For more than seven years and just under 100,000 km, we’ve driven our Noah Hybrid like the lackluster workhorse Toyota intended it to be. The exterior of this five-door minivan bears the scars of countryside scrapes and urban bumps, while its interior is a rich collage of smears and spills.
Normally, the trade value of our weary but rock-solid friend would be something close to zero. In Japan, the cost of meeting the country’s rigorous testing — 60-part technical checks by government-approved inspectors every two years — can run into the thousands of dollars beyond a car’s seventh year ( a deliberate policy to increase the number of new car sales). Thus, the attractiveness of a vehicle on the local second-hand market collapses.
But, as our Toyota dealer confirms, we are far from ordinary times. So much so that the mobile phone business of struggling Japanese tech group SoftBank, seeing a company that can deliver immediate growth, threw its artificial intelligence prowess at the lackluster used-car game.
It’s a weird time and hard tech is at its root. A global shortage of semiconductors remains unresolved, along with a wider disruption in the parts and materials supply chain, particularly aluminum. As a result, says our dealer, if we order a brand new Noah today, it could arrive in 13 months, if we’re lucky.
The silver lining is that while our car’s previous trade-in value might have been less than ¥100,000 ($700), this dealer will now offer us 10 times more if we commit to buying a new Noah when it arrives. finally end of 2023. Plus, we can drive the old Noah until the new one arrives, and its inflated value stays fixed, no matter how many extra miles we put on the clock – or how many strokes we we add. Because not only have used car prices jumped around 30% in one year in Japan, but – in this spike – older cars like mine now have a national value they never could have. achieve in the past.
That’s what attracted SoftBank, whose $100 billion technology Vision Fund backs Carro, a Singaporean startup that deploys AI to calculate the value of used cars. Previously, used cars in Japan were mainly sold in emerging markets, where vehicle history matters less. (Last year, 1.2 million cars were exported, with Russia the main destination before its invasion of Ukraine.) Now cars like our trusty Noah are more likely to spend the rest of their lives in the Japan, where these stories matter a lot more. Therefore, technology capable of quantifying this history has tangible value.
Last week, using Carro’s software, SoftBank mobile launched a service where customers looking for a used car can pay a flat-rate subscription to rent and drive one. AI matches fees to required car specs, prices and history – the main challenge being matching used cars to customers previously accustomed to buying new. All those bumps and spills that wouldn’t have mattered to our Noah’s rating before will now be rated by the AI. And SoftBank will do its part for bringing buyers and sellers together on its platform.
Initially, it will be for companies, but it is planned to extend it to individuals in the long term. In the process, SoftBank’s technology has set a standard that this new emerging market must meet. The technology may have upended Japan’s auto industry, via semiconductor shortages, but it may also have found a quick fix.
Leo Lewis is the FT’s Asia business editor
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