Bizzare bazaar: USS and the used-car craze

Japan, Inc., May, 2004 by Lucille Craft

JAPAN'S leading carmakers are expanding their reach into the US. But even in the poorest corners of the planet the Japanese are gaining a large and loyal following, thanks to a brisk trade in secondhand cars.

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ONCE UPON A TIME, about the only customers in Japan for used cars were scrap dealers. But in recent years huge, high-tech bazaars have emerged across Japan, efficiently dispatching Japan's unwanted cars, trucks and buses to dealers who in turn channel the vehicles to everywhere from Barbados to Burma.

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"Used cars are still quality cars. They can be driven three or four years. Every right-hand country in the world is taking these cars now," says Mike McCarthy, owner of Proficient Export Services in Nagoya, and a regular participant in the USS Company Nagoya auction, which runs until almost midnight every Friday.

Steven Bennington, another dealer in Nagoya, says Africa, South America, Russia and the Caribbean--even Iraq, Iran and Burma--eagerly snap up used Japanese cars. But the 15-year-old veteran says he has his hands full exporting to England, Ireland, Australia and New Zealand.

Introducing one of the hottest businesses in Japan right now--used-car auctions. It may not be as glamorous as robots or IT, but hyper-efficient auctions, such as those run by industry leader USS, draw buyers by the thousands. It's an auction without human auctioneers, hammers or gestures. Bidding is performed in silence, by the click of a button. An endless parade of sedans, compacts and SUVs for sale are displayed on the screen for a matter of moments, before an accelerated flurry of button-jabbing decides the new owner. In an average of 20 seconds, it's going, going, gone.

"Under the old-fashioned system of human auctioneers and bidding by hand signals, if we started at 10 a.m. and finished at 5 or 6 p.m., we would only have time to sell 350 cars a day," says USS president Futoshi Hattori. But with the point-of-sale system, volume suddenly surged into the thousands. Formerly each car was driven onto the arena floor, but to save time the company simply snaps digital photos of each vehicle and projects the images on massive screens at the front of the auctioneer-less auction hall, and via personal monitors installed at every dealer's seat; the newest auction site in Yokohama, opened in February, has room for 1,300 dealers. "With the point-of-sale system and by using video displays of the cars, our biggest auction site [in Chiba] can move 11,000 cars a day," boasts Hattori, calling his system the world's fastest.

The 82,000 square-meter Yokohama site--down the road from the national fuel-cell demonstration hydrogen station--was previously owned by Cosmo Oil, a gritty industrial estate built on land reclaimed from Yokohama Bay in the city's Tsurumi Ward. So many tractor-trailers are roaring past on the double-decker highway it's impossible to look at the road without getting an eyeful of dust. But to USS spokesman Shigeo Hara, the location is as good as it gets: "We're close to Haneda Airport, the harbor--we have the best access here of any auction site."

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USS is short for the techie-sounding "Used car System Solutions," but the acronym originally stood for something considerably less high falutin'. Back in 1980, "USS" was President Hattori's own sober assessment of the firm's tenuous existence: Used car Scramble Survival. The company, which once had to plead with supermarket owners to temporarily lend their vacant lots for auctions, gained a new lease on life with the adoption of high tech in the fall of 1982.

Under the old system, "once the auctioneer got to know the buyers, he would favor the regulars and ignore bids from the rest," says Hattori. Searching for alternatives, he learned that Fujitsu had developed a point-of-sale auction system for meat, involving suspending numbered sides of beef and pork from the ceiling.

"At first it was difficult to get people used to it," he says. "But younger (Japanese) grew up on video games, and they embraced this system."

At USS's 12th and newest site, in Yokohama, vice president Shigeo Hara showed off amenities such as a prayer room, complete with foot-washing area, for Muslim dealers. The company is also considering adding lamb to the menu at its complimentary cafeterias. Of the 30,000 dealers who have registered with USS and are eligible to bid, Hara reckons about 1,000 are non-Japanese, concentrated in the Tokyo area and Nagoya, where the firm is headquartered.

In fact, perhaps no other legal profession in this country is as wide open to foreigners as the used-car business. Men from Pakistan, Sri Lanka, the UK and scores of other countries--some without Japanese language skills or the start-up guarantee money usually required to register as a bidder--flock to the countrywide used-car auctions held by USS, Ikeda and other companies.

A Japanese sedan with 60,000 miles on it can be had for just $2,000 here. Older models with more mileage--so-called ELVs, for end-of-life--and "recycle" cars, or junkers, are practically given away. In 2003, Japan's used-vehicle exports rose to an estimated record one million units.