Japanese used vehicle exporting

A Honda Step WGN in the Philippines. Officially, it is not sold in the country by Honda Philippines.

Japanese used vehicle exporting is a grey market international trade involving the export of used cars and other vehicles from Japan to other markets around the world.

Despite the high cost of transport, the sale of used cars and other vehicles to other countries is still profitable due to the relatively low cost and good condition of the vehicles being purchased. Contributing factors to the feasibility of such export include Japan's strict motor-vehicle inspections and high depreciation which make such vehicles worth very little in Japan after six years, and strict environmental-protection regulations that make vehicle disposal very expensive in Japan. Japan has very stringent vehicle emission test standards.

Due to progressively escalating costs of passing the mandatory periodic vehicle inspection, cars are typically scrapped or exported for sale abroad by the time they are about 10 years old. Engines removed from scrapped vehicles are in some cases exported for sale outside Japan.

Nearly 1.4 million used vehicles were exported from Japan in 2006. The most popular destinations for used cars from Japan are Bangladesh, Russia, Mongolia, Kazakhstan, Trinidad and Tobago, New Zealand, Tanzania, Zambia, Zimbabwe, Malaysia, Australia, Congo, Ireland, Pakistan, Dominican Republic, Peru, Bolivia, Paraguay, Kenya, the United Kingdom, Thailand, Myanmar and (until recently) the Philippines. Additionally, Chile, Singapore, South Africa and the United Arab Emirates are used as popular transit hubs.

Overview

Supply of used cars

In Japan, used cars are mainly sold at auto auctions by car owners and dealers. At auto auctions, owners are hidden from bidders while the auctioneers provide independent car evaluations called inspection sheets. Exporters, acting as bidding agents for importers, use the auto auctions as their main supply. There are over 200 auto auction groups operating throughout Japan including JAA, JU Group, TAA, USS, and ZIP.

Besides auto auctions, Japanese exports have access to vehicles from dealerships and private sellers.

Exporting methods

Vehicles which will be exported from Japan must be prepared before shipping. This includes de-registering the vehicle with the government, getting an export certificate, and cleaning the car to remove biosecurity risks. Car cleaning is especially necessary for the Australian Quarantine and Inspection Service (AQIS) and New Zealand's Ministry of Agriculture and Forestry (MAF) agencies' clearances.

Exporters can ship the car that is ready by ro-ro or container according to customer specification, ship schedules, and the capabilities of the destination port.

Market differences

The suitability of Japan's domestically sold cars for export to other countries is constrained by various factors. Vehicles in Japan have right-hand drive—the driver's seat is on the right side of the vehicle—in accord with Japan's left-hand traffic. Some countries with right-hand traffic permit right-hand drive vehicles, though right-traffic headlamps are generally unavailable for models exclusive to Japan. Some countries with right traffic do not allow right-hand drive cars, but in some such markets the extensive labor required to convert a car to left-hand drive is economically feasible; such conversions are sometimes done by the local importers. The Philippines is an example of a market where such conversion is common, until recently, when the importation of such used vehicles (except for heavy vehicles) was banned by E0 156. Japan's automobile safety regulations also differ substantially from the ECE Regulations used throughout most of the world and the U.S. North American regulations that apply in the United States and Canada. Vehicle components such as windows and windshields, seat belts, lamps and reflectors, and mirrors, as well as design features for crashworthiness such as bumpers, fuel tanks, and structural rigidity of vehicles meant for the Japanese market may not comply with non-Japanese standards. They often lack structural reinforcements needed to meet side-impact crashworthiness standards in effect outside Japan. Moreover, entire categories of vehicle, such as Kei cars, do not exist in regulations outside Japan.

Responsibilities

Generally, most exporters are responsible for the organization and completion of the vehicle's transportation until it arrives at the importer's Port of Destination (POD). At the POD, possession of the vehicle, and the responsibility of possession, is laid on the importer. Financial responsibility, on the other hand, is transferred when ownership is handed over. Ownership is switched after the car has been purchased and before being exported. In the case of damage or losses occurring during shipping, the buyer is the one bears all financial loss.

Car export companies verification

Whilst the vast majority of websites in Japan are of genuine business companies, but it is also a fact[1]that online scams and fraud are alive, well and very big business in Japan. It is very important for foreign importers to verify each company and to not send money until full satisfaction. Verification of each Japanese companies under "Japan Company Trust Organization" can also be helpful.

To specific countries

Canada and United States

Any vehicle more than 15 years old may be imported to Canada without regard to its compliance with Canada Motor Vehicle Safety Standards. Similarly, vehicles at least 25 years old may be imported to the U.S. regardless of non-compliance with that country's Federal Motor Vehicle Safety Standards. However, vehicles are registered at the provincial level in Canada and the state level in the U.S., and increasingly stringent sub-national vehicle safety requirements make it difficult to register a Japanese-market vehicle without replacement or modifications to the headlamps and other lights and reflectors, the window glass, the tires, the seatbelts, and other equipment.

Chile

In Chile, second hand imported vehicles may only be registered in the extreme regions of Arica and Parinacota, Tarapacá, Aisén and Magallanes. Japanese used vehicles must meet emission standards and be converted to left hand drive. However, a big market of non converted cars exists in the duty-free zone of Iquique, where customers from other countries buy them and sometimes drive them home.

Hong Kong

2008 Nissan Skyline sedan 250GT Type P, Japan Domestic version, exported and registered in Hong Kong.

There are quite a lot of used cars from Japan registered in Hong Kong, including both Japanese makes and even European makes, since both Hong Kong and Japan are right hand drive. In order to register the car in Hong Kong, the car must be less than 7 years old, gasoline powered, meets Euro V emission and noise standard, with E-mark for all glass and safety belts, and unleaded-fuel restrictor installed. For cars over 20 years old, they can be imported as classic cars and need not meet Euro V emission stardard. In addition, Hong Kong does not accept privacy windows. If a Japanese used car is fitted with privacy windows, it must be converted to clear glass in order to register in Hong Kong.

Ireland

Ireland has relatively loose vehicle importing laws for Japanese cars. To keep imports down, Irish Revenue Commissioners require all new and imported cars to pay the VRT. Also, every car, both domestic and imported over four years old must pass the stringent National Car Test (NCT) in order to be given a road worthiness certificate. In the case of cars imported from Japan, all glass, tyres, noise, must meet EU approved levels.

Kenya

In Kenya, second-hand imported Japanese vehicles must undergo Worthiness inspection conducted by the Japan Export Vehicle Inspection Center as per mandate from the Kenya Bureau of Standards. The Inspection aims to ensure that the vehicles are not more than 8 years old, are right hand drive, have genuine mileage and that the vehicles pass a safety & mechanical inspection similar to the Japanese periodic inspection.

Macau

Although Macau is right hand drive, it does not allow imports of used car from Japan or any other country, unlike Hong Kong. However, brand new parallel imported cars from Japan are allowed in Macau.

Malta

In Malta, second-hand imported Japanese vehicles must comply with Road Worthiness regulations which take care of Emissions, Lights Operability & Mechanical Operability. Other than that such vehicles can be imported and registered without any problems. Some Maltese importers also apply corrosion protection to these vehicles due to high humidity and heat levels imposed via the weather.

New Zealand

New Zealand has stringent safety and emission standards. Besides Biosecurity clearance and Customs clearance, a vehicle must be Entry Certified by a Transport Services Delivery Agent (TSDA) which includes checking that paper data and physical data meet safety, emissions, and fuel consumption standards.

Pakistan

Pakistan also applies strict control on imports. In order to import a car, it must be not more than 3 years old. Extremely high importation taxes are levied on imported vehicles. Special ships are sometimes used for exporting vehicles to Pakistan, to meet the rising demand.

Russia

While Russia has right hand traffic, it allows the importation of LHT vehicles, providing that they pass the Technical Inspection test which is compulsory for all street-legal vehicles in Russia. Although a prohibitively high import tariff is levied on the cars more than 7 years old, to protect the local industry, even the oldest Japanese vehicles usually pass the inspection, if they were originally well maintained, and are registered without any problem. Vehicles imported to Russia are sometimes exported to North Korea.

United Kingdom

Importing rules for the UK are stringent; all vehicles must undergo Individual Vehicle Approval to assure compliance with applicable ECE Regulations or British national equivalents. The speedometer must be converted from kilometres per hour to miles per hour, a rear fog light and unleaded-fuel restrictor installed.