for cars with "pencils" at auction centres
Walk into any of the gleaming car sales centres in Colombo or outside
the capital trading in used vehicles and you find rows and rows
of cars, vans or trucks with a selection that suits your price and
have you ever wondered how the re-conditioned car industry evolved
in Sri Lanka or are you aware that a sizeable number of these vehicles
are now shipped from Singapore apart from the original source -
market started some 30 years ago when the Japanese government began
encouraging the export of used cars at a time when the authorities
began revolutionising the brand new car industry to be a leader
in the world.
that time Sri Lankans looking for second-hand vehicles scanned newspapers
for used cars for sale by individual owners or were compelled to
buy new vehicles.
then introduced a licensing structure for owners of vehicles which
virtually made it too expensive to run an aged vehicle and cheaper
to buy a new one.
purpose was to encourage motorists to get rid of their vehicles
after a few years and go in for a new one, which was cheaper to
maintain - than paying exorbitant licensing and other fees on older
were encouraged to allow distributors to trade in old vehicles for
new. Thus authorised distributors began collecting used cars in
their yards. Now what was Japan going to do with all these used
cars? Either use it as scrap or encourage exports.
authorities went for the second option and thus began the huge commercialization
of the used car market with Japanese used vehicles being exported
to countries like New Zealand, Chile, Australia, Malaysia, some
African states, Russia and Sri Lanka.
exporters were Japanese nationals with manufacturers and distributors
facilitating this process. The Japanese Automobile Association Inspection
(JAAI) was formed as the quality control centre and to provide quality
certificates on vehicles shipped out. It was meant to ensure that
high quality standards were maintained so that the end user gets
a quality second hand car -- not junk.
time exports grew and the distribution and supply chain expanded.
Sri Lanka became a major buyer next to Chile and is now among the
top five exporters of used Japanese vehicles. Professionalism in
the buying process was fine-tuned.
second phase of this industry came when vehicles began trading through
the auction system. Under this, the sale of vehicles were not restricted
to distributors and their sub agents but also to any possible person
who was willing to pay a huge membership fee and be part of the
auction centres that were run by groups.
the same time some part of the industry migrated to Indians, Pakistanis,
Sri Lankans and businessmen from other buying countries setting
up offices in Japan and directly participating in these auctions.
There are dozens of auction centres across Japan - each having some
5,000 used vehicles for sale at any given time. The auctions are
held simultaneously all over daily between 9am to 9 pm.
at auction centres takes place simultaneously with members seated,
waiting before huge computer-like terminals poised with a pencil-like
gadget to make bids. A vehicle is sold every 90 seconds within which
all bids have been made and the vehicle sold to the higher bidder.
member is recognized by an individual auction number that keeps
giving his price on the screen as a button on the pencil-like gadget
is pressed whenever a bid is made.
American auction style is partly used in this system and every bid
adds 3,000 Yen to the price. For example if buyer A puts in a bid
when the price has shot up to 3.5 million Yen, then another 3,000
is added. The next offer goes up by 3,000 and so on. The bidder
who succeeds then pays the final price for the vehicle.
a bid is made, the number of the bidder is displayed on the screen.
Interestingly when the used car market began the Yen was equivalent
to around 4-6 Sri Lanka cents.
the Yen is equivalent almost to a rupee - a one-for-one equivalent,
showing how much our currency had depreciated. There are about 150-200
people per auction and when a vehicle is offered - it is driven
onto a public platform for the bidding to start.
three to four years because of the expense and cost of running these
auction centres, the auction-on-net system was introduced. This
enabled members to sit in their offices and homes, log into the
system and bid for the vehicles.
of vehicles on offer were provided the previous day for potential
buyers to make their selections and precise times of the auction
was given. For example, if a Nissan Sunny was being sold the auction
centre would say the bidding will start at 3.52 pm!
Vehicles were also subject to a grading system from one to six depending
on their condition. A grade six vehicle is considered almost brand
new while a grade 4-5 vehicle is nearly near.
required deposit is debited from the account of the buyer at the
auction centre once a purchase is made. Within a prescribed period
- often two to three days - full payment must be made or the membership
is immediately cancelled.
is no second chance here.
Sri Lankan dealers were also allowed to buy vehicles on the net
as long as they were members of auction centres but due to foreign
exchange constraints that didn't work out and purchases are made
The vehicles are delivered to Colombo four times a month with four
sailings from Japan.
(Information for this article came from used car dealers)
In the past 18 months, dealers are also trading in vehicles
shipped from Singapore. Many years back, Singapore - struggling
for space and an increasing vehicle population - brought in a system
where those owning a vehicle had to buy a costly permit. These permits
were available on an auction system.
became too expensive to maintain a car under this system while public
transport improved. About 18 months ago, the prices of these permits
fell sharply and the car market changed. Buying new permits meant
scrapping old vehicles or exporting them which is how
began shipping second hand vehicles. Vehicles from Singapore are
shipped to Indonesia, Thailand and Sri Lanka among other countries.
The cars, vans or trucks that came from Singapore were mostly Japanese,
Korean or Malaysian-made vehicles.