Susan Gordon, Business Reporter

Rising demand in the emerging markets of Europe and Asia, com-bined with fluctuations in the currency markets, is driving up the price of pre-owned vehicles in Japan and having a direct impact on the pocket of Jamaican consumers who are in the market for second-hand cars, dealers here say.

In recent months, the price of used cars are risen by as much as 20 per cent, they say.

"We have a lot of emerging markets and they have been taking the lion's share (of the export of pre-owned cars from Japan) and are paying premium prices for the high-end vehicles," says Kenneth Shaw, the president of the Used Car Dealers Association of Jamaica.

Markets such as Russia and Dubai, said Shaw, are particularly active.

"They go for the three- or four- year-old cars and are competing directly with us," says Shaw.

more cars on ja roads

Since the early 1990s, the opening of the Jamaican market to the second-hand vehicles, primarily from Japan, has enhanced the ability of Jamaicans to own vehicles and led to an explosion of cars on the island's roads.

It is estimated that 19,000 vehicles come into Jamaica annually and that around 65 per cent of them, than 12,300, are used cars.

But with with the improving economic situation in former communist countries of eastern and central Europe, some of which have joined the European Union (EU), the demand for vehicles is on the rise. They, like Caribbean countries, have turned to Japan for second-hand vehicles and have been buying many top-end cars.

currency markets a reason

In the first half of this year, for instance, an estimated 200,000 Japanese used cars were exported to Russia alone.

But tight demand is not the only reason for the rising cost of the Japanese exports. The currency markets, too, have played a role.

In the case of Jamaica, the island's dollar, so far this year, has depreciated by 6.22 per cent against the greenback, the primary currency against which it is benchmark. The upshot is that it cost Jamaicans more foreign exchange for purchases denominated in U.S. dollars.

double whammy

But worse for Jamaican buyers is the fact that the Japanese yen is appreciating against the U.S. dollar. At the start of the year, the yen was averaging 120.17 to the dollar.

Now, it is closer 108.51 to the dollar - an appreciation of nearly 10 per cent.

The effect of this is that it now costs more dollars to acquire yens for purchases in Japan.

"With the yen revaluing against the U.S. and with our dollar devaluing against the U.S., we get a double whammy," says Shaw.

susan.gordon@gleanerjm.com

TAKEN FROM THE FINANCIAL GLEANER, FRIDAY, NOVEMBER 23, 2007