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, the processes involved in buying a used car in Japan can be confusing. 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.
How much is the annual automobile tax?Simply put, automobile tax is based on the engine size of a given vehicle, allocated in increments of 500cc. As part of the registration process, the vehicle owners' details will be withheld by the local tax authority and accordingly billed every year in the month of April, with full payment required before the 31st of May. Amounts payable are further highlighted on the infographic.
With the exemption of kei cars, automobile tax is payable on a sliding scale if purchased after April.
Factors involved for calculating acquisition taxAcquisition tax is a prefectural tax assigned for the construction and maintenance of the local road infrastructure, levied on buyers of new and used cars under the age of six (6) years old that exceed an acquired value of JPY500,000. It's important to remember that the acquired value of a used car under six years old is not equal to the purchase value.
The acquired value is actually based upon the cars grade and specifications from new, amortized over the six year period using the sample formula below.
Our sample above uses a 2010 Fiat 500 1.4 Sport as an example, priced at JPY2,430,000 new at the time of initial registration. The acquired value is therefore calculated as shown in figure (a), which is then multiplied by 0.05, and rounded up to the nearest thousand to calculate the actual cost of acquisition tax.
NB: Values defined by an asterisk (*) differ depending on the year of registration.
Applicable Fees for recycling carsSince the introduction of the recycle law in January 2005, every registered vehicle must possess a recycle certificate, in which owners pre-pay a determined fee for disposal (shredding) of vehicles upon the end of their service life. The amount largely depends on the volume of disposable properties, and is paid in advance by each new owner, before the transfer of any given vehicle.
When is weight tax payable, and how much is it?Based on the given curb weight (highlighted on the shaken certificate) in increments of 500kg, weight tax is payable at the time of shaken renewal only. Some sellers may ask new buyers to pay a proportion of the amount remaining, however this is not necessary - unless the car requires the shaken be renewed.
With regards to price, the new system, introduced in May 2012, splits vehicles into four main categories:
- JPY0 ~ JPY5,000 / 0.5 tonnes for eco cars -- those exceeding certain emission standards
- JPY8,200 / 0.5 tonnes for non-eco cars under 13 years of age
- JPY10,000 / 0.5 tonnes for non-eco cars exceeding 13 years of age
- JPY12,600 / 0.5 tonnes for non-eco cars exceeding 18 years of age
What is compulsory insurance?Compulsory insurance is a legal requirement, giving basic cover to drivers in the event a third-party suffers an injury at the hands of the driver. This insurance policy is set to cover the term of the shaken (24mths) and is currently priced at JPY24,950.
Other miscellaneous costs that increase the total expenditureOther costs typically associated with the purchase of a used car, include but are not limited to the following; fees may differ substantially depending on the service provider:
Where should one buy a used car from?There is no definitive answer to this, as each individual has different needs. The Japanese traditionally tend to favour their local branded dealership, building up a relationship that lasts many years, while those in the foreign community often prefer to purchase direct, utilising the experience of an agent to purchase cars direct from auction.
Purchasing through your local dealer
- The ability to view cars in person,
- The ability to negotiate on the price of the vehicle,
- The ability to include optional extras (e.g. maintenance) into the deal,
- The ability to obtain a warranty for the vehicle
- The ability to obtain a loan
- Inability to check the vehicles history,
- Inflated prices,
- Limitations associated with the warranty,
- Inability for [some] foreign citizens to obtain a loan on vehicles
- Japanese may be required for negotiations
Purchasing direct from auction
- Detailed history of each vehicle including accident history,
- Utilising experienced buyers to assess each prospective car,
- Potential to pocket substantial savings by purchasing at wholesale prices,
- The ability to choose from tens of thousands of vehicles every week,
- Agents available in your native language
- Inability to view vehicles in person,
- Cash payments only accepted (no loans),
- Vehicle notification to turnover is exceptionally quick (about 48hrs),
- The time taken to source a specific model can take some time,
- Vehicles are purchased as described (no return policy)
The Private market
While 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.
If you've bought a used car in Japan, how did you go about it? Any recommendations or suggestions for others considering buying a used car here?