Sri Lanka has become Japan’s biggest dumping ground for used cars, including hybrids and electrics, which are being sold by the thousands to unsuspecting buyers by Japanese and Sri Lankan dealers in Japan and local importers.Some used cars are being sold for higher prices than they are worth in Japan, according to a report by [...]

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Used Japanese cars flood Sri Lanka – some cars 70% more pricey than new ones

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Sri Lanka has become Japan’s biggest dumping ground for used cars, including hybrids and electrics, which are being sold by the thousands to unsuspecting buyers by Japanese and Sri Lankan dealers in Japan and local importers.Some used cars are being sold for higher prices than they are worth in Japan, according to a report by a leading Japanese business publication.

A quotation sought this week on the website of a Japan-based exporter for a 2016 Toyota Prius S Touring Selection (1,800 cc), model DAA-ZVW50, cited the cost equivalent to Rs 3.88 million including shipping charges to Colombo, but not other costs such as insurance. Also, a 2015 Toyota Aqua Hybrid, (1,500 cc), model DAA-NHP10, was quoted at the equivalent of Rs 1.25 million including shipping costs to Colombo but excluding insurance and other outlays.

According to Sri Lanka Customs, the Toyota Prius model ZVW50 is valued at Rs 2.43 million for tariff purposes.
Sri Lanka imported 143 used Japanese vehicles on average every day last year, a rough calculation based on data of 51,561 vehicles reported by the Nikkei Asian Review earlier this month shows.

It is not unusual to find gullible Sri Lankans at the wheel of Japanese cars, especially hybrids, where LCD displays flash Japanese letters, charts, and messages. Many drivers are blissfully unaware of potential alarms, dangers, or warnings of defects in their multi-million rupee vehicles, most of them gleaming like white ceramic tiles.

There is no regulatory regime that protects Sri Lankan buyers from used imported products being sold by anyone, let alone the Japanese. An internet search of a branch of the Japan Auto Appraisal Institute shows it offers an inspection for a fee, and the stipulations accept a windshield crack or breakage that is “no greater than 1 cm’’, and even accepts wiper blade scratches that do not hinder the driver. The institute dictates among other things, “the engine and other portion under the body must be cleanly washed, and rusted parts must be painted with chassis black.’’

The Japanese business publication also reveals how at a Sri Lankan dealer, Wasana Trading, the reporter Hiroshi Kotani, found a Toyota Aqua hybrid, also known as the Prius C, in stock. Kotani reports: On one of its seats was a document showing the vehicle was registered as a new car in the northern Japanese city of Kanazawa in December 2014. With an accumulated mileage of 975km, the car was priced at 5 million rupees, nearly 70 percent higher than a new Aqua in Japan.

The one-way love affair with used Japanese cars propelled Sri Lanka into becoming Japan’s biggest market for used passenger cars in 2015, from being the third largest market in 2014, the report shows. The report also cites data from Colombo brokerage JB Securities noting that 56,000 used vehicles had been imported into Sri Lanka last year – nearly all of them Japanese.

Exports leaped by 54% from the previous year, to 89.8 billion yen (US$787 million), the Nikkei Asian Review reports. This dwarfed the 54.6 billion yen value for second-place destination Malaysia and was close to an all-time high of 95.7 billion yen set by exports to Russia in 2013, which had topped the rankings for five straight years through 2014, the publication reports.
By volume, however, Sri Lanka was just the sixth-largest export market for used Japanese cars last year, importing 51,561 vehicles. The difference in the country’s value and volume rankings underscores just how expensive imported used vehicles there are, averaging 1.74 million yen, far higher than the 520,000 yen or so in Russia, the publication explains.

It also ponders: why are such expensive vehicles going to Sri Lanka?
One reason is that Sri Lanka restricts used auto imports to “new used cars,” those that are three years old or less. In addition, the government is keen to get more eco-friendly cars on the road. To that end, it sets excise duties on conventional vehicles up to two times higher than those on electric and hybrid ones, the publication explains.

When Sri Lanka’s demand for used cars grows, there are greater incentives for Japanese consumers to buy new cars, the report reveals. This is because when used-car prices rise, so do trade-in prices, the Japanese publication reports.

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