Car Auctions in Japan

Car auctions in Japan are a great place to find low mileage, high quality used cars at good prices. My aim in writing this hub is to help you understand these car auctions in Japan better so that you can make a good, informed decision about whether to buy from them or not, and how the whole process works.

This is a good question to begin with. After all, right now where you sit reading this hub is probably many thousands of miles away from Japan. So why would you be interested in getting cars from a country so far away?

Well, first of all, you may be a car importer, already buying cars from other countries and wondering what the fuss is about these Japanese car auctions. Alternatively, perhaps you are a car dealer looking for an edge in your local market - something to differentiate you from your competition. Or perhaps you are an individual buyer looking for a certain model that you can only find in Japan.

Wherever you are coming from, there are some excellent reasons to consider buying cars from used car auctions in Japan.

First of all, the selection is simply huge and you can view all these cars remotely online. Auto auctions outside Japan may typically have a few hundred used vehicles at any one time, but only the tiniest car auction in Japan would have such a pitiful selection.

In terms of individual auction locations, we are usually talking about over 1,000 cars per location, and sometimes over 10,000 cars (in the case of USS Tokyo) all in one place and being auctioned there weekly. Put all these individual car auctions together on the Internet, and over 30,000 on a single day is really not at all unusual.

So there is a huge breadth of choice. But that is not all. There is also a great depth of quality. The fact is that Japanese people just do not drive as much as people in other countries. Japan has an excellent public transport system and high levels of neighborhood walkability. Furthermore, urban driving speeds in Japan are incredibly low (you would not believe how many traffic lights there are) and this all works together to keep people from using their cars very much.

Then on top of this the Japanese are fastidious in caring for their vehicles. They have them services regularly, and often will have entire panels replaced rather than have a minor scratch buffed out. So it is ironic that it does not take long before the car they have seems old to them and they want a new one.

The Japanese roadworthiness test - called shaken in Japanese - regime and the way cars are taxed also conspire to push the Japanese driver into upgrading to a new car on a regular basis, but the cultural obsession with "new" is probably the strongest factor here that pushes people into replacing their cars regularly.

As you can see, cars that are low mileage and well maintained are a dime a dozen. But the thing is that the Japanese themselves are really not into secondhand items, so they don't really want these used cars for themselves.

So what is the result? Simply that car auctions in Japan have a great selection of great condition, low kilometer cars, but the Japanese people are really not that interested in buying them. This means that prices are relatively low for good quality cars, and there is all the more opportunity for buyers from outside Japan to compete.

The car auctions in Japan have an in-depth inspection regime. The cars are given an overall grade, an interior (and sometimes exterior grade), detailed comments on specifics of the car's condition, and a "map" showing exterior damage.

Cars and other vehicles are registered for the following week’s auction, after which they are inspected by the inspectors who are also qualified mechanics.

Now, it is important to bear in mind that these inspections are very thorough, but they do not involve any dismantling of the vehicle, nor do they involve test-driving it. They will often pick up mechanical issues very well, although problems which would only come to light if the vehicle is driven at anything more than the kind of speed you would expect in a parking lot can be missed. This is no fault of the inspectors, just a limitation of an inspection that does not involve a road test.

The auction grades span the whole scope from brand new cars with literally delivery mileage only on the clock, to write-off vehicles with major accident damage.

You should never enter a bid based solely on the grade if the car is anything less than a grade 5. Unless the car is exceptionally clean (grade 5 or above) there will always be something you will want to be aware of in the detailed comments you get from the auction inspector. A good Japanese car exporter will provide you with accurate and comprehensive translations of these comments.

Here is a quick run down on each of the grades. Click through to watch a video in which I talk you through the details of an auction sheet of some representative vehicles if you want to know more.

Grades 7, 8, 9 or S – These refer to a brand new car with only delivery mileage.

Grade 6 – This grade can sometimes be equivalent to the grades above, but sometimes will have a little more than just delivery mileage.

Grade 5 – A vehicle in superb condition, very close to brand new standard, but with several thousand kilometers on the odometer.

Grade 4.5 – A vehicle in excellent condition, but with up to a few tens of thousands of kilometers on the clock.

Grade 4 – A good, solid vehicle usually having less than 100,000 km on the clock.

Grade 3.5 – A higher mileage vehicle or one which will need some work to clean up.

Grade 3 – Either a very high mileage vehicle or one which is rough.

Grade 2 – A very rough vehicle usually with corrosion holes triggering this low grade.

Grade 1 – Usually a heavily modified vehicle which has had a different engine or transmission fitted, or which has an aftermarket turbo charger. Other possibilities are flood or fire extinguisher damage.

Grade R, RA, A and 0 (zero) – These are vehicles that have had some degree of accident repairs. At one end of the spectrum the repairs will be a single panel replaced due a minor parking ding, whereas at the other extreme there are vehicles that must have rolled in an accident which have had almost every panel replaced.

Ungraded vehicles (RR) – These are sold as-is by the auction with no or almost no information about their condition. As such they are very risky and can result in escalating additional costs if they cannot drive or move.

The "map" of the car is usually at the bottom right corner of the auction sheet. It shows the exterior condition of the car using alphanumeric symbols as well as the occasional comment in Japanese.

Here is a key showing all the common alphanumeric symbols and their meanings:

Scratches

A1 Small Scratch
A2 Medium Scratch
A3 Large Scratch

Dimples

E1 Minor Dimple
E2 Medium Dimple
E3 Large Dimple

Dents

U1 Small Dent
U2 Medium Dent
U3 Large Dent

Repair Marks

(Bodywork not perfectly straight due to panel beating)

W1 Very Slight Wave / Repair
W2 Medium Wave / Repair
W3 Large Wave / Repair

Rust and Corrosion

(Rust means surface orange discoloration. Corrosion means orange discoloration which is flaking away.)

S1 Minor Rust
S2 Medium Rust
S3 Major Rust

C1 Light Corrosion
C2 Medium Corrosion
C3 Severe Corrosion

Replaced parts or those needing replacing

X Need to be replaced
XX Has been replaced

Distortion

B1 Minor Distortion
B2 Medium Distortion
B3 Major Distortion

Cracks

Y1 Small Crack
Y2 Medium Crack
Y3 Major Crack

Windscreen Issues

X1 Approx 1cm crack on windscreen
R Repaired Crack
RX Repaired crack in windscreen, but in needs to be replaced
X Crack in windscreen, so it needs replacing
FW Front windscreen

Paintwork

P1 Minor paintwork damage
P2 Medium paintwork damage
P3 Major paintwork damage

By now you should have a better idea about grading and how these Japanese car auction inspections work, so take a moment to go over the sample auction sheet below, and then watch the video to see how much you understood.

So, let's imagine you have found a car you are interested in bidding on. How do you go about buying it?

Well, first of all, you would need to be a member of the auction in which the car is entered. If you are reading this, the chances are you are not in Japan, so there is no way you can become a member of one of these auctions. Access is restricted to individuals or companies in Japan with property and a Japanese guarantor, so this is the province of Japanese car dealers and Japanese car exporters.

To bid on cars, you will need to find a Japanese car exporter with auction access who you can then make your purchases through. (I will give you some pointers about how to find a good car exporter later.)

Gone are the days of an auctioneer surrounded by people bidding by raising their hands. All bidding is online now. However, bidding at car auctions in Japan is also very different to the eBay model as well.

Whether bidding at the auction's own location, or bidding remotely, the process is much more like a video game than either of the above auction types: The bidder watches a screen on which several cars may be being auctioned at the same time. Lights flash, indicating other people bidding, and the bidder clicks a button to enter his own bid.

Bidding might be over in anything from 10 seconds to 45 seconds or so. Take a look at the video below to see what I mean.

There are a number of possible outcomes beyond the simple bought / not bought possibilities:

• Bought for you in live bidding- This is the best outcome for you.
  
• Bought by another in live bidding – If your budget does not stretch far enough and another bidder wins the vehicle.
• Passed – This means that the car failed to meet its reserve. It may be back the following week, or it may be sold in Negotiation.
• Negotiation – A car that has "passed" may still be within our customer’s budget, so we immediately make an offer for the vehicle through the auction to the owner directly. We may end up buying it in negotiation.
• Removed – Sometimes a car may be removed due to incomplete documentation or if it has been sold by other means prior to the auction starting.

After a car is bought at a Japanese car auction, the first thing that happens is that it is moved by car transporter to the port. Once at the port, the car waits to be loaded onto a RORO ship, or waits to be loaded into a container.

Most destinations have RORO shipping options, but some countries or ports can only accept container ships. Shipping by container does result in additional cost, as the container must be loaded (which takes more effort than simply driving the car on the ship, as is the case with RORO shipping), as well as THC (Terminal Handling Charges) and drayage (transportation of the container).

If your destination requires container shipping, you need to ensure that the loading is done properly. Steel frames or other steel supports should be used and not wooden frames. Wood frames may be cheaper, but sudden jarring of the container will result in them shattering - causing cars to fall on each other and get damaged. Proper container loading is a cost that you must not skimp on.

Very occasionally, it may be worth using container shipping even if RORO shipping is available, for the simple reason that a car in a container is sealed in and protected from access by ship's crew, port staff and weather. However, the additional cost means that this is only worthwhile in the case of very high value vehicles.

While the car is in transit from the auction, the car exporter will immediately start looking for bookings on the earliest ship, as well as doing paperwork to de-register the car and pass it through Japan-side customs.

Once on a ship, the car will take anything from a few days to over a month to reach its destination. This is mainly dependent on the distance of the destination country from Japan.

The car exporter will send the end customer the Bill of Lading, invoices, the de-registration document and any other documents that the customer requires for importing the car into his or her country. These import regulations vary from country to country so it is vital to check them before buying anything.

If you have read this far, you have taken the time to really understand the ins and outs of car auctions in Japan as well as the used car export process.

So, if you think that this might be for you, the next question is how you can find a good Japanese car exporter to handle the bidding, the Japan-side work and the shipping for you.

This is not an exhaustive list, but here are some important questions to consider:

• Can you access the auctions online through the exporter's website, and does this exporter give you good coverage of the car auctions available?
• Is your contact person a native English speaker, and is this person also fluent in Japanese? (Miscommunication is a huge source of stress as well as resulting in potential financial loss.)
  
• Can you get high-quality comprehensive translations of the auction inspectors' reports from this exporter? (You should not just rely on the auction grade numbers and just hope for the best.)
  
• Does your contact person at the Japanese car exporter keep you in the loop so you know what is happening with the vehicles you purchased?
  
• Does the exporter work hard to ensure your cars get to you from the car auction in Japan as quickly as possible?

You can see cars for sale in the car auctions in Japan yourself without committing to buy from a particular exporter. Browse the cars that are available each day and see if the kinds of cars you are interested in can be bought in the Japanese car auctions.