USS Co.,Ltd.

Business Details

Operates Auto Auctions across multiple venues nationwide, with membership open to used vehicle dealers. Also offers auction connection services via the dedicated terminal "USS JAPAN" and the internet-based "CIS," used vehicle information services, transport brokerage for listed and purchased vehicles, financial services for members, and bike auctions (Japan Bike Auction). This is the flagship business, accounting for approximately 79% of Group revenue, with a highly profitable base boasting an operating margin exceeding 65%.

Recent Overview

Vehicles listed and contracted both increased by approximately 9%, and the bidding fee revision also contributed to higher revenue and profit.

In FY2026 (ending March 2026), the Auto Auction segment expanded steadily, with vehicles listed at 3,504,437 (up 9.4% year on year) and vehicles contracted at 2,347,566 (up 9.4% year on year). The contract rate held at 67.0%, roughly in line with the prior period. The revision of USS JAPAN's bidding fee (from ¥14,232 to ¥14,855 per vehicle, up 4.4% year on year) increased auction fee income, resulting in external customer revenue of ¥89,702 million (up 9.6% year on year) and operating profit of ¥58,584 million (up 10.0% year on year). The company continued active capital investment, including the rebuilding of major venues and the addition of multi-story parking structures, with the increase in tangible and intangible fixed assets reaching ¥10,743 million (up 177.5% year on year).

Key Products

Growth Drivers

• Increase in vehicles listed and contracted (expanding market share amid an overall market listing volume of 8,013 thousand vehicles, up 5.1% year on year)
• Increase in auction fee income due to the revision of USS JAPAN's bidding fee (up 4.4% year on year per vehicle)
• Expansion of CIS registered members (up 3.2% year on year to 36,279 companies) and increase in On-site Auto Auction registered members (up 2.1% year on year to 49,176 companies)
• Capacity expansion and market share gains through active capital investment such as rebuilding major venues and adding multi-story parking structures
• Support for auction listing demand from the expanding used vehicle export market (up 10.1% year on year to 1,738 thousand vehicles)
• Forecast for FY2027 (ending March 2027): vehicles listed of 3,560 thousand (up 1.6% year on year) and total Auto Auction operating revenue of ¥93,000 million (up 3.7% year on year)

Risks

• Continued sluggishness in new vehicle registrations (4,533 thousand vehicles in FY2026, down 0.9% year on year) affecting used vehicle supply and auction listing volumes
• Uncertainty over the outlook for domestic new vehicle sales due to supply chain disruptions amid escalating tensions in the Middle East
• Increase in depreciation expenses associated with rebuilding major venues and adding multi-story parking structures (segment depreciation expense of ¥4,396 million in FY2026, up 7.4% year on year)
• Risk of a shrinking membership base for the dedicated terminal service, as seen in the slight decline in USS JAPAN registered members (down 0.9% year on year to 1,946 companies)
• The flat contract rate (67.0%) suggests limits to the growth rate of contracts relative to increased listings, along with a risk of a declining contract rate (forecast at 66.3% for FY2027)
• Member reactions to fee revisions for internet- and dedicated terminal-based services, and price competition with other companies

Business Details

Comprised of two businesses: the used vehicle purchase and sale specialty store chain "Rabbit" (18 directly operated stores and 124 franchise stores, 142 in total) operated by Rabbit Car Network Co., Ltd., and the Purchase & Sale of Accident Vehicles As-Is business. This segment handles the downstream area of the used vehicle distribution market and is positioned to secure stable earnings while pursuing synergies with the Auto Auction business. Although this segment accounts for approximately 11% of overall Group revenue, its operating margin remains at a low level in the 3% range.

Recent Overview

Revenue was slightly lower, but operating profit rose 37.7% year on year due to improved gross profit per vehicle

In FY2026 (ending March 2026), revenue was ¥12,470 million (down 1.4% year on year) and operating profit was ¥380 million (up 37.7% year on year). Used Vehicle Purchase & Sale saw higher revenue due to elevated auction market prices but lower profit due to a decline in vehicles sold, resulting in higher revenue but lower profit. Purchase & Sale of Accident Vehicles As-Is saw a decrease in revenue due to fewer vehicles sold but higher profit due to increased gross profit per vehicle. The number of directly operated stores increased by two, from 16 to 18, while franchise stores decreased by one, from 125 to 124, bringing the total to 142 stores.

Key Products

Growth Drivers

• Expansion of directly operated stores (18 at the end of FY2026, up 2 stores year on year), strengthening the Rabbit brand
• Improvement in gross profit per vehicle in the Purchase & Sale of Accident Vehicles As-Is business (achieving higher profit despite a decline in vehicles sold)
• Synergies with the Auto Auction business (utilizing bidding market information and managing procurement costs)
• Steady trend in used vehicle registrations (6,507 thousand vehicles in FY2026, up 0.6% year on year)

Risks

• Risk of lower revenue due to declining vehicle sales volume (both Used Vehicle Purchase & Sale and Purchase & Sale of Accident Vehicles As-Is saw declines in vehicles sold)
• Risk of fluctuations in gross profit per vehicle (earnings are affected by changes in auction market prices and procurement costs)
• Vulnerability of the earnings base due to the low operating margin (3.0%)
• Risk of spillover effects to the used vehicle market from sluggish new vehicle registrations (4,533 thousand vehicles in FY2026, down 0.9% year on year)
• Low strategic priority within the Group, with resource allocation potentially limited under the policy of concentrated investment in the Auto Auction business

Business Details

Comprised of two businesses: the Resource Recycling Business, handling scrapped vehicles and metal scrap, and the Plant Recycling Business, which serves as the main contractor for equipment and plant decommissioning. The company positions the appropriate processing of scrapped vehicles, in synergy with the USS Group's used vehicle distribution business, as one of its key management priorities in contributing to the global environment. Although this segment accounts for a relatively small approximately 9% of overall Group revenue, its performance is influenced by trends in non-ferrous metal market prices and orders received for large-scale demolition projects.

Recent Overview

Led by the Plant Recycling Business, revenue increased 22.4% and operating profit increased 24.1%, achieving higher revenue and profit

In FY2026 (ending March 2026), the Recycling segment recorded external customer revenue of ¥10,292 million (up 22.4% year on year) and operating profit of ¥673 million (up 24.1% year on year). The Resource Recycling Business saw higher revenue due to the upward trend in non-ferrous metal prices, but profit declined due to increased depreciation expenses. The Plant Recycling Business achieved higher revenue and profit due to an increase in large-scale demolition orders received. Note that a fire occurred at a plastic recycling plant in November 2025, but operations have resumed except for some equipment. The forecast for FY2027 (ending March 2027) projects revenue of ¥12,000 million (up 16.7% year on year).

Key Products

Growth Drivers

• Increase in large-scale demolition orders received in the Plant Recycling Business (up 42.3% year on year in FY2026, with a forecast of a further 38.4% year on year increase in FY2027)
• Revenue growth effect in the Resource Recycling Business from the upward trend in non-ferrous metal prices
• Continued policy of strengthening the business given its positioning as a contributor to the global environment through the appropriate processing of scrapped vehicles
• Synergies with the Auto Auction business (capturing demand for scrapped vehicle processing)

Risks

• Risk of deteriorating profitability in the Resource Recycling Business due to a decline in non-ferrous metal prices
• Risk of fluctuations in the Plant Recycling Business due to a decrease in the number of large-scale demolition orders received
• Operational risks such as equipment aging and fires (a fire occurred at a plastic recycling plant in November 2025, with operations resumed except for some equipment)
• Risk of profit pressure from increased depreciation expenses (¥558 million in FY2026, up 26.2% year on year)
• Possibility that resource allocation to the Recycling business may be limited, as the Group's overall strategy prioritizes concentrated investment in the Auto Auction business

Business Details

The "Others" segment consists of businesses not included in the reportable segments (Auto Auction, Purchase & Sale of Used Vehicles, etc., and Recycling). Specifically, this includes the Auto Loan Business for general consumers and the electricity sales business through solar power generation systems, among others. This segment is small, accounting for approximately 1.2% of overall Group revenue (in FY2026, ending March 2026), and is positioned to complement the core Auto Auction business.

Recent Overview

In FY2026 (ending March 2026), both revenue and operating profit increased substantially year on year

In FY2026 (ending March 2026), the "Others" segment achieved substantial growth in both revenue and profit, with external customer revenue of ¥1,388 million (up 24.1% year on year) and segment profit of ¥61 million (up 165.2% year on year). Segment assets also expanded to ¥10,847 million (up 9.2% year on year). The increase in tangible and intangible fixed assets was ¥30 million, down from ¥99 million in the prior period, indicating a somewhat restrained level of new investment.

Key Products

Growth Drivers

• Expansion in the number of auto loans handled and increased loan origination opportunities through synergies with the Auto Auction business
• Steady auto loan demand supported by the resilient trend in used vehicle demand
• Continued stable electricity sales income from the solar power generation business

Risks

• Increasing credit risk in the Auto Loan Business (an increasing trend in the allowance for doubtful accounts)
• Low likelihood of being upgraded to a reportable segment within the Group, with low priority given to management resource allocation
• The solar power generation business is exposed to fluctuations in electricity market prices
• The segment's small scale (revenue accounting for approximately 1.2% of the total) limits its impact on overall Group performance