Imagine entering a huge car park. Cars, vans, and sport utility vehicles number in the hundreds. At first glance they all appear to be in pretty good shape. In each vehicle the key has been left in the ignition and you can start up any one you like. Sounds good? In fact, no imagination is needed because there are several places like that in Japan. Yet not anyone can just walk in and drive away their dream car.
That description covers only part of the scene at Chiba Auto Auction (CAA) in Inage-ku.
Bidding is scheduled to begin at 11:30, but for at least an hour beforehand, many dealers are prowling the outside lot, looking for vehicles to bid on. They have just enough time for a brief series of cursory inspections. Any rust lurking below the paint? Is the power steering OK?
Bonnets were raised and engine noises were diagnosed for specific frailties. Since bidding for the more coveted vehicles is fierce, a few wary glances are exchanged between some of the dealers. Perhaps they are reminiscing of past battles for cars won and lost.
Just as certain elements of the modern battlefield have come to resemble a Nintendo game, so has the car auction business in Japan. At CAA, the bidding room is large, with nearly 100 rectangular tables lined up in descending rows. Behind each table are three chairs. Under the tables were small electronic boxes, to which push-button mechanisms are connected via cords. A score of video screens are installed throughout the space, affording everyone at least one good angle of view.
Every week, thousands of cars, mostly used but some new, are bought and sold in auction rooms like this. Most of the dealers are Japanese who wish to increase, unload or rationalize their stock. For example, a Mitsubishi dealer might have acquired a Nissan as part of a trade-in deal. He hopes a Nissan dealer will take it off his hands. If this doesn't work at the first auction house, he will try again at others.
The export trade is also in evidence. Dealers from Ireland, Australia, New Zealand, and Britain occasionally attend. The reason: These countries, like Japan, use right-hand drive vehicles. Dealers from South American and South Asian countries are also present.
Dealers have more than just their instincts and prior inspections to rely on. The auction house provides the details for each vehicle. Listed on specification sheets are the manufacturer, year (the Japanese dating system is used), options, mileage, and gradings indicating a cars' condition. At CAA, the gradings generally run from 1 to 5, with 1 meaning the car is in rather poor shape. The few new vehicles are listed as 7's or 9's. If a car had been in an accident no number is used; It is graded as "A".
Information specific to a vehicle is placed inside each car and later shown on the video screens along with digital images of the cars. Larger computer printouts with the most important condition information for all cars to be auctioned off is listed (in order of bidding appearance) on stapled computer printouts. These are placed in front of each chair in the bidding room by the auction staff.
The bidding tends to be a largely quiet affair. Current owners decide on the opening bid prices. Sometimes, especially when the owners are not present, the prices at which they are willing to sell are preloaded into the auction house's computer system. Otherwise, there is a computer operations room next to the bidding room. From there, the owners could direct the auctioneers to push an "agree to sell" button when and if bidding prices reach desired levels.
Signaling the start of the bidding process is the word "START" projected in a white rectangle on the bidding screens. In one bid, for instance, dealers pressed their buttons, thereby raising the offered prices in 3,000 yen increments. On the screens, colored flashes accompanied the action. When the amount hit the point where the owner was willing to sell, the word START disappeared and the white rectangle turned red. Bidding could continue, however. When the red rectangle changed to a green one, the last bid had been made. The car would sell at that price.
The push button environment requires a certain amount of caution among the dealers. A dealer recounts; "Once I brought my twelve-year-old daughter to a car auction and I told her to be very careful about pushing the bidding button,". Unfortunately, the little girl was not to be denied her chance to play and she pushed the button in front of her. As a result, her father found himself the successful bidder for a car he did not want. He was made to pay 70,000 yen to back out.
One curious bidding habit appears to be the bane of dealers. Owners sometimes place bids on their own cars to create the illusion that the bidding is more competitive than it actually is. Since a sale would not occur until the owners directed that the red light be displayed, they had no fear of buying a car they already own. Some dealers can sense, thanks to their knowledge of the market and by the way the bid lights are flashing, when an owner is engaging in this practice.
When vehicles fail to sell, the START light goes blank and the next vehicle is displayed. But this doesn't mean that the unsold vehicle cannot be sold on the same day. At the rear of the room is a special table where auctioneers can arrange for direct negotiations between the owners and potential buyers.
In the past, potential buyers would literally run to the back to be the first to haggle with the owner. Needless to say, the spirited dashes occasionally led to pandemonium. Computerization has thankfully ended that situation. As dealers now have coded smart cards they insert into a slot to activate their bidding mechanisms, it is easy to determine who has made what offer. The last person to have bid on an unsold car is designated as the first person to engage in negotiations with the owner.
For now, the auction houses are limited to dealers only, not the general public. Dealers pay significant yearly membership fees to each auction house they attend.
The auction houses have been pressuring dealers to maintain the number of vehicles they put up for sale. Consequently, the level of vehicle quality has declined with older and more damaged vehicles being brought in. As this also hurts sales, no effort is spared to increase buyer interest. If the bidding has stopped on a vehicle and the red light has not appeared, sometimes there is a pause. A voice on the speakers entreats the audience with the words "Mo sukoshi " (Just a little more). This lets buyers know they are very, very close to the owner's selling price and it's too soon to give up.
(Please note: the images above are not from the CAA but from TAA as kindly provided by AMJ)
A dealer in this area of Japan, Tokyo may well be a member of several Auction Houses. Mike Ainis of Angel Motors Japan based in Chiba, the supplier of my vehicle, attends a number of these auction houses.
OK, so we've seen how a Japanese Auto Auction works, but How Much would an Estima cost at one of these auctions? Say, number 7 above, the JAA Tokyo for example - click here to find out!