How does a large-scale disaster impact on the used-car market? A case study of the Great East Japan Earthquake and Tsunami

Abstract

The aim of this paper is to examine how a large-scale natural disaster impacts on the used-car market. This paper particularly tries to clarify what type of cars and what kinds of car features were demanded in damaged areas and when. We conduct a case study on the Great East Japan Earthquake and Tsunami of 2011 and compare the used-car prices in damaged areas and non-damaged areas. The finding of this paper is that after the Great East Japan Earthquake and Tsunami, cheaper used cars and used cars with larger carrying capacity were needed in damaged areas. In addition, we find that car types which people in the damaged areas needed depend on the phase of recovery.

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Source: Created by the authors based on the data of our analysis provided by Proto Corporation

Fig. 7

Source: Created by the author based on the data of our analysis provided by Proto Corporation

Notes

  1. 1.

    A Japanese category of light motor vehicles whose engine volumes are 660 cc or less.

  2. 2.

    Fukushima prefecture was also one of the most damaged areas but was excluded from our target data because Fukushima prefecture suffered more from Fukushima Daiichi nuclear disaster and should be analyzed separately.

  3. 3.

    Chugoku consists of five prefectures; Yamaguchi, Shimane, Tottori, Hiroshima, and Okayama.

  4. 4.

    National Tax Agency https://www.nta.go.jp/taxes/shiraberu/saigai/higashinihon/tokurei/jidosha_01/index.htm.

  5. 5.

    To directly analyze demand for used cars, data of individual selling data would be the best but, to our best knowledge, there is no such available data.

  6. 6.

    Although, as far as the authors knows, there is no available used-car data which can be used in this study, it should be noted that our dataset might have bias because we only depended on used-car data sourced from one company.

  7. 7.

    Before the main analysis, with the aim of showing demands for each body type before the disaster in both damaged and non-damaged areas, equation [1] is applied to the 2010 data to estimate the regional dummies (Ri). The result shows that the regional dummies of LR and LC and LT had statistically positive effects on the prices of their respective prices. On the other hand, the regional dummies of CS, HB, OC, SD, SU, WG, LA, HT, BB had negative effects on the prices of their respective prices. In our analysis, we investigate how these price differences changed after the disaster (e.g., whether these differences did not change, or theses differences became bigger). Haan and de Boer [6] found the effects of the Internet has eliminated regional price differences in the used-car market in the Netherlands, but our study assesses diachronic changes of regional price differences before and after the disaster.

  8. 8.

    We calculate the effect size of regional dummies by Cohen’s f. \( Cohen^{'} s f = \frac{{\left( {\left( {R \times 1 \times 2} \right)^{2} - \left( {R \times 1} \right)^{2} } \right)}}{{\left( {1 - \left( {R \times 1 \times 2} \right)^{2} } \right)}} \). where \( \left( {R \times 1 \times 2} \right)^{2} \). is our model with all of the variables, and \( \left( {R \times 1} \right)^{2} \) is the model without the regional dummies.

  9. 9.

    Attributes of used-car buyers could be a different variable that explains each body types’ prices but there is no such personal data to include in our model. However, the high value of the adjusted R2 suggests that the variation in used-car prices can be explained well by the variables included in our model.

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Acknowledgements

An earlier draft of this paper was presented at the 74th Conference of Japan Economic Policy Association, Asia University, May 28th, 2017. The authors would like to thank the session chair, commentators, and participants at the conference for giving constructive comments and advices. This study was partially supported by the research grant ‘Proto Award,’ which the first author received. We would also like to show our gratitude to Proto Corporation who provided various used-car market data, financial support, and expertise. This study is also partially supported by Graduate Program for Social ICT Global Creative Leaders, in which the authors participate.

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Correspondence to Yuya Shibuya.

Appendix

Appendix

See Tables 9, 10, and 11.

Table 9 Statistical summary of Eq. (1) (for three-year pooled data)
Table 10 Estimation Result of WG, LR, BV, LC, and LT
Table 11 Correlation tables for independent variables included in the model (3-year pooled data of WG, LR, BV, and LT)

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Shibuya, Y., Tanaka, H. How does a large-scale disaster impact on the used-car market? A case study of the Great East Japan Earthquake and Tsunami. IJEPS 13, 89–117 (2019). https://doi.org/10.1007/s42495-018-0003-6

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Keywords

  • Used-car market
  • Used-car supply
  • Disaster logistics
  • Great East Japan Earthquake and Tsunami

JEL Classification

  • D12
  • L62
  • H12