Auctions are at the core of the market structure
While manufacturers usually sell their new vehicles to customers via their own sales channels (including contracted dealers and subsidiaries), the starting point of the used vehicle market is conversely the initial owner. Although carmakers attempt to bind their customers throughout the vehicle lifecycle – or rather their products – at this point, they compete with used vehicle purchasing companies, used vehicle dealers, and even other end users. Nonetheless, specialized car dealers dominate the scene, with the customer-to-customer market being comparatively small, despite some gains through internet websites. When these dealers find a new end-user right away, that is the end of the story. Often enough, this is not the case. Instead, gigantic auto auctions attempt to reallocate more than seven million vehicles per year between dealers (and exporters). If this is futile, the auctioneers sell them to recyclers.Is buying secondhand the way of doing things in Japan?
The numerous market participants make it hard to judge this proposition for the automotive market. A common way to determine the yearly sales volume of used vehicles is the sum of re-registrations, transfer, and alteration registrations. Comparing new registration sales with those three would suggest roughly two million more sales of used automobiles. The actual figure is probably lower: although it includes sales to end-users, it also contains many other cases. Surveys among consumers indicate slightly more than three percent of 18 to 69 year-olds in Japan buy a used automobile per year, with a strong demand for mini passenger cars (kei cars). However, this estimation ignores businesses and other corporations. Therefore, some suggest a fifty-fifty relation between used and new purchases instead of the one-third-two-thirds ratio among consumers.Notwithstanding, several developments are certain: the supply of used vehicles has been constant, neither exceptionally increasing nor decreasing. On the other side, prices have climbed within the last years, implying higher demand. The future of Japan’s vehicle market will be impacted significantly by its shrinking demographic and the used vehicle market, more specifically, by those trying to strike a bargain.
