High oil price & Japanese reaction

The other day I read in a Japanese newspaper that more people are saying “Good-bye” to their cars because of the recent rise in oil price. I thought this might interest you, so I am going to write about it.

According to one of the major newspaper companies’ surveys on consumers aged between 20s and 60s, it shows its findings as follows: 53% of car owners reduced their car usage from last year, more people stopped going out of town to do shopping or for an outing, 20% were saying they would stop using cars if the price reached JPY200/litre. The top answer for activities people do less or totally stopped doing was “short distance drive for leisure” (37%), then “Going to out-of-town shopping centre” (34%) and “Driving for eat-outs” (27%). This has a strong link to the sluggish sales in big shopping centres and restaurants. 14% of the people gave up their domestic travelling this summer. On the other hand, 37% said that they are spending more time at home on holiday. Some people would rather hibernate in their nests! 38% said that they will stop using cars and 14% are going to farewell theirs once the oil price hits JPY250/litre. The numbers who want to purchase a car has dropped from 49% to 40% of all the respondents within 6 months.

As this type of survey show, a high oil price is keeping more people away from cars and used car dealers in Japan are struggling with sales.

At JPC, we sell cars in Japan as well as exporting them overseas but from late June this year the number of enquiries regarding purchase has been reducing, whereas more people want to sell their cars. This is also affecting car auctions too. May to July is usually the best time of the year when a large number of used cars make sale but this year there is not enough numbers of buyers. Some cars end up with no bids. Apart from some compact cars, it is mostly a buyers’ market. Some sellers have to accept incredibly low prices and more cars are being sold cheaper than usual. If oil prices go back to normal in a few months time and the demand bounces back, you might regret not having bought a car now.

It does not look like this sort of thing affects auction places directly but it has, greatly. Even at USS Tokyo, the biggest car auction place in the country, they are facing difficulties of getting enough cars on the list. You know, the business model at auction is like this: firstly someone who wants to sell his/her car list it up for auction paying the fee, then buyers place bids and whoever wins the auction pay his fee and the seller has to pay the success fee to the auction place. So for each car sale, they get 3 fees. However if less people list their cars, the auction places’ profit unfailingly drops. So USS Tokyo expanded their business from this June to two-wheeled vehicles and heavy construction machines. Also, they usually have a week off in the middle of August every year but this year they are going to have a special auction on Tuesday of their holiday week (their auction is usually on Thursdays). Making around JPY300,000,000 from each auction, they suddenly decided to have an extra auction to make up for the loss in their profit.

However, a dealer I met at USS Tokyo auction the other day said he was not going because no one goes there when it is the “Obon” season. He reckon no one wants to sell their cars especially during the festive season of the year, so there will not be many cars; even if they have some good ones listed, there will not be much merit. It seems to me that they were only thinking about themselves not us the affiliated retailers.

Please note that we are having our summer break between 11 and 16 of August. Thanks!


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★ JPCTRADE Home page : http://jpctrade.com/
★ JPCTRADE Blog : http://jpctrade.blogspot.com/

(Editor)
JPC TRADE CO.,LTD.
Kato building 4F, 1-1-2 Furuishiba, Koto-ku, Tokyo
Japan Used Motor Vehicle Exporters Association (JUMVEA)
TEL : +81-3-5245-7731
FAX : +81-3-3643-4955