Used Car Market Cooling in Japan as Auto Production Recovers

Jiji Press

10:52 JST, May 18, 2023

TOKYO (Jiji Press) — The surge in used car prices is dying down in Japan as demand retreats following a recovery in new automobile production.

The used vehicle market is returning to normal from when prices exceeded those of new cars.

Demand for used cars had grown after production and deliveries of new vehicles were slowed by a semiconductor shortage. The waiting times for deliveries grew to over half a year for some popular models.

Also reflecting a decrease in used cars traded in, the supply-demand situation tightened rapidly, boosting used car prices noticeably from the second half of 2021.

According to major used car auctioneer USS Co., the average price of used vehicles topped ¥1 million for the first time in February last year. By September that year, it had grown to ¥1,221,000, the highest since comparable records began in April 1999.

Toyota Motor Corp.’s popular Land Cruiser SUV saw used vehicle prices skyrocket. A Tokyo auto dealer said, “The prices reached double those of new vehicles temporarily last year, though they are only slightly higher now.”

New car production has been gradually recovering since last autumn, causing used vehicle prices to peak out. The average price of used cars last month stood at ¥883,000, the lowest level since August 2021. The figure slid 5.0% from a year before, down for the third straight month.

Meanwhile, used vehicle sales in April grew 0.9% from a year earlier to 285,500 units, the first rise in 23 months, data by the Japan Automobile Dealers Association showed Monday.

But it is unclear how much the supply-demand situation will relax. An auto dealer said that trade-ins have yet to increase.

Meanwhile, another dealer said that prices “are on the decline, mainly for relatively new vehicles.”