cause accidents.

A Japanese government source described the regulation as a protectionist measure, saying, "If Russia becomes a member of the World Trade Organization, it will be sued without fail."

The planned regulation is reportedly the result of lobbying by Russia's automobile industry to get rid of Japanese-made vehicles.

"European and American automakers appear to regard this as the best chance to expel Japanese imported vehicles from Russia," a Japanese industry source said.

A Japanese businessman involved in the secondhand vehicle business in Russia said: "Right-hand drive vehicles will have the life choked out of them if they are banned. We will have to increase handling of products other than automobiles."

The Japan Times: Tuesday, Nov. 24, 2009
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