Before the 1990s, made-in-Russia vehicles filled the streets of Ulaanbaatar. Today, one can see hardly any Russian cars among Ulaanbaatar’s 70,000 vehicles, except off-road vehicles like UAZ jeeps, still favored by many off road drivers.

Ulaanbaatar’s motor vehicles range from cheap, small sedans to big off-road jeeps, many of which were imported from South Korea and Japan. No traffic laws exist to limit today’s mixed traffic of both left and right-hand driven cars.

According to foreign trade statistical figures from the first ten months of last year by the General Customs Office, Mongolia imported 99 motor vehicles from the U.S., 102 from Germany, 379 from Russia, 73 from UK, 18 from China, 3 from Sweden, 2,660 from South Korea, and 7,628 motor vehicles were imported from Japan.

Imported cars are subject to customs tax and excise tax. The government imposes excise tax on imported cars depending on their cylinder capacity and year of production.

Source: Excise Tax Law

Although the world’s big companies, Toyota, Hyundai, Nissan, Suzuki, Ford, Mercedes Benz, and BMW, have authorized sales agents in Mongolia, people still prefer driving cheaper and used cars.

“Many Japanese used car exporter companies expressed their interests in cooperating on sales in the Mongolian market, which is rapidly growing,” said a businessman of an auto trading company.

“But our government lacks attention and checks on the imported cars whether they are stolen cars. The government only cares about collecting taxes. We [importers] don’t declare the price of vehicles truly because the customs tax is high.”

Japan exports used vehicles to over 180 countries; the largest markets are Russia and New Zealand, according to Japan Used Motor Vehicle Exporters Association. “In the future, further increases of Japanese used export are expected, especially to developing countries,” noted Hiroshi Sata, chairman of the association.

“We sell used Toyota Mark II for US$5,000, Land Cruiser US$25,000, Mitsubishi Pajero for US$9,000, and Toyota Raum for US$4,500. Buyers like Japanese ones because of safety, but the spare parts are more expensive than Korean ones,” said a retailer of Dako Auto, one of the largest auto vehicle importing companies in Mongolia.

In an effort to promote automobile manufacturing in the country, the government committed to not charge any excise tax on exporting cars, which were manufactured in Mongolia, by the Excise Tax Law of Mongolia.

Up till today, this sector is still vacant, awaiting potential investors.

“We have no record of this type of proposal submission. If someone foreign investor proposes, we will support it,” said an officer of the Mongolian Chamber of Commerce and Industry.