Team-BHP - Guide: Importing a Used Car from Japan

Japanese Cars! Sleek or small, glitzy or sporty, convertible or coupe, cheap or luxury – think car models and there’s a good chance that you’ll be thinking Japanese.

Japanese-made cars are currently not only amongst the most desired models across the world, but also amongst the highest selling. Although through the first few years of models had a reputation for being complex and not very sturdy, the modern Japanese cars match the best in the world. There are nine major car manufacturers in Japan – Toyota, Subaru, Nissan, Mitsubishi, Honda, Suzuki, Isuzu, Daihatsu and Mazda. Toyota has climbed to the top slot within Japan. Honda is another great success story in modern times.

There has been a tremendous growth in the demand for importing Japanese Cars in India as well, especially since the rules for importing cars have been relaxed in recent years(somewhat :P) . At the same time, Export laws in Japan have also been revised, So that exporting cars is easier for the Japanese dealers.

Okay, Now that we are done with the introduction, let’s get down to what this is all about, and that is to guide you through the process of buying a used vehicle from Japan and importing it while providing the information you need to do so in a simple, Lucid manner.
This thread is an ongoing process and will be updated for a long time, but not necessarily by myself.The reason behind the creation of this thread is to provide a single source to all auto purchase and importing needs from Japan. I therefore humbly request the contribution and input of everyone reading, to provide whatever info they can in order to make this a complete bible on the buying and importing process.

Testing Waters: Pre-purchase Details.

Like in any other second-hand vehicle purchase, the condition of the vehicle, reading on the odometer and reason for sale are important bits of information that one must know. However, in this case it is likely that the inspection of the vehicle will be done by someone on your behalf, and the reason of sale might not get conveyed to you as it is depending on your middleman. You also might get suspicious since the Japanese dispose of used vehicles faster than most. Therefore, it is imperative to understand as to WHY they do this.
Used Japanese domestic cars are popular for their quality, reliability, and low costs (sometimes starting as low as 300,000 Yen/about 1, 20,000 INR). Most are fanatically maintained and in impeccable condition. Low cost, quality and reliability in the same sentence? This raises some

Questions

Quote:

“If the cars are so good, even by their standards, why sell them?”

The number one and paramount reason is:-

Cost

Owning used cars in Japan is expensive. This causes used cars to be sold early and cheap. So, of the many factors that promote the Japanese to purchase new vehicles faster, the biggest is the cost of keeping an older automobile. To get an idea of the ownership costs involved, and how they go up with time, consider the following:-

Taxes - "Zeiken"

1) Acquisition Tax:
5% of the car's "purchase price" when you buy the vehicle
3% for commercial vehicles and light automobiles ["Kei" cars])

2) Weight Tax:
*Calculated according to the car’s weight.
*Must be paid in advance for the number of years your "shaken"(read ahead for more on this) certification lasts.
*When purchasing a new car, you must prepay three years of this tax.
*Afterwards, you will have to pay this tax at every "shaken" inspection for two years length.

3) Annual Automobile Tax:
Determined by the engine's displacement volume (CC - cubic centimeters).
It costs between ¥5,000 (for a Kei) to ¥56,000(about 25,000+ INR) (for 3Liter cars) each year in May.

Parking Fees - "Shakoshomei"
1) By law, each registered vehicle must have an official parking spot.

2) If you’re in the rural mountain areas then renting/buying one can be relatively cheap, but in the cities, the prices rise sharply. Prices are also according to the car's physical size. Your car must (by law) fit into your spot.

3) Costs for a mid-size car owner annually are between ¥15,000 to ¥75,000 (6,194 to 30,973 INR).

Insurance - "Hoken"

There are two levels of insurance:
1)"Kyosei Hoken" which is madatory only covers crash damages. I.e. minimal coverage

2)"Jibaiseki Hoken" is in addition to "Kyosei Hoken" and will cover injuries and non-accident car damages.
Most Japanese will buy both.

Inspection - "Shaken"

The most expensive aspect of owning a car in Japan is the "Shaken".
Shaken is a maintenance test used to inspect the car's safety.

Key advantage of buying a new car is that you don't have to pay for the "shaken" the first time.

The First “shaken” lasts three years.

After three years, the vehicle must pass the "Shaken" every other year. This costs around ¥120,000 to ¥200,000(about 82,000 INR) per year for an average car.

Therefore, when the Japanese consider all the costs involved (especially "Shaken"), they find less and less value in their old cars. They must make a choice weather to keep the existing car or buy a new one, And it usually results in the latter.

Reason number 2,

Out with the old! The Japanese love new vehicles. (Who doesn’t?:( )

:D . Okay seriously, as we all know, Newer certainly is better. Also Japanese society promotes keeping up to date and constantly upgrading, nostalgic value for old models is low and “new and improved” is the mantra. Therefore, most cars in the Japanese used vehicle market are 3-9 years old.

The Third reason is pretty self explanatory, and most of you know it.

World Leaders - Japan is the world's leader in manufacturing new cars.

Accelerated Turnover, the only reason auto makers need. Perceived value loss in old vehicles and cheaper new cars accelerate turnover. This causes manufacturers to constantly keep providing new stock and great bargains to their home market.

Quote:

“Why should I consider buying a used vehicle from Japan?” Is the obvious first question to come to your mind?"

In other words,
Why should you invest money, time, and effort into buying Used Japanese Vehicles?

Well, First the simple and obvious reasons,

1) Ownership of a unique vehicle
2) Ownership of a cost-effective alternative to the home-market line-up
3) Ownership of a vehicle that will outperform virtually anything else on Indian roads near the same price tag.

Now, Some solid reasons,
1) High Standards

• Vehicles in Japan are maintained very well and used lightly.
• Cleanliness - Most Japanese take excellent care of their vehicles.
• Reduced wear on interior and reduced rusting compared to most countries/domestic conditions.
• High Standard Inspections - It is very expensive and difficult to pass (read “Shaken”).Average total inspection costs can be around $3000 (about 1,20,000 INR).
• Smooth Roads - Roads in Japan are among the best and to find a car that has gone off-road is rare.
• Low Mileage - Traveling long distances in Japan by car is expensive and frustrating.
• Most cars don't see over 90,000 kilometers (56,000 miles).
• Alternative transportation and Nature of use:
*Trains - Reduces the use of cars between cities. Japan has one of the fastest and most efficient trains in the world. (Remember the top gear Japan episode? Okay, not a very good example, but still…)
*Road tolls are expensive.
*Traffic can be VERY bad.
*Bicycles are used a lot as Cities are very dense.
*People often walk or bicycle for most daily activity.
*Car usually sits in the garage and is well taken care of at regular intervals. *Driving is often a very short distance at low speeds.

Unique Vehicles
Now we're talking!
• JDM-only Models - Specially made by Japanese auto manufactures for Japan.
• Performance cars: Cars are often designed for Japan with higher power output than outside of Japan.
• Many models outside of Japan undergo re-naming and are sometimes power restricted.
• Kei class vehicles: are small, unique and have many special uses.

• They come in all shapes and sizes! You’d be surprised to see crossovers of your favorite vehicles that you’ve never heard of!
• More Equipment - Japanese vehicle’s base models contain what in most countries would be considered "extras". For example, navigation systems, alloy wheels etc.
• Manual or Automatic - Both transmissions are equally popular. Lots of choice and options =win/win.

3) (Spoilt for)Choice
• You will see on average 40,000 used vehicles available on the market each week.
• Dealers constantly upgrade their inventory.
• You will be surprised as dealers/agents go out of their way to find a vehicle to suit your needs. Most are looking for repeat business.

Basically, buying Japanese vehicles CAN be a fun and exciting experience. Whichever reason you might be interested in buying used JDM vehicles, importing them can be rewarding, provided you are well informed, which brings us to this next section:-

Going Ahead: Buying :thumbs up
>>> To Be Continued <<<

Note:-Before i continue posting the guide, i want to make it clear that this is not a step-by-step "How to". The main purpose of this guide by far is providing information. In practicality, you would consider costs way before you actually even think of the buying options. For those of you seeking practicality, assume that you will be paying atleast double the price tag in the home country. Actual damages can be known when we get to the duty break-up part. :)

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So, You do realize that you'll be paying mammoth tax money to the government so that it can NOT be used to give us better roads? Still think you can get a good deal? Are you ready to face the hassles of customs clearance? Know a prominent politician? Don't know anything but still want to know how close you can get to getting your dream car?Great! read on!

Going Ahead: Buying

Now, There are two main ways to buy these vehicles,
1) Buying via Auction (centralized used car auction system, most popular choice for citizens) and
2) Buying via Dealer, i.e. buying from a dealer/agent’s stock.(This is usually where more "outsiders" shop)

1) Buying Auction Vehicles

As mentioned above, when people in Japan want to buy a vehicle, they have two options. They can either get one from a dealer's lot or from an auto auction. Of the two, buying from auctions is the most popular.
Below you can read the benefits of buying via auctions and how to buy from them. Knowing what to do and what to watch for can make it a more enjoyable(well, actually, less frustrating) experience and you'll more likely be able to get what you want.
It is important for anyone seeking to buy from auctions to know that they cannot buy directly from them. Auto auctions legally can only give membership to those with trading licenses for used cars. (i.e. Dealers or Exporters). This means that someone else will be bidding on your behalf.

BENEFITS OF AUCTIONS:-

• Saves you time on searching because there are huge selections available.

• Are a safer way to buy - you're getting independent reviews of a car's condition.

• Often give much more competitive prices.

• Unlike dealerships, the reputation of an auction house depends on the quality of their inspection; therefore you can be assured their inspection will be top-notch and transparent.

AUCTION PROCESS :- How it works.
Here are some guidelines of what happens at auto auctions in Japan and what you should do to purchase vehicles from them. Knowing what will happen will help you avoid pitfalls and make better decisions when searching, bidding, and purchasing. Im not sure how usefull this is to the average guy who will probably get everything done through a dealer/agent, but more knowledge is never a bad thing... i think :uncontrol

1) Vehicle Inspection:-
All vehicles must be first inspected by the auctioneer before they can be auctioned. Because the reputation of an auction house is in its accuracy of assessing a vehicle's condition, they strive to give fair inspections. When they inspect, they use a form called an 'Inspection Sheet'(more on this later). In general, you will find the following:
• Vehicle's Data (registration, chassis number, etc.)
• Any structural damage.
• Any cosmetic damage.
• Any mechanical damage.
• The vehicle's Rating (example. 4.5)(more on vehicle ratings later)
• The vehicle's Equipment (example. alloy wheels)
• Assessor's Notes (written in Japanese - you should get them translated)

Take the time to look at Inspection Sheets for more information. Remember to make sure you bidding agent takes the time to double check a car you want to bid on. Auto auctions allow members to examine cars on the day of the auction before bidding begins.

Vehicle Has Been Listed for Auctioning
When a vehicle gets listed for auctioning, an auction house will assign it to an auction date and add the vehicle to its database for members to view. Members of the auction can find this vehicle via internet or fax. For an example, visit this demo site:- Nihon Cars: Search Auction Vehicles ****** . If you have an agent searching for you, he/she will notify you of possible candidates. If you are planning to look yourself on the internet there may be auction listings available.

A Vehicle Gets Selected?/Picking a Vehicle.
There are many ways to find vehicles but before you begin, you must choose who will search, your agent or yourself. He/she will need to know what you want and how flexible you are. Or, you can search yourself which could become time consuming and you will be unable to access all the places your agent can. If you choose to use the agent to search, you must express EXACTLY what you're looking for.
You might find an exporter/agent doesn't really know English very well. Make sure you either work with him/her in very simple terms or hire another one that speaks English better. With all agents, have them repeat what you say to know if they understand your terms. Also get things in writing whenever possible.
If you absolutely MUST search yourself (some exporters will give you access to listings), you may want to prepare ahead for the task. Check out the definitions of any terms you might not know (example. FOB, PS, FAT, etc). Also check Japanese to English Translations for any words not in English found on Inspection Sheets.

Important things to watch for when considering a car:
• Mileage
• Ratings (Overall, Interior)
• Manual or Automatic Transmission
• Gas or Diesel
• RHD or LHD – If it doesn't say anything, it's RHD. If it says LHD, you can conveniently say "next please" and move on.
• Year - it can be the production year or first registration year. Knowing both is good for importing reasons among other things.
• Check production year by chassis number, or check through your exporter (bidding agent).
You should find a few vehicles you like before you stop searching. With a few choices to choose from it will make it easier and quicker for your agent to get you a car. Try to get a selection narrowed down to about 3-6 cars.

The Buyer Prepares the Bid
Once you find what you like, contact your agent to place a bid. There are a number of different methods that a bidding agent (usually your exporter) may use to bid. Auction houses use anything from an advanced automated bidding system over networks to simple email and fax.
At the time of placing a bid, you usually must either place a deposit of ¥100,000 to ¥200,000(43,312 to 86,623 INR) or pay 50-100% in advance. Both charges are common among exporters. If a bid fails, you will be either refunded or given the opportunity to use this money for another bid. Expect your bidding agent to charge around a minimum of ¥1000 for a failed or successful bid because this is what is charged by the auction house to enter bidding.
Remember to clearly convey which car you want and what your maximum bid is to your agent. Communication can be difficult if your bidding agent doesn't speak English very well. Fortunately, most exporters are providing automated systems that can translate your input into Japanese and back.
You must remember that you are simply bidding which is not the same as purchasing. When you are buying an auction car, first you place your bid. If your agent wins the bid and fulfill all other conditions, then you can begin purchasing.

Bidding For Your Choice
This is where you're exporter (acting as bidding agent) is especially needed. Auction houses are usually opened once a week on a pre-selected day. Those who wish to participate must come a few hours earlier to inspect the cars they will bid on. After inspections occur, the auctioning begins. If a vehicle is as you want, your agent will bid up to your maximum. If you have the highest bid, you will most like be able to continue on to purchasing. If some else outbids you, your exporter will try to find another car. If necessary, you will be refunded. Wont go into details, general auction stuff.

Purchasing After a Successful Bid
At this stage, you'll be required to pay the remaining balance. You will also need to pay freight charges, marine insurance, and possibly other charges/fees provided these are the same people taking care of the above.
Most exporters will use only wire transfer (often called Telegraphic Transfer or TT) for payments. Buying by credit/debit card is usually not possible due to large fees the seller must pay to the banks. Once everyone is in agreement, you will receive a purchasing agreement and invoice. Some exporter may want you to sign both and fax back copies for security reasons.

That should be enough on auctions.

2) Buying Stock/Dealership Vehicles

Quote:

What are stock vehicles?

Stock vehicles are the automobiles that are already in the possession of the dealer, who is selling to you directly. Prices are usually fixed, meaning there is an asking price without any bidding involved. This is why Stock vehicles are also called Dealer Stock or Fixed Price vehicles.

Benefits of Stock
There a few things that might make you want to choose buying directly from a Dealer than using Auto Auctions. Skipping the auto auctions would be beneficial if you:
• Want a car quicker.
• Want a set price.
• Want a more personal and closer account of the cars condition.
When buying Stock vehicles which have fixed prices, you will be able to easily calculate the total cost (or better yet, you can ask for a quote). Also, Dealers are sometimes able to provide a better analysis of the vehicle than a quick auction inspection(depends very highly on the dealer, the reverse is true in most cases).

Listings
There are two main advantages for searching Stock over Auction: One is that the prices are at a flat price which is simpler and usually "first-come-first-served". That means there is no waiting for an auction day or worrying about being outbid.
Also, you can always get more details about the car on request and the dealer might be able to inspect the car's condition better(longer would be more appropriate) because the dealer is in possession of the vehicle(s).

Ordering
Compared to bidding/auction, ordering can be much easier. All you must do is simply send an order form/message (via email and/or equivalent) after you're absolutely sure you want a car. After you submit, you should be contacted so you're able to move on to purchasing the vehicle. Some exporters may require some form of deposit to hold the vehicle for you from others making offers between the time of ordering and payment.

Purchasing
Same thing you would do when "Purchasing After a Successful Bid".

Recheck all information and ask all the questions you want. Think about the difference in auto value Vs money and the price to performance ratio the Japanese get as compared to Indians. Simultaneously prepare yourself for the soon to follow kick-in-the-groin called Indian duties. If you still find value in your purchase, you have made a wise one. Start preparing for the next step :-

Advancing Forward: Import/Export:eek:
>>>To Be Continued<<<