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. Last Updated: 07/27/2016

Far East Buying Up Used Japanese Cars

KHABAROVSK, Far East -- Boots crunching on the packed snow of Siberia's largest car lot, Anatoly Kiselev passed row upon row of the cars that keep the Far East rolling: Toyota Land Cruisers, Mitsubishi Pajeros, a delivery van from Osaka, and strings of sensible Hondas and Nissans, many still bearing stickers from parking garages in Tokyo.

Incomprehensible Japanese characters emblazoned on a Toyota pickup truck? No problem. Left-hand drive? No problem. Everything sells.

"A Russian car, a Zhiguli, for example, practically falls apart after 50,000 kilometers," said Kiselev, the sales director of Montazhny Rynok, described as "the largest car market in Khabarovsk." There was not a Russian car in sight on a recent Saturday morning; virtually all the 414 cars, trucks and vans on the sales lot had already clocked about 50,000 kilometers on the roads of Japan.

While the United States is the world's largest importer of new Japanese cars, Russia is now the largest importer of used Japanese cars.

With China and many Southeast Asian countries closed to imports of used cars, some analysts fear that Russia has become a magnet for hot cars, with western Russia attracting stolen German cars and eastern Russia attracting vehicles stolen in Japan. The Japanese police have broken up several theft rings shipping cars to Russia. But stolen vehicles are thought to account for a small part of the illicit flow, probably less than 5 percent.

Stolen or not, the high-quality Japanese cars are definitely improving things for a population long deprived of decent vehicles -- or any vehicles at all.

"When I was a kid, only top officials had cars -- everyone else walked or took the tram," said Sergei Rudenko, 46, a retired Aeroflot pilot, as he contentedly piloted his 11-year-old Toyota Sprinter, a Corolla variant sold in Japan, down streets packed rock hard with snow. "See that Zhiguli over there? The latest model costs $20,000 -- that's the price of four used Japanese cars."

In this city of 800,000, bored children can play the back-seat game of "spot the Russian car." With Ladas, Volgas and Sputniks increasingly rare, it takes real hunting to find a Russian-made car on streets clogged with Japanese imports.

To listen to Russian and American carmakers, though, the flood of used-car imports is retarding the development of the national car industry and threatening to set back efforts by General Motors, Ford and other foreign auto producers to build modern vehicles in Russia. Last year, the country's overall car production fell 5 percent, to 970,000, slipping below China's production for the first time. Against this background, Ford and GM embark this year on rival assembly projects, investments totaling nearly $500 million.

To listen to Japanese consumers, Russian drivers are getting a free ride -- or at least a subsidized ride -- as a result of Japanese laws that encourage owners to sell their cars after three years, giving an artificial lift to the Japanese automakers.

"In Japan, the older the car gets, the more expensive it is to register it," Christopher Richter, an HSBC auto analyst, said in Tokyo. "In reality, it is a subsidy of the car industry."

Still, Japanese are holding on to their cars longer, about six years today, compared with 4 1/2 years in 1990.

Still, there are plenty of good-quality, only-driven-on-Sunday Japanese cars left over to keep Russia rolling. As many as 200,000 used Japanese cars were exported to Russia last year, according to an estimate by Toshio Kimura, an executive with the Japan Used Motor Vehicles Export Association, a trade group.

"The Russians like four-wheel-drive cars, strong off-road-type cars, because their roads are not very good," Chuzo Takayama, president of Honda Used Car Sales, said in Tokyo. The high-quality underbody treatments of Japanese cars generally hold up well on Russian roads, where salt is used liberally in the winter.

Officially, only about 25,000 cars were exported last year to Russia. But the vast majority were exported informally, on the thousands of fishing boats and freighters that dock every year around the Japanese archipelago.

"As many as 7,000 fishing boats come here a year, bringing timber or fish," Kimura said. "They go home full of Japanese used cars."

Richter, the HSBC analyst, said: "They just boat these things across the Sea of Japan. They don't have to go too far."

Used cars now account for about 10 percent of Japan's annual vehicle exports.

Most of the cars arrive in the Pacific port of Vladivostok.

"I came across a police car from Toyama prefecture, buses for a kindergarten, and for a Japanese country inn," Yoichi Funabashi, foreign affairs columnist for Asahi Shimbun, the big Japanese daily, wrote in late January of his car-spotting in Vladivostok.

From the Pacific Coast, many cars are driven to Khabarovsk, an eight-hour trip that nets the driver only $50.

"At this site, the cars usually belong to sailors who bring them here and leave them until they are sold," Kisilev said. "We also have buyers from Moscow, St. Petersburg, Krasnodar, Chelyabinsk."

With Russians buying some 480,000 used cars last year, about a third of car sales, German models dominated in the west and Japanese models in the east. Western police agencies have estimated that as many as half a million of the cars in Moscow were originally stolen in Europe.

In Japan, car thefts have nearly doubled in a decade, reaching 62,673 last year. After the police broke up several gangs shipping hundreds of stolen cars to Vladivostok, the government recently reinstated an old rule that allows the export of a car only after submission of proof the registration had been canceled.

Russian automakers have lobbied hard to raise import tariffs. In October, the government responded by raising taxes on cars more than seven years old to 35 percent, compared with the 25 percent duty levied on new-car imports.

But in the Far East, people seem happy to drive their imports, often oblivious to the messages on some vehicles.

A Toyota dealer in Vladivostok once repaired a car that was painted with the slogan in Japanese: "Return the Northern Territories!" The slogan referred to four disputed islands, claimed by Japan, but occupied by Russia as the southern Kurile Islands since the end of World War II.