Why Are Japanese Used Cars So Cheap?
Importing used Japanese cars to other right hand drive countries has long been a popular way to afford a car. The compromises are noticeable in terms of the Japanese controls and navigation. But when you see the variety of cars and the prices relative to local cars it is clear that many Japanese used cars are cheaper than alternative markets. Have ever wondered why are Japanese used cars so cheap? Allow us to explain why.
Why are Japanese import cars so cheap? 4 key reasons
The common thought would be to question whether the car’s mileage is genuine. But modern technology now allows us to verify this much more easily. The export certificate and the car’s service records will soon verify that a car’s mileage is genuine. When we dig deeper, it’s clear to see there are four key reasons why the JDM (Japanese domestic market) cars are so affordable to export.
1. Cheaper new vehicles
The new vehicle prices in Japan are some of the most competitive in Asia. The Japanese motor vehicle industry is one of the worlds largest manufacturers of vehicle components. This gives them huge economies of scale which helps to keep the cost of the new cars low. Costs are also kept low thanks to minimal transport of the new cars. European cars are produced across the world and not just in Europe eg the Audi Q5 is now manufactured in Mexico and then shipped into Europe to be sold. These costs mount up. Cars sold in New Zealand are often imported via Australia which also increases their final retail price. Whereas the new JDM cars are barely transported at all. This all makes the costs much more affordable.
2. Japanese cars have different specifications
Japanese cars typically have a restricted number of options and a lower starting specification. For example it is very common to find the entry level models to have cloth seats rather than leather as standard. A difference in airbags between models or the lack of a sunroof may also be found versus the like for like models from Europe, so it’s important to be sure you are comparing the correct base specification for cars from Japan and any other markets.
3. Cost of owning and licensing used vehicles.
The biggest factor that makes Japanese cars so cheap to export is the licensing system for used cars in Japan. Once a Japanese car is three years old, it must undergo a rigorous roadworthiness inspection. Following the inspection, the car must continue to pass the inspection every two years after that for up to ten years. These inspections are very expensive and cost over $1000 USD each time. This inspection and licensing system is called the Shaken system. This quickly makes owning a used car in Japan very costly.
4. The cost of finance is inexpensive
By contrast, the interest rate for car finance for Japanese cars is very low, making purchasing and owning new Japanese cars very attractive relative to the running costs of used Japanese cars.
5. The cost of dumping is expensive
There is very little appetite to dump an old car in Japan. Instead, the Japanese are motivated to sell their car at a very competitive price rather than lose value from depreciation, high running costs and then scrapping costs on top. You can see why you might replace your car relatively quickly in Japan.
Conclusion – Why are used Japanese cars so cheap?
Now we have understood the factors which influence why used Japanese cars are so cheap to export, it is much more logical to understand. It is easy to see why the Japanese Shaken system motivates residents to buy new cars and replace their used cars relatively frequently. This also goes a long way to explain why the mileage can seem rather low for a used car in comparison to other markets.
The running and licensing costs for used cars in Japan quickly become too expensive to make owning and maintaining used Japanese cars cost effective. The export market is then flooded with cars which they need to ship to other right hand drive countries such as Kenya, New Zealand, Uganda, the Caribbean and South East Asia. This large supply of used Japanese cars available for export keeps resale prices relatively low and attractive for export buyers worldwide.
