Are cars getting expensive at Japan Auto Auctions?
Really good question thats simply begging for an educated answer. Sadly I am an idiot and not the
one to really supply you with what one would or should consider an educated answer. However in saying that I will try my utmost to explain.
Dont hold your breath lol,
After considerable time in the automotive business here in Japan and also in New Zealand I truely
believe that in some way I the writer have the credentials to write something about the automotive industry here in Japan, specifically the car export side.
However not being one of those folks who can just tap stuff out night after night this may prove to be a dull read so please bare with me and dont scratch your head to quickly.
My first time (with an imported car)
Remember when you saw the first imported Japanese car in your neighbourhood! I dont know what you thought at all but I can relate my impressions from 1988 back in New Zealand. Firstly we were all driving crap cars that were continually being re-built and recycled as the cost of anything near near was for rich people.
Looking out the window of the car dealership where I worked there was this Toyota Crown estate or station wagon as we like to refer to them as in NZ driving up the road looking rather odd with these weird mirrors on the front guards ( to be referred to as “Hockey Sticks)
Admittedly it looked pretty darn good in some sort of dirty metallic brown colour which I had not seen before. It was probably already 10 years old or so and looked better than the brand new Ford cars I was supposed to be selling behind me in the showroom.
We kept seeing this car and one or two others driving around over the next few weeks. One day the boss came up spouting that we was going up to Japan to buy some of these Japanese Imports. We all had some serious chats about this and it was going to happen!
Why Japan? Well it was simple! We were driving expensive junk. The bulk of new cars either were sourced from Australia of the UK and poorly made and we had a few start up Japanese franchises. These imports coming in had air-conditioning, electric windows and mirrors not to mention a host of other features not even dreamed of on our domestic market. Not only did the Japanese import cars come with these great accessories, they were half the price to buy in Japan as our clunkers were and the extra featured simply increased the added value. We were hooked.
After 2 months waiting and a few stories of drinking parties in Tokyo bars from the boss our first imports arrived at the dealership. There was probably about 30 in total. I was breathless when I saw them. Yes breathless and not because there were so many in the first shipment. Breathless because they were all driving school cars. Extra pedals for the passenger, a large stripe over the centre of the car, mirrors on places that were not required and hockey sticks on the front guards.
We were told clearly that this was the future of the New Zealand motor industry squatting on four wheels in front of us. What a scary thought it was at that point! Where was my fucking Toyota Crown lol.
These cars owed the company about $1,500 landed and detailed sitting on the car lot, and yes they still had the spare passenger pedals when we were selling them ( the extra pedals were short lived )
So now we have these cars at $1,500 each or there abouts sitting on our car yard with window prices of $7,500 to $9,000. How is that for a darn good mark up! Monday comes along and the advertising starts for the new shipment of quality Japanese driving school cars begins.
People would start coming into or onto the yard and would first look at the New Zealand domestic market cars with no electric windows and zero air-conditioning etc. They looked around these cars as I thought what a waste of time they were. These domestic cars only had a margin of about $3,000 in them and those darn hockey stick cars had close to $5,000 plus of which I was getting 25% off.
As they walked around the cars talking shit I would push them towards the Japanese Imports, and with contempt and disgust the potential buyer would say ” I dont want no bloody Jap Import” Yes racism was very alive and well back in 1988 ~ 1993 when I was walking the car yards and a green neck salesman.
Within days I learnt a new trick as sales were not going well and 25% of $3,000 bucks which was about $2,200 after negotiations was not so great. The trick was that as the husband was walking around complaining about Japanese imported cars to talk to his wife and plant some subliminal messages about comfort levels, low mileage and late model attributes of these imported cars, and not forgetting the low maintenance aspect (yes save money and stay warm with aircon)
She turns to him and squawks that she wants to look at this import. I say “Dont worry about the
stripe we can have it removed” just before he opens his mouth. Slowly we gravitate towards the hockey stick car. $ signs flying every where in my mind. You can see hubby squirming and the sky turning black.
He refuses to get into the car as his time frame suddenly goes from we have all the time in the world to we have to get back for the game or some shit.
I then say to her “Surely you can spare me 5 minutes yes?” She agrees and he is forced to agree. Suddenly I sprint away in a mad dash to get the keys for the car. 10 seconds later the little Toyota or Nissan is running with the aircon blasting, electric windows going up and down, plus central locking actuators clicking time and time again.
I still have 4 minutes and thats enough to get their fat asses into the seats for a quick 15 minute run around my favorite demo route! (yes I lied to them about the 5 minutes) It was my job to bend the truth in any shape that suited my end purpose. THE SALE.
Within a month all cars were despatched to new happy owners around Auckland. Some had stripes and some didnt. We would laugh when they drove down the road. Others had the passengers pedals removed regrettably due to safety reasons. I am sure it would have been fun if they had left them in.
As time went by in my city over 80% of used vehicle sales yards were stocking Japanese imports and all fighting for the largest profit margin possible. In following years to come other countries started following the New Zealand example and began importing cars from Japan also. Countries such as England, Ireland, Australia, Cyprus, Canada and more opened the barriers for these cars to enter their fine lands.
Now its 2019 and over 98 countries are importing used cars from Japan which in reality is only slightly larger than New Zealand but with 128 million people. Luckily for all these 98 plus countries Japan has a great car turnover system that dumps used cars into the auctions regularly.
Think back to 1988 and New Zealand had the Japanese export market virtually to itself. It was a car smorgasbord at auction. Now 2019 we have close to 100 countries walking through Japanese auction houses.
The only problem with this from an importers perspective is that not only are you bidding against your own countrymen, you are now bidding against multiple countries for the same product, of which there is limited supply. So everyone is squabbling for the same car at auction here in Japan thus forcing auction prices up.
At one point there were only dealers entering the auctions. Now and for many years we also have the end user. Some end users are educated on prices and others not so. This also forces prices up even more so with the slice of profit pie becoming increasingly smaller for the dealer on the car yard.
Your 1988 $6,000 profit margin in New Zealand is now $500 to $1,500 in 2019 and you pray that the buyer needs finance as that is where the real profit is made. Times change as does everything.
Sitting here in my lounge typing this out I look back with a smile with fond memories of the hockey stick cars and my 25%.