In Japan the main car dealers such as Toyota, Honda and Nissan only sell new cars. Used and new cars are usually not displayed on the same yard. When you trade your car in for a new one it is unlikely to stay on that dealers yard long.
Most car manufacturers have their own auctions (TAA auctions, Nissan auctions) or they have deals with the big auction companies, USS Auctions for example. USS auctions, the biggest auction group in Japan owns a company called Gulliver which is the largest trade in house in Japan. The USS auction group also produces a book of previous car sales that dealers carefully devour before setting the sell prices in the auctions. This lists every car sold in the USS auction over that last month.
Many other auctions provide used data so buyers and sellers will have an idea of potential sale price of a vehicle they are buying or selling. Used car pricing is very accurate due to the large number of vehicles going through the auctions every month.
So, when you bid on a vehicle in the auctions, expect it to sell at comparable prices in recent months. Both the sellers and competitor buyers are all looking at previous auction selling history.
What are the advantages of competition within the used car auctions in Japan, or in fact competition in any market? Here is a quote on the advantages of competition in a market:
Vigorous competition between firms is the lifeblood of strong and effective markets. Competition helps consumers get a good deal. It encourages firms to innovate by reducing slack, putting downward pressure on costs and providing incentives for the efficient organisation of production. As such, competition is a central driver for productivity growth in the economy, and hence the UK’s international competitiveness.
But, when most dealers bid on cars in the auctions through the same exporter, competition goes away. It is called a monopoly, and it does not benefit the end user, and in this case that would be the importer.
Picture this is example. It is based on the New Zealand market, where the majority of dealers purchase their cars through about 3 companies. The cars purchased by the importers are all similar.
For example 10 dealers are all purchasing cars through the same large exporter in Japan. This Japanese exporter has one membership in each of the auctions. He can not bid against himself. He must do one bid for all the interests of those 10 importers.
The car everyone is interested in is a Nissan Blubird
Here are the bids that the large Japanese car exporter gets:
The cars sells at a real bargain of 240,000yen FOB! Yes, bargains do happen.
Dealer number 3, purchases this car for 240,000yen FOB.
Of course, ALL the dealers want this car, but only one will get it. 9 dealers will go away disappointed and their competition will bring back a very cheap vehicle to sell in NZ at a large profit. This is unfair competition. The market rate in NZ will not be competitive (too cheap) and supply will be affected.
Lets say, rather than all 10 dealers buying through one company, they bought through 10 different Japanese export companies.
Now what will be the final FOB selling price in the auctions in Japan? It will sell for 450,000yen to the highest bidder. 9 other dealers will go away satisfied that this car was bought at a price higher than their own bid AND it will come into NZ and at a cost reflecting the competition from the other dealers. 10 satisfied dealers (9 that the car sold at a price above their bidding price and a 10th that he purchased a vehicle within his budget). This is market force competition at work!
Have you ever: bid on a car to find out it “sold” below your bid price with no explanation why YOU didn’t purchase it? How often does that happen?
So the ideal scenario for importers is a large number of small exporters all competing against themselves. IT IS IMPORTANT FOR AN IMPORTER TO BELONG TO AN EXPORTER WHO PROVIDES COMPETITION WITHIN THE AUCTION, not amongst it’s own customers. That is, the less the number of customers competing within that same company for the same market, the better.
Provide Cars is a small company with customers from various markets. We do not have a conflict of interest that biases our customers against their desired purchases.
The export timeline. So which one is faster? Buying from a dealers stock or buying from the auctions.
First of all we need to understand the process of exporting a used car out of Japan.
- A car is purchased by an exporter, agent, Japanese used car dealer, and in our examples case, Provide Cars.
- The documentation is usually sent and arrives at Provide Car’s office within a week of purchase. Let’s say a week, though there are exceptions.
- The car’s deregistration document (or registration document if it is still registered) needs to be changed to an official “export deregistration document”. This means some documentation writing then a visit to the local “Rikunkyoku” or local city car registration office, with documentation in hand and number plates in hand (if it was still registered). If you have a dot missing or a “t” uncrossed then forget about any success that day! In Japan there are no exceptions, every “t” crossed and every “dot” dotted. If you manage to succeed in getting your “export deregistration certificate”, then you are ready for the next step.
- Ship booking. Yes, Provide Cars can only book a car on a ship if you have your “export deregistration certificate”. Plus, you must book at least one week before the boat leaves. Some countries there is only one boat per month, so if you miss this by a few days… well that is a pity!
- Send documentation to the export yard for customs clearance. The cars export certificate must be sent to the shipping line’s agent to clear customs on the Japan side. Included with this a various other documents.
- Nothing goes wrong and the car is sent/exported to your port.
- Documentation is received back from the export yard to Provide Car’s office.
- The original “Bill of Lading” is received from the shipping line.
Now what in this process differs from buying from a dealers stock and buying from the auction through Provide Cars?
The dealer has usually purchased his stock a few days to weeks or even months before he sells it. This means most times he has the de-registration document available.
Compared with buying directly from the car auctions, the delay will be perhaps a week after the decision to purchase from a car dealer.
Now add onto this payment. A Japanese used car dealer will not book a car for export until the car has been paid for. Often a TT transfer will take a few days, even up to 5 days, that is basically the time it takes to purchase a car from the auctions and have that cars documentation arrive at Provide Cars office.
So essentially, the time it takes from the moment of purchase, whether from a used car dealer’s stock or from the auctions, to the moment of export, is the same.
So in terms of time saved, there is no issue between purchasing from a dealer stock or purchasing from Provide Cars through the auctions in Japan.
You will get the best price, especially if you are patient. Exporters, Japanese car dealers all buy from the auctions for their stock as that is the cheapest place to purchase a vehicle in Japan. It is purchasing at the wholesale rate, rather than the retail rate as through a dealers stock page.
- Large Selection of Vehicles to Choose From
The larger the selection of vehicles there is to chose from the better it is for the buyer. Getting 10 vehicles the same colour with a variety of kms on the clock means you have a variety of prices being sold and hopefully finding the one that fits into your budget. Having the same model in a variety of years also helps to gain the right vehicle into your budget. For example a 2005 Toyota Estima is the same model as a 2006 Toyota Estima, though with all other factors the same, the later will sell at a higher price in the auctions. Basically the more to choose from, the better the vehicle will be.
- Time frame
Because we can only see the vehicle 2 or 3 days before it sells, the time frame to decide whether to purchase or not is limited.
Most auctions only show 2 or 3 photos of a car before it sells, often these are at a distance. Compare this to a dealers stock, where he may have up to 20 photos of a vehicle on his stock page.
A lot more has to rely on the auction sheet when purchasing from the auctions.
So there are the advantages and disadvantages for purchasing from the Japanese car auctions. For price and variety, definitely the auctions. If convenience is a strong value of yours over savings then your best bet may be to purchase from a dealer stock page.
Car passed. Negotiation, what to do?
The whole realm of “negotiation” after a car has passed in the Japanese used cars auctions not many bidders seem to understand the whole process. Some of them want to:
- Offer a bid under the passed bid price! (No sorry that will not work, (the auction will not even receive such an offer)).
- Offer a bid AT the passed price. Getting closer now, BUT, every Japanese car auction has set RULES that state at what price negotiation can start from.
- Ask to negotiate the next day or even the next, next day after the auction. The Japanese used car auctions have set rules on exactly what time limits you can negotiate from.
- Some customers would like to negotiate through the auctions and then perhaps withdraw their offer if they “change their mind” afterwards. Sorry not possible, negotiation purchased cars, unlike normal purchasing through the auctions, can not even be cancelled!!
Here are the basic rules.
After a car has passed in the auctions, you are allowed to negotiate, however, you must negotiate according to the rules of the auctions. This means in USS auctions you must negotiate at least 30,000 above the pass price. Other auctions, we ring and ask what price the seller wants to start negotiation from. Other auctions it is 10,000yen above the pass price. Every Japanese used car auction has it’s rules, and there is no compromise from those rules.
Order of negotiation. You may be willing to negotiate higher than another bidder. However, if the other bidder has their negotiation in BEFORE you, they have buying rights OVER you.
Time limits. Some auctions allow up until 12pm the following day for negotiation. However, if the auction can not contact the seller, there is no negotiation. Other auctions in Japan only allow until the end of the auction and others only a certain amount of time since the car passed.
Unlike most purchases in the Japanese used car auctions, where you can cancel a car purchased within the first hour of purchase or sometimes before the auction closes, for a large fee, negotiated cars can not be cancelled. You negotiate, you own, period.
Many people buy cars from Japan by going to a dealers homepage, looking at the stock item then buying.
Did you know this is “retail buying”? Did you know you could save $100s of dollars and probably even $1000s of dollars if you bought wholesale?
Buying wholesale is buying from the “source”, buying from where the Japanese exporters buy from!
These are the Japanese used car auctions.
Shhh. Don’t tell everyone though! You want your competitors to keep on buying from a Japanese exporters stock page!
Now is the time to buy!
In the Japanese used car auctions vehicles increase this time of year. If vehicles increase this time of year, then due to the law of supply and demand, the auctions become over-supplied, and to sell a vehicle you have to accept a lower price. All the better for the buyers in the auctions (as well as the exporters and in your case the importers).
So why the increase in vehicles in the Japanese used cars auctions this time of year?
- The end of the financial year for many companies, especially used car dealers in Japan. This is stock take time of year and a good chance to re-auction cars that have not been selling. Also other companies, also at the end of their financial year, replace vehicles regularly, especially at the end of the financial year.
- Private owners of vehicles must pay in May, the annual car tax. This is no small amount of money that must be paid during May. This is where the decision makers of the household will decide whether to keep their vehicle for another year or trade it in at a local trade in company (Gullivers used car trade in is the largest). The Japanese public, not being card holding “car dealers”, do not have the ability to sell their vehicles into the Japanese used car auctions, it all must go through a dealer.
These car taxes can be quite high. They increase for the engine size of the vehicle:
|Less than 1000cc||29500yen|
|Between 1000 and 1500cc||34500yen|
|1500cc to 2000cc||39500yen|
|2000cc to 2500cc||1,45000yen|
|2500cc to 3000cc||51000yen|
|3000cc to 35000cc||58000yen|
|3500cc to 4000cc||66500yen|
|4000cc to 45000cc||76500yen|
|45000cc to 6000cc||88000yen|
You may need to check your chassis wall to check the number hasn’t been replaced if you have one of the following top 7 stolen vehicles from Japan:
Although Toyota Hiace had the largest number stolen, as a percentage of the total sold that year, it was most dangerous last year to drive a Toyota Celsio, of every 1000 registered in Japan, 6 were stolen.
The second most dangerous car to drive in Japan last year was a Toyota Landcruiser with 4.6 cars stolen in every 1000 registered in Japan.
Was it your country? Let’s look at the top 25 countries that imported used cars from Japan in 2012. Of course, Myanmar was there, but was it number one? Take a look below: