Bizzare bazaar: USS and the used-car craze.

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.

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Finicky Japanese consumers generally shun used cars, so unlike in the US, there is virtually no demand for secondhand vehicles. But Japan's junk is treasure in the third world. A surfeit of used Japanese cars is flowing to emerging markets from Sri Lanka to Kenya, Iraq and Afghanistan. Whenever and wherever consumers can't afford to buy new cars, increasingly they're buying old Japanese ones.

Tokyo representatives for GM, Ford and Daimler-Chrysler declined comment, but Detroit has good reason to be nervous about the tide of used Toyotas and Hondas washing into developing countries. The onslaught of exports could end up creating brand loyalty to Japanese cars in the handful of emerging markets left in the world. The dealers say that US cars--while prized for their styling and brute horsepower--are considered shoddy and unreliable, while used Japanese cars just keep on ticking. USS president Hattori is unapologetic. "The world is a big place. And Japanese cars are so reliable they can keep going for 200,000 miles. Even when they don't run anymore they can be broken down for parts," he says.

By swerving downmarket, USS expects to handle two million cars a year by 2006. The firm's flagship auction in Noda, Chiba Prefecture, is due for a facelift and is scheduled to reopen this summer on a 529,000-square-meter piece of land, enough space to bid six cars at once, seat 2,400 dealers and handle 15,000 vehicles a day.

It hasn't been all smooth driving for used-car auctions and dealers. Some countries have complained that Japan is exporting its garbage problem to countries ill-equipped to handle high volumes of superannuated steel. USS official Shigeo Hara says he is worried about the trash problem in developing countries, but argues that policing the refuse is the government's job. As long as there are new cars--and last year, new car sales here topped four million--used-car brokers are optimistic the secondhand business will thrive.

The Japanese Dream

Clipboard clamped casually in one hand, Naseer Ahmad weaves among the rows of cars for sale, the futuristic towers of downtown Yokohama gleaming like Emerald City in the distance. At 39, the Pakistani native is at the top of his game. He swiftly tracks down the prospects on his list, quickly sizing up each car's paint job and upholstery. But Ahmad is beset with ambivalence, his handsome face lined with worry and beard starting to fleck with gray. He longs to be among his own, in a country free of pork and liquor, to move his children far from the allure of McDonald's. If only there were an Islamic country as safe and as easy to earn a living in as Japan.

Ahmad's life has followed a trajectory fairly common in Japan's used-car trade: Go to Japan to study, graduate to exporting used cars. "It's very easy," he says. "You look at the car. And after, you export it." Ahmad's English is now as rusty as the exhaust pipes on an old Chevy, and he is relieved to switch to Japanese, which he speaks fluently. In fact, Ahmad in many ways is living what might be called The Japanese Dream. He married a local woman, traded in his nationality to become a Japanese citizen and came close to buying a house in the Tokyo suburbs for his wife and three kids. At the auctions he attends three times a week, he finally found the car of his dreams, a '95 yellow Mustang, for four million yen. His religious and cultural reservations aside, life has been good to Ahmad.

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His one-man company sends 30 to 40 cars a month to England and Dubai, where Ahmad maintains a showroom of 150 models. He once dealt in Japanese models but the brisk trade has attracted too many competitors, so now he deals solely in American and European marquees. On this particular afternoon, Ahmad decides to bid on a hulking '97 GM Astro Van. Dubai is merely a transshipment point for Africa and the Mideast, and chances are good the van will end up in Iraq. "For 12 years they couldn't buy anything," Ahmad notes with typical directness. "Now they'll buy anything in any conditon." With cheap gas and aid pouring in from the US, Iraqis don't worry about fuel economy, he points out.