Curbside Commentary:  The Cost of Owning a Vehicle in Japan

In several previous posts, commenters expressed an interest in the costs of purchasing and owning a vehicle here in Japan.  Here’s a short summary; from purchase price to annual expenses.

New Car Cost.  I’ve found new car prices here and in the US are pretty similar.  Obviously exchange rates can make comparisons difficult, especially since we’re at a ten year high for the dollar now at 150 yen.  Using the ten year average of 128 yen to the dollar, prices on new cars are mostly equivalent.  A new 2024 upper-level Corolla Cross here in Japan goes for 3,459,000 yen or $27,023, while I found one listed at a Toyota dealer’s website in Ohio for $28,385.  There is one exception – foreign European makes; Mercedes, BMW, Audi, Porsche, even Volvo are much more expensive here than in the US.  A Mercedes C Class starts around $48,000 in the US, in Japan it’s over $55,000.  This isn’t due to government tariffs or import restrictions – those were dropped years ago.  These makes are more expensive because the Japanese consumer is willing to lay down their hard-earned yen for one – European luxury models still have significant brand cachet and prestige here.  The manufacturers are certainly not doing anything to discourage that.  On the other end of the scale are the “Kei-class” minicars, which there is really no US equivalent.  Brand new Kei car prices range from $10,000 for a basic model to around $18,000 for one fully tarted-up.  

Used Car Cost.  I consider Japan a used-car paradise, for several reasons. 1) There’s excess inventory vs demand – Japan exports tons of used cars to Russia, the Middle East, and other parts of Asia, yet there are still plenty left over for the home market, which makes for low prices.  2) Japanese that live in major cities typically use the country’s efficient mass transportation system during the week, and only drive their cars on the weekend – most used cars have very low miles.  3) Japanese tend to meticulously follow the recommended maintenance schedule – and coupled with the rigid biennial JCI inspections, most are extremely well cared for.  For the equivalent of $5K to $10K in yen, you can pick up a nice, dependable, nearly-new used car that would likely go for double or triple that in the US.  

Maintenance and Service. Prices between the US and Japan are pretty much the same.  The old adage that you’ll pay more at a dealer vs an independent garage applies here in Japan as well.  Fortunately Japan still has quite a few small “Mom and Pop” type garages.  For minor work and oil changes, I take my Volvo to a small, one-bay mechanic that specializes in European makes a couple blocks over from our house.  The wife’s Toyota goes to a nearby Big Box “Home Depot” like store that also does vehicle service.  Replaceable items such as tires, batteries, etc., are also equivalent.  

Japan Compulsory Insurance (JCI).  JCI or “Shaken” is both a vehicle inspection and the purchase of government-mandated insurance.  New cars in Japan come with a three-year JCI policy included – thereafter, inspections are required every two years.  A few decades ago, only a small number of government-owned facilities could conduct the inspection.  Thankfully that was changed and now dealers and large/small garages are permitted once certified by the government.  There are even “Shaken only” shops that do nothing else.  The choice of going to a dealer or local garage, or just having your insurance company handle everything usually boils down to cost and convenience.  I’ve been using my insurance company for years as they’re convenient and quick – drop it off, they take it to a local garage, then to the Land Transportation Office to update the forms, then back to me the next day.  

The inspection covers eight major areas; exterior compliance, VIN check, emissions test, chassis alignment, odometer inspection, headlight alignment, functional brake test, and lastly a thorough inspection of the vehicle’s underside.  The check typically takes about three hours.  Any failure has to be corrected before a new inspection certificate is issued.  The inspection also verifies that all road tax and other fees have been paid.  If it passes, the car’s paperwork is taken to the nearest Japanese-government Land Transportation Office – these are essentially regional vehicle registration centers.  A new “Shaken-sho” or registration form is issued along with a new insurance policy form, and a small sticker with the new expiration date is then affixed to the right side of the windshield.  

The insurance policy is personal liability only, in the amount of 30,000,000 yen, or depending upon exchange rates, between $200-$300,000 for death, and $80-$120,000 for injury.  All other insurance coverages are considered “voluntary”, though most Japanese purchase them, such as additional personal liability above the JCI minimum, property damage liability, collision, comprehensive, etc.

In addition, the national government collects a “tonnage” tax during the inspection – which varies based on the vehicle’s overall weight.  It ranges from 10,000 to 100,000 yen.  

Typical costs for JCI and the inspection are; 1) 30,000 yen for the insurance policy, 2) between 20,000 and 40,000 yen for the inspection and processing fee, and 3) the tonnage tax.  Let’s say a total around 65,000 yen – maybe $450-$600 based on exchange rates.  

Annual Expenses and Fees.  Annually the prefecture you’re living in will send you a bill for “road tax”; this is a tax for road maintenance and upkeep, and is based on engine size.  It applies to cars beyond the 660 cc cutoff for “Kei” vehicles.  Here is an example from one prefecture:

  • Total displacement equal to or less than 1000cc:   ¥29,500  
  • Total displacement more than 1000cc and equal to or less than 1500cc:  ¥34,500 
  • Total displacement more than 1500cc and equal to or less than 2000cc:   ¥39,500
  • Total displacement more than 2000cc and equal to or less than 2500cc:   ¥45,000 
  • Total displacement more than 2500cc and equal to or less than 3000cc:   ¥51,000 

It continues to go up correspondingly.

If you have a “Kei” minicar, you are taxed by your local city or town, not the prefecture, and pay significantly less – about 10,000 yen.  

Any vehicles used for business-only are taxed at much lower rates.

Miscellaneous.  If you’re forced to get your initial license in Japan, or have one from one of the countries not recognized by the government, then you’ll be required to take a mandatory drivers training course.  These courses aren’t cheap – one near our home charges 374,500 yen – about $2900 for 45 hours of instruction.  Prices can be cheaper outside of Tokyo.  Then there’s parking – in major cities there is a requirement to show proof of parking before you can register your vehicle.  If you don’t have a space, you’ll be forced to rent one – downtown Tokyo’s rent-a-space parking prices are similar to New York and London.  We live in Tokyo but on the far outskirts and the monthly fee for a spot is about $50.

Summary.  So in terms of operating cost, excluding gas, maintenance, etc., each April I pay 51,000 yen in “road tax” for my Volvo C30 and 29,500 yen for my wife’s Toyota Roomy.  We also have additional insurance above JCI on both cars, which is around 100,000 yen annually.  Every other year, in addition to these costs, we pay approximately 65,000 yen on each car for JCI.  So using the 128 yen to the dollar average, we pay about $1400 in taxes/fees for one year, and around $2400 the next.  

Bottom-line:  New car prices in Japan are pretty much equal to those in the US, though you’ll pay a lot more for European luxury and sports models.  Used cars are a definite bargain.  In general operating costs are significantly more expensive.

Thanks to my Tokyo cohort and tomodachi Tatra87 for some key suggestions and input.