A step-by-step guide for figuring out the used car market!

February 21st, 2012By Category: Uncategorized

With some three million used cars sold annually in Japan, the vast number of vehicles available to buyers can be confusing. Whilst the level of courtesy and service offered is generally of a high-standard, buyers may be confused by the whole buying process.

While cars seem relatively cheap in Japan, buyers need to be prudent in their search as vehicles listed at dealerships and online can be misleading.

This article provides details of all costs incurred by buyers, elimating the hassle of understanding estimates and how each of those costs are calculated.

Six simple steps to understanding the process

1) Obtain a valid Japanese Drivers License,
2) Understanding the estimate and how those additional costs are calculated,
3) Benefits of purchasing new or used,
4) Required documentation for registration,
5) On-going costs associated with owning a car,
6) Important notices for drivers

Why do I need a Japanese license?

If not already in possession of one, those who wish to drive long-term in Japan need to convert their International license to a Japanese drivers license before it expires. Whilst an International Driving Permit will allow foreign residents to drive for up to one year in Japan, the process of obtaining a Japanese license can be a laborious affair. Depending on the country of issue, license holders may be required to undertake both a written and practical exam. Examiners are notorious for being ‘strict’, and it’s not uncommon to fail numerous times without third-party assistance.

But the list price states….!

Browsing online or through the forecourt of any given dealership, one might be surprised at how relatively cheap vehicles are in Japan. Whilst on the surface this is true, vehicle list prices in Japan can be misleading as they only include the cost of the car and consumption tax. When inquiring about any particular vehicle, buyers will be represented with an estimate, which will include a long list of additional costs.

So what are these additional costs…?

Typically, additional costs come in the form of taxes, insurance, actual costs, miscellaneous fees and proxy fees, though all of the above may not be included in any initial sales estimate. Below is a sample of a vehicle estimate along with brief details of each additional cost and how they are calculated.

Automobile Tax

Based on the engine size of a given vehicle and allocated in increments of 500cc. Annual fees are payable pro rata if purchased after April.

Acquisition Tax

Vehicles calculated to have a value exceeding 500,000, are subject to pay tax at a rate of 5%, using the formula: ((New Price – Consumption Tax) x 0.9 x 0.xxx) > 500,000)

Weight Tax

Based on the given curb weight shown on the vehicles shaken certificate in increments of 500kg, payable at the time of shaken renewal.

Compulsory Insurance

Mandatory third-party insurance covering the length of shaken, payable at the time of shaken renewal.

Recycle Fee

A fee for disposal (or shredding) of vehicles is payable by the vehicle owner, which in turn is transferred upon the sale of the vehicle.

Other Fees

In addition to the numerous taxes and fees highlighted above, other fees attributed with a sale include, but may not be limited to: Proxy Fees for Vehicle Registration, Miscellaneous Overhead Costs and Delivery Fees. It’s worth noting that such fees differ wildly depending on where vehicles are purchased from.

Should I buy New or Used?

Other than having the ability to refine a vehicle to your own tastes, one of the main benefits to purchasing a new car is the ability to pay in instalments in the form of a loan. Unfortunately, as there are only a few establishments offering loans to the foreign community, such benefits may not be applicable to all individuals. Check with each individual dealer for details.

Another alternative is to acquire newly registered vehicles, or shin-ko-sha as they are known in Japanese. These pre-registered vehicles tend to have limited mileage (anything from as little as 1km) and are generally sold through the wholesale auction houses. In some cases, buyers can make substantial savings on these near brand-new vehicles.

Wholesale…
Found a car at your local dealership that catches your eye? Chances are, it like so many other vehicles, was purchased through the dealer network auctions. With USS Auction alone accounting for around a third of all used car transactions, vigilant buyers could pocket substantial savings by purchasing direct from auction.

With thousands upon thousands of vehicles going under the hammer each week, not only do buyers have access to a large pool of vehicles at wholesale prices, but can leave the whole buying process in the hands of experienced buyers.

The Private market…
While most popular vehicles can be sourced through the auctions, it can get somewhat more difficult when seeking out older, rarer models. Whilst the private market in Japan is under developed, there are a select few avenues through which private owners can buy and sell vehicles receiving substantially higher returns than the standard trade-in offered at the dealers. It’s also worth noting that payment of consumption tax is not required when a sale is made between two private individuals.

I’ve decided on a car, what next?

Registering newly acquired vehicles in Japan is, unfortunately, not without its complications. In order to change the title of ownership, buyers will need to obtain numerous documents in addition to those forwarded by the selling party. The basic documents required to transfer a vehicle between two individuals is as below:

  • Copy of Alien Registration available from the local city hall
  • Seal Certification available from the local city hall (Signature Certification from Embassy/Consulates acceptable)
  • Parking Consent Form available from the management company of your residence
  • Parking Application available from the local police station

And from the seller…

  • Certificate of Transfer
  • Shaken Certificate
  • Power of Attorney
  • Seal Certification

In addition to the above, any due taxes will need to be paid in full before the transfer of title is complete. One aspect that is sometimes forgotten is changing the details on the compulsory insurance certificate.

And the on-going costs?

Maintaining a car in Japan need not be expensive if you plan ahead. Whilst it’s true not all cars are maintained regularly, to retain optimum performance, the manufacturers recommend getting vehicles serviced every six months, with the exception to most international brands which typically service vehicles once-a-year. With lots of competition domestically, most of the major brands offer very competitive maintenance packs lasting for periods between shaken. The largest benefit associated with purchasing such packages is to reduce the overall costs of maintenance over a given period of time, with the possibility of only having to pay the necessary taxes and application fees at the time of shaken renewal.

  • Automobile Tax – paid in full by the current owner of vehicles by the end of May on an annual basis.
  • Weight Tax – paid every two years upon renewal of shaken
  • Compulsory insurance – paid every two years upon the renewal of shaken.

Other Points of Importance!

All vehicle documentation should be kept in the car at all times for safe keeping, especially the shaken certificate and compulsory insurance certificate. In the event of an accident, police will ask to see copies of the above along with a valid drivers license. Fines may apply.

Source: www.motovique.com

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Author of this article

GaijinPot

GaijinPot is an online community for foreigners living in Japan, providing information on everything you need to know about enjoying life here, from finding a job and accommodation to having fun.

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