Next to Buddhism and Shinto, there is a third, equally important religion in Japan: “Seken tei wo kinisuru,” or be mindful of ones reputation. Japanese are neat, and polite, and they very much care of what their neighbors think. You don’t see many old and decrepit cars on Japan’s streets. Would be bad for your seken tei. Buying a new ride every few years is just the right thing to do. Make that “was the right thing to do.”
Most of the Japanese are now dead set to hang on to their current car for its dear life. Only if it dies will they set foot into a dealer again. This is the result of a study conducted by The Nikkei (sub) and C-News, a marketing data service operated by Yahoo Japan Value Insight Corp.
The question was simple and straightforward: “What do you plan to do with your current car?” 56.5 percent of the respondents said they would drive it until it breaks down, then buy a new one. Only 10 percent chose “replace it with a new one, as soon as I find a nice model.”
The former standard behavior was to drive the car until the first mandatory safety inspection comes up. “Drive it until the next inspection, then buy a new one” now is the choice of only 18.8 percent of the respondents. Japanese repair shops will like to hear that, because it takes work and money to keep a Japanese car up to snuff for the inspection. The first one is due after three years. The next ones every two years thereafter.
At least the Nipponese don’t plan to give up driving altogether. “Drive it until it breaks down, then I will stop owning a car” (3.8 percent,) and “get rid of it as soon as possible, then I will stop owning a car” (0.5 percent) are not very popular, and no seken tei enhancing options.
Japan’s domestic auto sales fell last year to their lowest level since the mid-1970s. According to data released by the Japan Automobile Dealers’ Association, sales of new cars, trucks and buses slid 6.5 percent to 3.212m vehicles last year, down from 3.434m in 2007. 2009 looks like another down year. Especially if the Japanese do as they said in the study and will stay with their current ride until its death will tear them apart.
Wasn’t the extreme cost of a third-year inspection another reason Japanese rarely held onto a car for many years?
Though I figured someone must pay this cost, so even if the car was sold its value would be affected by the inspection cost.
You are right, Michael. That’s why it says: “The former standard behavior was to drive the car until the first mandatory safety inspection comes up after three years.” That was the pattern and it is changing.
With cars being able to last 20 years these days, a new car purchase to most people has become the ultimate luxury purchase, comparable to buying a Gucci bag: basically unnecessary, and very vulnerable to the whims of fashion. I predict that car makers will experience more extreme up- and downswings in their sales numbers in the future…
What used to happen to all those three year old JDMs? Does anyone know how much the inspection costs?
I remember reading about the Japanese car inspection system back in the 80s, when Americans were afraid that Japan was going to reverse WWII by buying Pearl Harbor. IIRC, the claim was made that no vehicle could ever pass the inspection so all Japanese owners sold their cars before inspection. and the cars were exported to East Asia. This was alleged to be a subsidy to the Japanese auto companies.
Just curious. If most Japanese kept their car only three years what did they do with the car? Did they sell it and was there much of a used car market in Japan? If so presumably the purchaser would be liable for the inspection, no? Or did they just junk them, which strikes me as un-Japanese like wasteful behavior.
So what will people do with the “extra” cash?
Say you drive for 60 years.. that’s 20 cars on the 3 year plan. Assuming you paid cash to keep it simple, and the cars cost $30K, that’s $600K, maybe you get half back when trading in, so that’s $300K.
Now say you drive 6 cars for 10 years at $30K each. A total of $180K.
So $120K over 60 years = $2K per year.. Let’s say you invest that in CDs at 5%..
You retire with an extra $760,000…
The 6 car guy loses on maintenance, but gains on insurance, but most people wouldn’t pay cash so they lose on interest and taxes…
Hopefully people don’t figure this out.. Oh wait they already did….
We had a tech bubble, a wall street/banking bubble, a realestate bubble, an oil/gas bubble. Bubbles, bubbles everywhere….
Have we witnessed the auto bubble burst? Is 9-10M the new norm for auto sales? Are people finally realizing that it is throwing your money away to replace your perfectly running car every 2-3years? Has the runaway consumerist mentality of the last two decades(16 years) faded? Are people waking up?
@lw,
wow we were both thinking the same thing.
Spyder
@Ken Strumpf
There is a huge export market to Africa for slightly used Japanese cars. There is also a large market for replacement parts. Getting a new JDM engine for most Japanese imports is very reasonable because of this behavior. Expect that to change…
@63CorvairSpyder
I just can’t imagine 9-10M being the new norm. I think it goes much lower for a period of a few years. Maybe 4-5M units.
The unemployment #s say it all. 500K new unemployed every month and rising. That works out to 11 people that get pink slips every minute. 33 got pinked while I typed this.
So every month 500K people lose their ability to buy a car and millions more lose their desire.
We are 3 months into a crash in the car market, just getting started….
The housing crash started in late 2006 and is still ramping up… Everyone said it would be fixed in 2007, then 2008, then 2009.
This year everyone will say that car sales will rebound in 2H 2009, then 1H 2010, then 2H 2010, then 2011, then eventually they will be right.
Have you seen real discounts yet? Commericals for car auctions open to the public?
New Chevy Impalas!!, 0 miles!!, Buy a 3rd party warranty on site!!, $5000!!, Cash only! Sunday! Sunday! Sunday! At the fairgrounds!
@Ken Strumpf & enderw88 : Used or stolen Japanese RHD cars end up in Africa, true. Some also end up in Pakistan (not India) and believe it or not in the Middle-East where they are “converted” into LHD by unscrupulous shady operators to be re-exported to West, North Africa and even Yemen or Iran.
The reason for the reconversion is that RHD East African markets have far less potential than their North or West LHD African counterparts (excluding South Africa).
Commericals for car auctions open to the public?
Mannheim has done a few here and there. I expect to see Mannheim and USA open them up to anybody rather soon.
You still have to pay cash to buy, so it won’t be a complete cluster-f***.
I’m with you on the 10MM units fantasy.
This Sunday at the Rosemont Horizon! All the cars are coming! Be there….
(Yeah, I know, it’s not the Rosemont anymore, but those childhood memories fade slowly.)
I totally agree with those postulating we have witnessed the bursting of an auto bubble.
Think about it. Do you, or most people you know really, really NEED a brand new personal vehicle every 2 years or so?
In 1994 I got my first car and I was fortunate enough to receive a 1990 Eagle Talon Tsi AWD with 65k on the clock.
I liked the car so much I kept it until 2004. When I finally sold it the paint still had some gloss, the drivetrain was tight, and the body was sound. There was some minor rust, but that is unavoidable after 14 Michigan and NY winters.
I took care of the car, but I did not go to outrageous lengths to baby it. It spent the better portion of my college years parked outside in Michigan weather. It never stranded me, but it did perform a couple mid-journey conversions to an air-cooled engine. Interesting times to say the least!
I’d also like to note that this vehicle wasn’t the best assembled or most reliable auto on the market.
Based on my personal experience, I think that most people who take decent care of a vehicle could easily make their current car last 5 or 10 years. I think we will see more people doing this.
That trend, combined with the large number of low mileage used vehicles and unsold new vehicles in the market, is definitely going to put a damper on new vehicle sales.
We should start a pool on how many vehicles will be sold in CY2009. My guess is no more than 5 or 6 million tops.
The shaken tax wasn’t really that much when I was living there. It was definitely more about appearances. A lot of us foreigners would buy up the three year old cars as the resale on them was total crap and even with the shaken, it was no big deal.
Japanese job security and constant new car sales was a function of economic growth and the expansion of the middle class. Now that Japan is Just Another Advanced Industrial Country (JAAIC), life looks less rosy.
Yes, a car will rust in northern winters if you don’t wash it. (The problem, of course, is that it always gets dirty with salt/grime during those periods when it is too cold to wash it.) I wash and garage my car – no rust in the past 7.5 years. A lot of people in Illinois, Michigan, and Ohio are just lazy/indifferent – if you wash the car, it will last.
I can buy a 100,000+ mi 6G75 replacement 3.5L V6 for my Diamante out of a junked model in the US for around $1200 w/o accessories.
Or, I can get the GDI version with an extra 70 hp (275 total), with accessories and electronics, from a Japanese market one with 65,000 kilometers for $600 plus shipping (shipping from the California importer, that is, who has already brought it to the US). Maybe no feasible everywhere, but I live in a state that doesn’t test emissions. It’s a viable option.
It’s a bit worrying to me that this might not be possible fairly soon.
Several recyclers import used auto parts. A JDM engine is significantly less costly than an overhaul or buying a local used or rebuilt engine. The engine blocks, rusty from shipping, clean up well. My mechanic does a compression test, installs new spark plugs, and changes the oil and filters. They almost always start right up. The recycler replaces the rare bad one.
With cars being able to last 20 years these days, a new car purchase to most people has become the ultimate luxury purchase, comparable to buying a Gucci bag: basically unnecessary, and very vulnerable to the whims of fashion. I predict that car makers will experience more extreme up- and downswings in their sales numbers in the future…
Hmm, I wonder if it might not work out the other way around? I suspect credit will be tighter for quite some time, and people will become accostomed to keeping cars longer. All in all, I think we are converting to a market that buys for actual need rather than want. It might stabalize the market -albeit at lower levels of sales. Just a thought – I might be wrong.
Yes, a car will rust in northern winters if you don’t wash it. (The problem, of course, is that it always gets dirty with salt/grime during those periods when it is too cold to wash it.) I wash and garage my car – no rust in the past 7.5 years. A lot of people in Illinois, Michigan, and Ohio are just lazy/indifferent – if you wash the car, it will last.
I live in MI, and I have never, ever, washed my ’98 Ranger. It gets a shower when it rains. It stays outside all the time. Not a speck of rust on it. Even the dents and scratches have no rust.
IMO, rust prevention is the single biggest advancement in cars in the past 20 years.
Several recyclers import used auto parts. A JDM engine is significantly less costly than an overhaul or buying a local used or rebuilt engine. The engine blocks, rusty from shipping, clean up well. My mechanic does a compression test, installs new spark plugs, and changes the oil and filters. They almost always start right up. The recycler replaces the rare bad one.
It depends on which engine you’re buying. Engines popular with tuners, such as Nissan’s SR20, Mitsubishi’s 4G63, or Toyota 2JZ engines will be assesed with the ‘JDM tax’ to the point that it’s cheaper to buy a local engine or get your current one rebuilt.
There’s also the risk of unscrupulous importers selling engines as JDM, but in reality they’re sourced from local vehicles.
In 1991 I visited family in New Zealand. They drove second-hand Subarus. Apparently a Ford assembly plant in NZ had recently closed because everyone was buying second-hand Japanese imports.
Many governments try to keep them out to support the local auto industry, but the price is so attractive that they come in via the “grey market” nonetheless.