Why Japanese Used Cars are cheap?

Japan has the second largest domestic automobile market in the world, with the five major manufacturers (Toyota, Nissan, Honda, Mitsubishi and Mazda) competing furiously for sales through large and comprehensive new and used car networks. To stimulate domestic sales, most automobile models undergo a full model change every four years with minor front and grill changes every two years.

All new cars are sold with a three-year "shaken" (warrant of fitness) which must be renewed after expiration at an average cost of almost US$2000. A renewed "shaken" is then good for 2 years, but must be renewed every two years for the life of the vehicle. Consequently, most vehicles available on the used market are 3,5,7 and 9 years old as they are usually traded in or sold by the user when the "shaken" expires. Purchasing vehicles with 6 months or more valid "shaken" increases the value of the vehicle domestically and generally is more expensive than units with no "shaken" left.

Consumers in Japan must provide proof of parking space for each vehicle when registering new and used cars. This is mandatory and strictly regulated to the extent that in most areas police will physically measure the parking space to ensure it is appropriately sized for the intended vehicle. Due to acute land shortages in Japan, private parking costs anywhere from $100 to $500 a month for those who don't have space at their homes (the majority don't!). These types of costs make two-car families the exception and severely limit the number of cars on the road. All these factors and others (including strict taxes) make new car purchases very attractive to consumers and contribute to sharp depreciation rates on used cars domestically. It is this very steep depreciation, which make used cars in Japan inexpensive enough to be viable for export throughout the world.