The Cost of Buying a Used Car in Japan
With millions of 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, buyers may be confused by the whole buying process. 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.
With vehicle listings in Japan primarily only showing the price of the car, plus consumption tax, hidden additional costs can add a significant amount to the intended purchase price. Costs not added to the original price include; dealer fees, shaken, and other arbitrary taxes. So what are these additional costs?
In relation to the above, dealerships can, and have been known to pass on some of these additional costs to unknowing buyers, primarily to inflate the level of profit in the sale. Below is a comprehensive run-down on these additional costs, and what should be charged in a transaction.
Update: As of the 1st of April 2014, with consumption tax increased to 8%, acquisition tax has in turn been reduced from 5% to 3% on new and used vehicles.
Vehicle Excise Duty
Locally called Auto tax - a direct translation from the Japanese 自動車税, this tax is levied on all vehicles based on two factors; the engine size of a given vehicle, allocated in increments of 500cc, and vehicles reserved for personal or business use
Billed every year in the month of April, full payment is due by the 31st of May by the vehicles' current owner. With the exemption of kei cars, auto tax is to be paid on a sliding scale when purchased after April.
A prefectural tax assigned for the construction and maintenance of the local road infrastructure, is levied on buyers on new and used cars under the age of six years old that exceed an acquired value of JPY500,000.
NB: It's important to remember that the acquired value of a used car is or may not be equal to the actual purchase value. Acquired values are based upon the cars grade and specifications from new, depreciated over the six year period using the sample formula below.
Our example, a 2012 Fiat 500 1.4 Sport, priced at JPY2,430,000 new at the time of initial registration, has an acquired value of JPY795,652. To calculate the cost of acquisition tax, simply multiply by 3%, and round up to the nearest thousand yen.
NB: Values defined by an asterisk (*) differ depending on the year of registration.
Since 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.
Based on the given curb weight 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 the new system introduced in May 2012, vehicle costs are divided into four main categories:
- JPY0 ~ JPY5,000 per 0.5 tonnes for eco cars
- JPY8,200 per 0.5 tonnes for non-eco cars under 13yrs of age
- JPY10,000 per 0.5 tonnes for non-eco cars exceeding 13yrs of age
- JPY12,600 per 0.5 tonnes for non-eco cars exceeding 18yrs of age
Otherwise referred to as voluntary insurance, is a legal requirement for all vehicles on the road giving basic third-party cover. Spanning the length of the shaken, the current cost at the time of writing is JPY28,780 for two years.
Other 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.