Japan to Ban Export of Used Cars to Russia

The Yomiuri Shimbun

13:47 JST, July 18, 2023

The government is set to ban exports of used cars to Russia as part of additional sanctions over Moscow’s invasion of Ukraine, according to sources.

Japanese cars are held in high regard in Russia due to their solid construction and price-holding power.

Tokyo’s planned embargo is apparently aimed at keeping step with the United States and the European Union to boost the effectiveness of economic sanctions.

The government plans to approve an amendment to the Export Trade Control Order, which is based on the Foreign Exchange and Foreign Trade Law, by the end of July. The stiffer restrictions will likely take effect in early August, at the earliest, the sources said.

Japan has prohibited exports to Russia of luxury cars priced over ¥6 million since April last year. The expanded ban will include all hybrids, plug-in hybrids and electric models, as well as gasoline and diesel vehicles with an engine size exceeding 1,900cc.

According to Finance Ministry trade statistics, Japan’s exports to Russia in 2022 totaled around ¥600 billion, representing a fall of about 30% from the previous year. Of this figure, some ¥250 billion was generated by sales of around 200,000 used cars, accounting for a quarter of Japan’s total exports to the country (about ¥960 billion).

The tightening of restrictions, which will limit exports to certain small and other types of cars, will likely cause export values to shrink by more than 50%, to about ¥100 billion.

With a drop in used-car exports to Russia, the price of such vehicles in Japan will likely decline in the long term.

During the G7 Hiroshima Summit held May 19-21, the Group of Seven leaders issued a statement on Ukraine that said, “We will broaden our actions to ensure that exports of all items critical to Russia’s aggression … are restricted across all our jurisdictions.”

In this connection, Washington decided in May to expand its export ban to include all passenger vehicles. The EU followed this announcement in June, saying it would widen its own ban to include passenger vehicles with engines over 1,900cc.

At present, Tokyo only restricts exports of luxury vehicles with the aim of putting pressure on senior Kremlin officials and Russian oligarchs who financially support the administration of Russian President Vladimir Putin.

Automakers in numerous countries have suspended production in or withdrawn from Russia following that nation’s invasion of Ukraine. As a result, new cars have become increasingly scarce in Russia.

According to Japanese government sources, there have been concerns that Moscow has been using Japanese used cars for military purposes.