Japan, being one of the most densely populated countries in the continent also holds the credit to be the second largest domestic market in the automobile industry. This ranking of the country is based on the manufacturing of five major manufacturers Honda, Mitsubishi, Toyota, Nissan and Mazda. The competition among these automobile giants is fierce both in the new and used car market. A major benefit of this monopolistic competition is that the companies do not compromise on the quality factor of the vehicle which guarantees cutomer satisfaction. These companies, in order to increase its domestic sales, undergo a complete model change over process, after every four years and minor changes in the front and grill area after every two years.

New cars are required to be sold off with a warrant of fitness or “shaken” of three years and the same must be renewed after expiration for a period of two years at a cost of £1000. In this context, used cars in Japan are usually available in the market when the “shaken” has expired or the car is 3-9 years old. These cars are traded in or sold by their owners at a low price because of the expiration of the warranty of fitness of the car. On the other hand, cars that have some time limit of the warranty left within them are generally more expensive than the latter one.

Another law that is prevailing in the used car market in Japan is that the user must provide evidence of parking space for each car at the time of registration. Providing of proof is mandatory as in many areas an inspection committee is formed to inspect the area whre the car is intended to park. The committee physically measures the parking space in order to ensure that the size of the area is fit for the vehicle or not. For those who do not have any parking space for the car are required to pay an amount of £60 to £300 per month as parking charges.

Another factor that stimulates the used car market in Japan is the steep rates of depreciation on used cars which makes the used cars market in the country inexpensive to the extent that it can cater both domestic and international market of used cars.