Car Ownership in Japan 101

Japan is known for its excellent public transportation infrastructures: a country where trains can take you to almost any destinations you have in mind, as they are also extremely clean, safe, punctual and reliable. In fact, it is often quicker to hop on a train than trying to drive, especially during rush hours when everybody is trying to get to school or work! So, why would anyone want to own a car then?

Well, there are many advantages to car ownership in Japan. For most people, convenience is probably the most important factor amongst all...... shopping trips to Ikea and Costco, weekend trips to a rural onsen town in the remote yet beautiful Japanese countryside, sending and picking up your kids from daycare........and for car enthusiasts like myself, owning a retro JDM sports car is a matter of personal satisfaction, labor of love, joy and pride. For some, it is perhaps a personal status symbol......driving a luxurious Mercedes or an exotic Lamborghini will be sure to turn heads and earn respect, envy and perhaps even jealousy. Whatever the reasons may be, if car ownership in Japan is an opportunity that you may be interested in exploring......then I have great news for you: car ownership in Japan isn't necessarily as expensive as you think! However, the steps along the process of purchasing and registering a car can be complex. But don't sweat, because I have everything you need to know right here about car ownership 101 in Japan!

 

What to expect budget-wise?

Let's do the money talk first: what do you need to budget for owning a car in Japan? 

1. Cost of a new or used car
2. 10% GST
3. Vehicle weight tax (based on gross weight of vehicle, ¥3000~¥50,000) 
4. Annual vehicle tax (pending on engine displacement, ¥30,000~¥80000) 
5. Environmental tax (0-3% of vehicle purchase price based on combustion efficiency, paid during shaken registration and Shaken inspection (¥20,000~¥200,000)
6. Registration and documentation (~¥10,000)
7. Parking (¥3000~¥50,000 per month pending on location)
8. General maintenance and fuel (¥5000~¥50,000+ per month)

 

Finding a parking spot

Before we even start shopping for a car, we need to make sure there's a parking spot for the car first! A quick Google search for Tsukigime Chushasho "月極駐車場 (insert your neighborhood's or nearest station's name)" should show listings of monthly parking spots available for rent in your neighborhood. Parking spots in the heart of big cities such as Tokyo, Osaka and Nagoya tend to be expensive and competitive, with high demands also leading to picky landlords that set out unrealistic requirements. Based on my own personal experience mixed with my non-Japanese friends' experience, our rental applications have all been rejected at some point for a variety of reasons. Ranging from not being able to speak Japanese at native proficiency, or because they don't have a Japanese family member that can act as a guarantor, to even just a blatant outright "Sorry Japanese only" policy! 

While rental discrimination laws exist at least on paper in Japan, many landlords who are weary of foreigners will instead turn to legally justifiable reasonings such as "inability to communicate" or simply "sorry not available" to get what they want, and the best thing to do when facing discriminatory landlords is to simply move on and keep searching. Searching for a parking spot can often turn out to be an extremely difficult, frustrating and unpleasant process for many foreigners, and lots of people have in fact given up on the idea of car ownership because they couldn't rent a parking spot within their neighborhood. 

Now moving on to prices......for a parking spot in Central Tokyo, expect to pay an average of ¥30,000 to ¥50,000 per month, and upwards to ¥100,000 for prime locations such as Shibuya, Roppongi or Otemachi (Tokyo Station). In the neighboring prefectures surrounding Tokyo, it is not difficult to find a parking spot for under ¥10,000 per month......and in the rural areas far from cities, it is actually quite feasible to find parking spots provided for free with your rental apartment, or at extremely affordable prices starting from ¥3000 per month. If car ownership is important to you, it is beneficial to factor parking expenses into your considerations when planning where you'd like to live in Japan. Renting a parking spot most often requires visiting a local "fudosan" (不動産) real estate broker office. When signing contracts, everything is done in Japanese, and most agents require the renter to understand Japanese through verbal communications, reading and writing. If you are not fully confident in communicating in Japanese just yet, be sure to enlist the help of a friend who can act as a translator, or a real estate agent specialized in dealing with foreigners. After securing a parking spot contract, ask the real estate agent to prepare the documents required for "Chusha Shomeisho" (駐車証明書) registration for an additional fee. You will need these papers later on once you buy a car, but for now, let's get started with the fun part: shopping for a car!

 

Shopping for a car

When budgeting, keep in mind the 10% sales tax on top of vehicle price. Buying a car in Japan can be as cheap or as expensive as you can imagine. Case in point, one of my good friends was able to buy a used Honda Acty Kei van for ¥20000. That's less than $200 in US dollars! Sure, the van has tons of scratches, dents and rust spots, powered by a leaky engine that sounded like a ticking time bomb, and an interior that smells like a confusing blend of a Soviet-era steel factory mixed with Grandma's living room, but the point is, the car starts, drives, turns and stops! 

On the high end of the price spectrum, it's a playground for the privileged few and the sky's the limit. Aside from the obvious expensive exotics such as Rolls Royce, Lamborghinis and Ferraris, many retro JDM sports cars have proven to be worthy investments over the past decade, as their values have skyrocketed and continue to spike with no signs of slowing down. The 30 years old manual Twin-Turbo Toyota Supras, as seen in Fast and Furious driven by Paul Walker, typically cost north of $100,000 to start, while clean and unmolested samples have sold for double or perhaps even more! The legendary black and white 1986 Toyota Corolla AE86 Trueno hatchback used for tofu deliveries in popular manga series "Initial D" are selling for over $30,000 nowadays. 15-20 years ago, they were littered all over Craigslist for $500-$1000. Who would've thought a Toyota Corolla approaching 40 years old would turn out to be a wise investment? 

The next important question is, what kind of car would you like to buy? If you already know your dream car, then skip this, but if you don't really know much about cars, or if you are not particular about any specific criteria or features and really just need to get from A to B safely and quickly, then it is perhaps advantageous to consider owning a "Kei Car". "Kei Car" is a special category assigned to cars that are physically light weight and small, with an engine displacement of 660cc or less. Owning a Kei Car will bring considerable savings on fuel, taxes and highway tolls, not to mention the carbon footprint you are minimizing by using a vehicle that is meant to be environmentally friendly by design! You can see many Kei Cars on the roads in Japan, they are issued yellow license plates instead of the normal white plates given to regular cars. 

 

Different ways to attain a car in Japan

Once you have decided on which car to shop, we can move on to the question of "how?" There are 3 different ways to shop for cars in Japan. 

 

Option 1: Car dealerships
The easiest but most expensive method is to walk straight into a dealership, negotiate, sign the papers, get the keys and drive home. On the plus side, there are lots of advantages associated with shopping at car dealerships: the opportunity to test drive and negotiate before making any commitments, the service that they provide to preparing and detailing the car prior to delivery to customers, and the aftersales service provided to manage all the paperwork, inspections, registration and licensing process that can be both time consuming and soul wrenching for most average folks. Car dealerships also often offer some sort of warranty on the vehicles sold. However, do expect to pay a 50% or even 100% markup in some cases if you are shopping for a used car! Most car dealers in Japan resell used vehicles attained through direct trade-ins, or acquired through wholesale auctions, which brings us to the next question: can private buyers shop through wholesale dealer auctions and avoid dealer markups? The short answer is YES!

 

Option 2: Wholesale auctions
Shopping from wholesale dealer auctions requires hiring a bidding agent to bid on your behalf. While you need to pay the service fees charged by the bidding agent, you are still paying considerably much less in comparison to dealership markups. All vehicles sold at wholesale auctions go through rigorous inspections prior to listing, so that potential customers have a general idea about the maintenance conditions of each car. Furthermore, bidding agents also usually visually inspect the cars just to make sure they are good as advertised. For an additional fee, most bidding agents can also assist with the paperwork, inspection and registration process for added convenience. The only downside to shopping through wholesale auctions is the lack of guarantee or warranty on the car itself; however, the money saved by avoiding dealer markups makes up for the shortfall. 

 

Option 3: Private sales
The last and most risky option is to go through a private sale from websites such as Craigslist, Mercari and Yahoo Auctions, where you assume all the risks and have to command the entire purchasing process on your own, up until finalizing all the paperwork, completing the inspection and registration procedures along the way. Personally, I wouldn't recommend this method unless you are mechanically knowledgeable AND happen to have found the car of your dreams or a stellar deal. When it comes to used cars in general, if the deal sounds too good to be true, it's usually actually too good to be true.  When I purchased my first car in Japan through Yahoo Auctions, the savings were not significantly less compared to purchasing through wholesale auctions. The reason being that many registered users on Yahoo Auctions are also the same car dealers trying to score for their inventories, so I'd still have to outbid them as I'd do at wholesale auctions! Most cars on Mercari have already been marked up by at least 10%, to offset the 10% service fee charged by Mercari, and finally there's Craigslist, which can be a good bargain source for the right car, but it's definitely not the best source for car shopping. Based on my past experience, it is essential to be familiar with cars at the least, and best if you are mechanically inclined when shopping through private sales. Again, expect zero guarantees or warranties unless explicitly stated by the seller. 

 

Registering a parking spot: obtaining Chushasho Shomeisho"駐車場証明書")

To register a car in Japan, you need to prove that you have arranged a parking spot for your car, within 2km from your registered residential address. This is a very simple and straight forward process: bring all the documents provided by the real estate broker office to your local police station (not a koban box!), request to obtain a parking certificate, fill out the paperwork and submit ¥2500. This process usually takes 3-4 business days, police officers will verify the information you have submitted by physically visiting the parking spot, and the parking spot certificate will be issued once everything checks out. The reason this needs to be done after you actually bought a car is because you need to submit detailed information about the car when registering for a parking spot, including the length and width of your car to ensure it will fit inside the parking spot.

Here's a question I have often received regarding parking laws in Japan: let's say I live in central Tokyo, I registered my car to a parking spot for ¥50,000 a month within 2km of my residence. Why can't I just cancel the parking spot right after the car is licensed and registered, and park it in a ¥3000 parking spot out in Chiba afterwards? The answer is simple: it is against Japanese laws, as it is considered vehicle registration fraud punishable with a ¥200,000 fine and criminal charge. 

 

Passing Shaken inspection
(when buying used cars with no shaken)

When shopping for a car in Japan, buying a car that comes with valid Shaken inspection certificate is a huge plus that makes life so much easier - just drive and go and not having to worry about the dreaded nightmare of failing government inspections, and the possibility that you may end up getting stuck with a useless piece of metal on your driveway. If you are purchasing a used car from a dealership, the dealer will usually do everything for you as part of the service and handling fees charged. 

In Japan, all brand-new cars come with a valid Shaken certificate valid for 3 years right off the bet; afterwards, the shaken certificate must be renewed every 2 years, by passing government mandated vehicle inspections. The good news is most used cars can ultimately be repaired to pass shaken inspections. The question is, how much money are you willing to spend? While most shaken can be renewed with a budget of ¥50,000 to ¥100,000 for repairs, it is not uncommon to hear stories where shaken renewals costed ¥200,000 or even ¥300,000 and beyond for maintenance preparations! If the car's resell value is ¥100,000 and shaken requires ¥200,000 to repair for renewal, it's probably time to sell it for cheap and shop for a new car. For this reason, it is not very often that you'd see older cars on the roads in Japan. 

Just as there are different options to car shopping in Japan, there are also different ways to pass shaken! But before we even deal with shaken, there are 2 additional steps you need to go through, in order to legally drive your car to pass shaken inspections before your car is registered and licensed:

Step 1: Bring your vehicle registration certificate to any car dealerships or Autobacs to purchase mandatory liability insurance for your car, known as jidousha jibaizeki hokien (自動車自賠責保険) The cost is around ¥20000.

Step 2: Bring your vehicle registration along with the insurance certificate to your local city hall and obtain a set of temporary "Kari Number Plates" (仮ナンバープレート). Choose shaken inspection as the reason on the form you need to fill out, request for the maximum 5 days validity and pay ¥800, then mount the temporary plates on your car while holding on to the paper certificate issued with the plates in your car, and you're legally allowed to drive your car to destinations for the purpose of obtaining shaken! 

 

Available options on Shaken facilities

Now that you can legally drive your car to designated shaken facilities, here are your options! The easy but expensive method: go to a car maintenance shop that is also a certified shaken inspector. Chains such as Autobacs and Shaken Kobac, or even gas stations equipped with proper garages, offer shaken renewal services, and all you need to do is call and set up an appointment, bring in the car, drop it off and forget it for a day or two, then go back to pay and pick it up… et voila, it's all done like magic! Easy and convenience comes with hefty price tags, expect to pay at least ¥50000 even if you think the car is in excellent working conditions, because there will always be things to fix! These certified shops are under constant pressure from the government to be extremely thorough and strict with upholding inspection standards......and as their business depends on the government certification, they cannot risk having their certified inspector designation revoked if discovered to be improperly lenient. 

Another possibility is to perform the inspection preparation maintenance on your own if you are mechanically inclined or bring your car to a maintenance shop near a designated government inspection facility, whose sole existence is to mock test your car and perform any work needed for you to bring the car through shaken inspections by yourself. Afterwards, you need to bring your car to the government land transportation bureau shaken facility and go through the actual testing procedures on your own. All verbal instructions are given in Japanese by the facility's staff, please do not expect anyone to speak English at the facility. This DIY method can be extremely time consuming and frustrating if your car requires multiple attempts to pass shaken, be prepared to dedicate an entire day just for going through shaken inspections and jumping through all the administrative hoops after passing. The bright side is, you will likely be able to save a significant amount of money as a result! The cost to go through the test is ¥2500, which comes with 2 additional tries on the same day if it were to fail in the first test. The prospect of renewing shaken for under ¥20000 before paying weight tax, road tax and recycling fees is quite realistic if your car is in good mechanical conditions! 

 

Licensing and registration

If purchased from a dealer, you can skip this section, as most dealers should take care of everything for you. But if you're a DIY kind of person like me, then keep reading. Your car just passed shaken inspections and you are now holding the inspection papers with the precious "gokaku (合格)" pass stamp......congratulations! But, just a few more steps until it's all finished. Before getting license plates for the car, you need to obtain a new copy of the Shaken Shomeisho vehicle registration (車検証明書), pay the weight tax, annual vehicle tax, recycling fees and license plate fees. Lots of paperwork involved, proficient reading and writing in Japanese required. Once you submit all the papers and pay all the taxes and fees, you will be given a new set of license plates. Mount them on your car, wait for an inspector to check and seal your plates, and you're good to go!  Finally, you can leave all the administrative headaches behind (for another 2 years) and focus on planning the next road trip to Mount Fuji, Kyoto, Costco, Hokkaido, wherever your heart desires.