Japan Used Cars business in Africa

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Japan Used Cars business in Africa

Although the car business has been doing well in most African countries, it is interesting

to note that Africa remains one of the largest importers of used vehicles from Japan. In fact,

Africa ranks second in the number of used vehicles imported globally. The reconditioned

vehicles from Japan became very popular in the African continent in the early periods of the 21 st

century. However, it began following the continent’s acquisition of independence where the last

country got its independence in 1994. The trade of vehicles in this continent is facilitated by the

fact that the continent favors affordable vehicles, which are of high quality. Since the new

vehicles are very expensive, they are mostly sold to the developed world and resold to Africa as

used vehicles at a significantly lower price. The price makes these vehicles more attractive as

compared to the new ones. This implies that being the largest exporter of used cars, japan directs

most of its sales to African markets and takes advantage of the huge African markets that favor

the used car business. This continent imports all types of vehicles including SUV’s trucks, mini

vans, pickups, hatchback, sedans, and commercial vehicles. This shows that Africa is one of the

best markets for Japanese used vehicle exporters since almost all vehicle types have a market in

these regions.1 The reason why Japanese vehicles are the most seen in African roads is because

they have high quality and they are affordable for most individuals in these markets.

Statistically, the African continent has imported at least one million used cars from

Japanese exporters between 2008 and 2013. Additionally, the number of imported used cars to

these markets is still increasing at a high rate since the demand of these vehicles is increasing as

these countries develop further. These cars are most popular in the African countries that include

South Africa, Nigeria, Zambia, Kenya, Malawi, Zimbabwe, Mozambique, and Ghana. These
1
Niko Besnier, On the Edge of the Global Modern Anxieties in a Pacific Island Nation, Stanford, Calif: Stanford
University Press, 2011
 3

countries import the Japanese used cars in large volumes. The main models come from the most

famous vehicle manufacturers that include Nissan, Honda, Suzuki, Mitsubishi, Toyota, and

Mazda. However, the countries import these cars according to models. For instance, Zambia may

import more Toyota models than it would for Honda models. This is usually determined by the

market preferences where most customers prefer one model to another. To ensure that the import

of these vehicles has been made easier, most African countries have reviewed their import

policies. This has been one of the milestones towards the increase in the number of used cars to

Africa. This is because the policies have made the markets more attractive due to reduced risks.

This is because the policies have made vehicle import considerably easy for the African citizens.

However, these policies have only been adjusted in regard to Japanese vehicle models. This is

because these vehicles are of high quality in that they have increased efficiency, which in turn

means that the vehicles emit lower volumes of harmful gasses and materials as compared to

vehicles from other countries.2 Specifically, Japanese cars are not only affordable but also

environmentally friendly making them a better choice especially in the modern world when fuel

costs have skyrocketed. In this regard, the Japanese vehicles have better fuel consumption as

compared to other vehicles from different regions such as Germany. The following charts show

the top 20 countries importers of japan used vehicles in 2007 and shows that there are three

African countries with Kenya being at the top most.

2
Nageswari Cherukonda, Exporting Basics, Indiana, Trafford Publishing, 2014
 4

The Internet has made it increasingly easier to purchase these vehicles from any place

around the world. Almost all exporters have websites that display all cars that can be bought at a

specific time. This makes it easier for people in Africa to purchase cars since the websites are

accessible globally. These websites show a comprehensive stock list from which an individual

can search for the most suitable vehicle. If the stock list does not have the desired car, then the
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individual can check it from the online auction database for the supplier. Exporters have made

the online auction system considerably easy and deliver the vehicle to the highest bidder. Details

on the delivery of the vehicle can be finalized once the choice of the vehicle has been made. The

online systems are very easy to use to encourage the customers to make their purchases through

online channels. In the African markets, most of the imputed cars, which are also the most cars

on African roads, include Toyota. This is because Toyota offers high quality products, which are

affordable. Toyota also has a considerable reputation in these markets. The biggest competitor in

these markets for Toyota is Nissan. In countries such as Kenya, there exists a stiff competition

between the two companies, as the number of vehicles from Nissan is slightly lower than those

from Toyota. However, Toyota Hilux in addition to Toyota Corolla is very common and famous

among Africans. These models have remained the bestselling models in the African markets

since the year 2008. Their sales volumes have also increased. When considering Nissan model,

the most common models in African roads include Nissan Bluebird, Nissan Tida and Nissan

Teenna. There are also other used vehicle models from other suppliers but Toyota and Nissan

dominate most of the market.3

Nevertheless, due to the landscape of the African countries, the market has also embraced

additional models that are specifically designed to be driven in such terrain as that present in

Africa. These models include 4x4 and pick-up trucks. When new vehicles are sold to European

countries and other developed countries, they may be exported to other markets such as African

markets as soon as they approach ten years in use. However, most of them rang around five years

before they are exported. The main reason why these vehicles are imported is because of the

mandatory vehicle inspection procedures in most countries. When vehicles are above five years

3
Arvind Panagariya, India: The Emerging Giant, New York, N.Y.: Oxford University Press, 2008
 6

in use, at times they do not pass the mandatory tests. When the owners realize that this age is

approaching they sell them from where they are shipped to African countries and sold at

significantly low prices. Additionally, the mandatory vehicle inspection is becoming expensive

since vehicle must meet certain standards so as to pass it. Since there are fewer vehicle

inspections in African countries, it provides a good market to export these vehicles to. While car

dealers are the main exporters, these vehicles can also be sold by owners although this is less

frequent as the owners sell them to dealers who in turn import them targeting the Africa markets.

Japan has at least 200 different vehicle auction groups who assist the owners in selling the

vehicles. During the auctions, the names of the owners are not disclosed and in turn, the bidding

agents’ names are used. The Japanese market sell vehicles that are driven on the left side of the

road implying that the vehicles are right hand drive. This is in according to Japan’s left hand

traffic. While some markets restrict their imports to right had driven vehicles, such vehicles may

be imported but not sold until they are converted to the correct hand drive. This limits the market

for Japanese used cars since the extensive work used to convert a vehicle from one hand drive to

another is at times not economically feasible with respect to anticipated returns. 4 Such

conversions are mostly done by local dealers after the vehicle has been imported.

Besides Africa being one of the best markets for used Japanese cars, Pakistan is another

market that has been importing large volumes of these vehicles from Japan. Pakistanis who are

living in Japan lead the business of importing Japanese used cars into Pakistan. The reason why

the Pakistan market has favored these vehicles is the durability of the Japanese vehicle models as

well as their application of high technology, which reduces emission of gases by increasing

efficiency. The Pakistan car dealers situated in Japan have been making use of social media to

4
Ken Westmoreland, A Pretty Unfair Place: East Timor Ten Years After Self-Determination, [Great Britain]: Lafaek
Press, 2009
 7

build contacts worldwide and mostly in their home country. At one auction instance in

November 2013, the Tokyo Motor Show attracted very many buyers from different parts of the

world and mostly those from Pakistan. The Pakistan used car business is said to have started in

the 1970s when a Pakistani citizen visited Japan and sent four used cars back to Pakistan

acquiring a profit from their sale. This began the business for Pakistanis and increased the

number of Pakistanis going to Japan to enter this business. This opportunity has brought many

Pakistanis into Japan comprising at least half of the people in the used car business in Japan.

According to the Japanese Used Vehicle Exporters Association, the top 20 importers of used cars

came from the African continent while the trucks were mostly imported into Russia, Myanmar,

and the United Arab Emirates at 140,000, 120,000, and 88,000 respectively. The following chart

shows imports by country throughout 2012.

The demand for used cars from Japan has been increasing in the African continent as the

Association points out stating that the largest importer of used Japanese cars was Kenya, which

alone imported at least 45,000 cars in 2012 followed by a distant Tanzania and Zambia which

imported 23,000 and 18,000 respectively. Due to such demand, the used car industry in Japan

has increased its attention towards shipping cars in containers mostly to East Africa. The factors

that drive the used car business in Japan are similar to those in major African countries importers

such as Kenya and Tanzania in that the Pakistani population prefers affordable vehicles.

Although a significant portion of Pakistani population imports vehicles from the United
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Kingdom, the imports from Japan are significantly high.5 The population prefers high quality

vehicles although the expensive new ones are currently not doing as good as the used ones. The

main models that are preferred by the Pakistani population include Toyota, Suzuki, Mazda,

Daihatsu, Honda, and Nissan. The preference of these vehicles encourages the top Japanese

dealers such as MH Cars limited.

The demand for Japanese cars is also attributed towards the economy of the brands from

Japan reducing the market for those imported from the United Kingdom. This is because the

Japanese models are associated with low fuel consumption as well as low mileages. Moreover,

the Japanese spare part suppliers have ensured that their products are available for Pakistan

customers who buy Japanese vehicle models. This implies that the availability of spare parts has

also favored the Japanese models. This give the buyers and dealers freedom of importing the

Japanese used cars because the market is well supported by the local repairing market and spare

part suppliers.6 To encourage the market further, the Pakistani government has made changes to

its import policies that encourage the import business. Since 2006, the government allowed the

import for three-year-old vehicles. Procedures for importing have also been made simpler. For

instance, it is not required that the vehicle to be imported be registered in the name of a Pakistani

under the transfer of residence policy and personal baggage policies. Additionally, the Pakistanis

living in Japan and holding a Pakistan origin card can import cars under the gift personal

baggage as well as the transfer of residence policy. This makes it easier to export vehicles into

Pakistan. However, only those overseas are allowed to import used cars into the country while

those requesting for them from Pakistan can only import new cars. Additionally, an individual

must have stayed abroad for at least 6 months before they are eligible to import cars. The trend
5
Yang. Asian Cross-Border Marriage Migration. Demographic Patterns and Social Issues. Amsterdam: Amsterdam
University Press, 2008
6
Edwin M. Woods, Sightseeing: Whirlwind Trips 2005 – 2008, New York, iUniverse, 2008
 10

for importing Japanese used cars into India is similar to other countries such as Pakistan. This is

because the market has improved especially recently following the government’s decision to

relax the motor vehicle import policies.

In the same way, exporting laws for the Japanese dealers have also been made less strict

to facilitate this business in to India and other countries. However, this market discourages the

import because it does not have a stable import duty structure, which leads to increase in costs up

to 45% of the total price of foreign made cars. Nevertheless, the vehicle models from japan are

preferred because of their fuel economizing ability and low cost. There are other restrictions,

though. These include the vehicle must be at most 3 years old, must be right hand drive,

clearance paper work can only be done at the Mumbai port, and the vehicles must first be

inspected by the Japan Auto Appraisal Institute. However, there is no engine size limit for the

used cars as there is for the new cars that must be at most 1600 cc. Importing for this market is

harder than any other market, which allows importing of used cars because the country also

requires that the vehicle being imported to have been in the possession of the importer for at least

one year. Restrictions are also placed where the country allows foreigners married to Indians,

working in India, and firms established in India to import used cars. It also permits Indian firms

working abroad, physically challenged individuals and journalists to import these vehicles. The

following table shows trade between Japan and India between 1998 and 2006.
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Bibliography

Besnier, Niko. On the Edge of the Global Modern Anxieties in a Pacific Island Nation. Stanford,

Calif: Stanford University Press, 2011.

Cherukonda, Nageswari. Exporting Basics. Indiana, Trafford Publishing, 2014.

Panagariya, Arvind. India: The Emerging Giant. New York, N.Y.: Oxford University Press,

2008.

Westmoreland, Ken. A Pretty Unfair Place: East Timor Ten Years After Self-Determination.

[Great Britain]: Lafaek Press, 2009.

Woods, Edwin M. Sightseeing: Whirlwind Trips 2005 – 2008. New York, iUniverse, 2008.

Yang. Asian Cross-Border Marriage Migration. Demographic Patterns and Social Issues.

Amsterdam: Amsterdam University Press, 2008.