Why Are Used Japanese Cars So Cheap?

New Zealand is famous for many things.

From being the best at rugby, to being the home of the Lord of the Rings, New Zealand has a lot going for it.

One thing that flies beneath the radar, however, is the number of cheap, used Japanese cars that are available in NZ.

Although prices aren’t as good as they were historically (due to general inflation, the recent effects of Covid-19 on supply chain and imports, as well as changes to import laws that make it harder to bring in used imports) New Zealand is still seen by many as the “dumping ground” of the West when it comes to used Japanese cars that can be purchased at affordable prices.

Of course New Zealand isn’t the only country where you can pick up a second hand car imported from Japan for a reasonable price (it just happens to be where we live, and it represents an excellent “microcosm” for the purposes of this article).

Take a look at something like the Honda Civic. No matter which generation of the Honda Civic you are looking to buy, chances are you can pick one up for cheap as a “Japanese import” in New Zealand:

But why is this possible?

Today, we are looking to answer the question “why are used Japanese cars so cheap?”

Just what is it about used vehicles from the Land of the Rising Sun that makes them affordable when exported out of Japan, and then imported into other countries? If you’re interested in importing a car from Japan, then read our guide here on how to do so.

Why Are Japanese Import Cars So Cheap? 3 Key Reasons

There are a few key reasons why used Japanese imports tend to represent good value for money.

They are:

  1. Less expensive new vehicles – New vehicle prices in Japan are some of the most competitive in Asia, and the rest of the world. This is because of Japan’s large economy allowing for “economies of scale” as well as the fact that cars manufactured locally do not have to be transported so far for sale. Motor vehicle production is one of the largest components of the Japanese economy, and because of the size of this industry the local consumer benefits.
  2. Different features (e.g. JDM variants) – Another reason to bear in mind is that Japanese Domestic Market (JDM) variants of cars may have more limited/restricted features. If you’re not familiar with JDM, then check out our article here on the meaning of JDM. Take a basic Japanese car like the Suzuki Swift. When these were sold new in New Zealand, they came with multiple airbags for side protection etc. However, JDM variants (i.e. Suzuki Swifts produced for sale when new in Japan) that find their way to NZ often only have twin airbags. We go into more detail on this topic below.
  3. Cost of licensing and owning used vehicles – Perhaps the biggest reason for used Japanese imports being so cheap to buy second hand (when imported into other countries like New Zealand) is due to Japan’s strict licensing system that makes it expensive to own a used car for too long. Three years after purchase, a car in Japan must go through an expensive and extremely rigorous testing regime to prove its roadworthiness. From there, a car is required to undergo this testing and licensing every two years until it reaches ten years of age, where the vehicle undergoes this process every year. It can cost upwards of $1000 USD to ensure compliance for your vehicle – which quickly adds up. This system – known as Shaken – is a key reason why used Japanese cars find their way into other car markets for cheap. Ultimately, this system was put in place to keep the domestic car market humming in Japan. It effectively makes buying a new car a rapidly more appealing proposition, thus stimulating the purchase of new cars. Shaken is generally seen as the key reason why Japanese motorists do not keep their cars for a particularly long period of time. You can learn more about Shaken and what is involved here.
Just a small example of what is involved in the Shaken process – no wonder imported Japanese cars are so cheap second hand!

Why Are JDM Cars So Cheap?

We touched above on the fact that JDM cars exported out of Japan can be cheaper due to having occasionally different parts/configurations/equipment levels.

An example of this is the Toyota Crown, which has a touchscreen infotainment system that also controls the air conditioning system. It is all in Japanese, and although there are some third party translations available, using one of these then has the effect of removing some functionality – this is a “black mark” that may reduce demand for JDM cars.

Another reason why JDM cars are so cheap when exported to other markets is the right hand drive issue.

Any car built for sale new in Japan will be right hand drive (i.e. the steering wheel is on the right hand side of the car, made for driving on the left hand side of the road). However, the majority of the world’s population does things the “American” way.

What this means is that the pool of countries where the average car buyer is going to want to buy the car for “daily” use is limited to generally Commonwealth countries like Australia and New Zealand.

In markets like America or Canada, people may be happy to buy right hand drive cars but generally not for daily use, which means that there is less demand.

Finally, in the case of true JDM cars (and not just JDM variants of cars made for export) it can also be that they are cheaper when exported because buyers have to contend with limited parts availability and fewer options when it comes to repair and maintenance. This also means lower demand.

Learn more about JDM here.

Conclusion – Why Are Used Japanese Cars So Cheap?

As you can see, there are a number of reasons why used Japanese cars find their way into markets overseas for relatively low cost.

The biggest factor by far is that Japan’s entire car industry and legislative system is structured around encouraging Japanese people to buy new cars more frequently, thus creating “artificial” demand for locally-manufactured vehicles. For many, it is genuinely a better option to buy a new car after several years than it is to keep an existing car on the road.

These old cars are then sent to be auctioned, and then exported overseas to car dealers as well as private importers in countries like New Zealand. You can learn more here about how to import a car from Japan, including details about the auction house system.

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