Selling & Buying Accident Cars in Japanese used car auction

Hi everyone. This is JPC’s News Letter #11.

As you might already know, cars with a score of “R” at auction means that they were involved in an accident and have a history of some repairs. (Some auction places use “A” or “0” for these.) Today, I am going to tell you how inspectors at auction mark them as “R”.

At each auction, experienced inspectors check all the listed cars as an objective third party. They consider cars with damage to the frame as “R” cars. Cars with minor scratches in the bumper or fender will not be rated as that. So when the only rule for this is whether the damage reaches to the frame or not, the judgement greatly relies on the inspectors’ visual observation. It is quite a subjective assessment. Different inspectors might have different views sometimes.

Panel beating skills in Japan are at a high level and professional panel beaters with experience can fix damaged cars incredibly well even after a car is involved in a huge accident. There are numbers of cars with an accident history but most of them are perfectly fixed so that average person cannot detect the repair. Inspectors at auction places decide if a car was involved in an accident by checking small details such as if there is any trace of bolts being re-tightened, if the panel still has the original paint or if there has been any retouching.

Inspectors’ judgement affect the car value greatly. Some sellers who had bought their cars from the previous owners believing it has never been in an accident cannot recover the cost once their cars are ranked with “R”, which is like a life-or-death matter for them. (Especially for expensive imports like Mercedes Benz and Audi, the price drops dramatically if they are “R”. Could be a business opportunity for someone?) Inspectors have to be responsible in their jobs because sometimes the sellers complain about their judgement and they will have to explain the reason to the sellers. They have to be absolutely positive about their decision.

Thinking about this, I think the level of the inspectors is getting higher every year. When we go to auctions, we are quite often surprised to see how small an area of the damage they picked. Auction organizers want to reduce the numbers of the complaints from the buyers afterward and to trade the cars smoothly; so high standards are required. Some used to feel obliged to lower their standard because of the pressure from the sellers, but now they realise that they can also lose the trust from their customers with such an attitude; so these days, all the auction places do the inspection strictly and sometimes use individual inspector on contract from outside to be fair.

Early this year, a Japanese customer visited our office and asked if we can sell his Estima he had bought from a Toyota used car dealer about a year before. According to him, the dealer explained that previous owner grazed the left fender and replaced the panel but it did not reach to the frame and will not affect its performance. But it was rated with “R” at auction. The damage was thought to be bad enough. In this case, the Toyota staff might have told him a lie to sell it but I think the staff did not genuinely think it was that bad but the inspector thought the other way.

So depending the inspector or seller’s stance, you might get two different answers. The Toyota dealer was thinking about having a buyer who is very interested in buying it right in front of him, he could not say anything negative which might make the buyer have second thoughts. Especially when the damage was so small that it was not going to affect performance, dealers will not judge it as “R” to lower the value of a car unnecessarily.

On the other hand, the auction places, as I mentioned before, judge cars on the basis that they can trade cars smoothly by using harsh standards. If they are in doubt, they mark it as “R”.

This is how people’s opinions get divided. When they have to make a difficult decision, it is natural you get different results depending which sides they are on; but if you understand this when you purchase used cars, it might widen your business opportunities. The quality of inspection at car auctions in Japan is extremely high, maybe one of the highest in the world; so you can trust them and safely buy cars from them. Some of JPC’s customers overseas mainly buy cars with an accident history but in good condition. They are doing business by lowering the purchase cost. They must know what they are doing.

There is much more to talk about on “R” cars, and this may be in the next issue. To be continued…

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(Editor)
JPC TRADE CO.,LTD.
Kato building 4F, 1-1-2 Furuishiba, Koto-ku, Tokyo
Japan Used Motor Vehicle Exporters Association (JUMVEA)
TEL : +81-3-5245-7731
FAX : +81-3-3643-4955