Auction grades

Is auction grade an important consideration when buying a car at the yard?

Yes !

Surprisingly, these days, no, not really.

It's a bit of a fallacy that so-called "auction grading" from Japan can make you an instant "expert" on the condition pre-export of a vehicle- nice to have, not necessarily of any use.

Each auction house (or chain) have their own grading standards and criteria. A "grade" is made up of many individual factors, some of which are relevant to NZ, some aren't. Most grades are computer-composed by a combination of aggregate "grading score" and certain flagged criteria. Some aren't- and the individual inspector determines the final "score".

For example- in Osaka, where I buy the majority of my stock from, Honda Auto Auction have the hardest "grading" especially for cars older than 5-6 years. It's nigh on impossible to buy a "grade 4" car, whatever that means, from Honda- you will frequently see grades 3.0 and 3.5 for used, yet the same car entered in BayAuc (the old Osaka Nanko Auto Auction) would almost certainly be a grade 4.0.

Some inspectors consider a changed panel (like a front guard) to be an "accident grade" classified car, yet some would mark this on the sheet and the score still be a grade-4.0. Interior condition can down-grade a car at some auctions, others won't factor this in. Some consider a changed rear guard (Japanese panelbeaters tend to replace a whole section, rather than repair a damaged guard- and always with new parts) to not be an accident grade, some will. Some might mark that as a grade 3.5, some will still give it a 4.0.

Because there is very little consistency, it's a very unreliable indicator- even for accident damage, although even then, MOST repairs are done pretty well and if they're not, the NZ compliance process will soon fix that!

Adding into the mix- re-grading. The majority of cars bought for export to New Zealand are not purchased directly from auction by NZ dealers- they're bought by huge volume "stock aggregators" (like Heiwa, Nichibo, Enhance, BeForward, SBL etc) and in turn offered to NZ dealers to purchase on a fixed-price basis out of their "stock". Some export stock aggregators choose to tidy up stock first- a pre-inspection then rectify and obvious issues- before re-grading the stock themselves and offering to the NZ dealer. Nothing wrong with that, either- it's a system for the dealer buyer to judge purchase quality, not how they'll market stock in NZ.

Third issue is- many dealers here simply do not know that grading, because they're not the importers of the vehicle. They have purchased stock in Japan OR New Zealand via a wholesaler who may not have that information, or provide it. It may well have changed hands several times before it is displayed on a dealers' showroom floor. The paperwork trail for an auction sheet- assuming it ever made it to NZ- is doubly difficult. The salesperson won't know, the manager won't know, and the owner may even not know- they've simply bought off a local wholesaler and the car turns up with the MR2A (right to register form).

I know it sounds a bit glib- but in my opinion, unless you're buying a VERY late model car (under 3 years old) then grading makes little difference to the product knowledge. If it had accident repairs, the compliance process would have picked that up, and demanded an extensive (and expensive) repair process to occur. If it was an absolute dog of a car in Japan, there's almost a 100% guarantee it will still be a dog here in New Zealand. Cheap panel and paint is not difficult to spot.

At the lower end of the market, I'd argue it makes no difference whatsoever- you're buying a car, not a life-long investment.

And being cynical about it- if you've got your doubts about a car, and the vendor insists it was a grade 4.5, and there's no proof, then buy, or don't buy, on your gut feel and a pre-purchase inspection.

We're all anal about grading and repainted bumpers on fresh imports, yet few ask the question of their NZ-new used car choice that has had significant insurance repairs!

Thats very interesting westwyn. Previous talk in these threads had always said grade 4 is a minimum you should be looking for.
I'm looking for a car for my daughter at the moment and rang about one thats on its way to NZ.
The trader said its auction grade 3.5 but will be finished to a grade 4 before he sells it on. Im guessing a buffing out of surface marks and touchup with a brush of any minor marks? Perhaps a bit of "Dent Magician" if needed.
The interior is Grade B.
Upon looking around Auckland last Saturday, there is some low grade stuff on the market.

Stevo I couldn't disagree with the post above more strongly.
The auction grade of a car is the very first indication of a vehicles condition.
Like everything in life where human beings are involved things aren't totally consistant. But they give a good starting point and in most cases a VERY clear indicator of if you should procede or not.
The smoke screen of "I buy from a wholesaler so I don't know " is just that a smokescreen. Nowadays as part of their advertising wholesalers generally show the auction sheet with the grade of the vehicle on it.
Unless purchased through an infamous auction house here in NZ
Where I DO agree is that as a dealer you need to be able to read and interpret the auction sheet.
By that I mean the number/letter combinations indicate the location,Type and severity of any external damage. Internal and mechanical damage is stated in the notes.

So in specific reaction to your question.
1)ask what auction its from
2)ask to see the actual auction sheet.

Just for the record IMO a vehicle being taken up to a grade 4 mehh sorry Grade 5 which is no visible damage round the body.

Thanks Kaz. Words of wisdom from the legend again. Pity you had nothing suitable or you would've seen us last Saturday. :(

coffee and yak is always good bro

Sorry Kaz, but I have to disagree with your disagreement- politely of course! Auction grading these days is a fool's paradise- and a bit like the comment in another thread about "information that could be giving people the wrong idea", using auction grading these days as a barometer is fraught with difficulties and half-truths, hence the reason I posted my long-winded comments, which may not be dealer-friendly, but answer the OP IMO truthfully.

OP, without being preachy, a significant part of my time is spent working with / analysing the import industry, a professional role I've held since 2006 (and as an importer since 1997), and my comments are based upon the reality that the supply of cars to New Zealand today, is a very different beast to the one we had ten or even five years ago.

It's true- quite a few dealers still actually buy their cars direct from auction, either in person (very few regularly, like me, a "maintenance trip" once or twice a year only) and most via an agent / internet who bids on your behalf. Even fewer of those actually have a proper "agent" inspect the vehicles at the auction, most now are reliant upon the auction sheet for a description, and sending a third party to verify the details at the auction itself before bidding takes place online at the office of the exporter or agent.

But the majority of stock entering New Zealand nowadays is NOT bought this way- large "exporters" and stock aggregators make up the bulk of car supply, with New Zealand wholesalers, auction houses and dealers either acting as an intermediary, or purchasing direct from the Japanese exporter, and in turn, holding for NZ or shipping and then selling.

During this process the original "grading" (if it WAS graded) is likely to be either lost in transmission, or re-graded once reconditioning in Japan takes place. And that's assuming there's any consistency to the grading- which there isn't- and that it was supplied via auction (which is another trend creeping in, with major vendors in Japan bypassing the auction process altogether and marketing direct themselves). There's one company here in Auckland with several branches doing just that- there is no point asking them for an auction sheet, because their stock was never selected from auction in the first place!

And as for consistency, you could be told the auction house name and still have no idea on the standard of their grading. It's all very well holding up Osaka and Tokyo as examples, but many cars are purchased in other regions too, where less information is readily available about the "standards"- Hiroshima, Gifu, Kyushu, Miyasaki, Hokkaido to name but a few, and each with several if not multiple auction houses. Like I said, reliance upon an arbitrary "grade" is a fool's paradise.

All that said, there are dealers (like Kaz, and for the record, like me) who DO hold copies of auction sheets, and DO know how to translate them, and DO understand the differences. Yay for us. But I'd be grossly negligent and unfair to suggest that you shouldn't consider a car from a dealer who hasn't / doesn't, for the reasons above. And that may seem anti-competitive for ME- since I DO hold such sheets. But here's the thing- I don't generally supply direct imports to the public, I sell wholesale to / through other dealers. And I can count on one hand the number of times I've ever been asked for an auction sheet by a dealer buyer, and even if I was, I'd almost guarantee they'd have little idea about what it actually meant.

A lot of this angst about "grades" stems I think from a certain large car retail operation that has fairly inflammatory and in-your-face marketing techniques, and the lack of grading details supplied to buyers. To that, I'd answer- have a look at the car. If it looks like a dog's dinner, with obvious panel and paint repairs, overspray on the undersides, wheelarches and tyres etc, well, you don't need an auction sheet to tell you everything you need to know!

Thanks Kaz and Westwyn for the sharing your insights.

Ok just to clarify your very long winded reply.
You are employed to represent second hand car importers.
Your job is to represent and make statements to protect the best interests of the importers.

Nope, Kaz, I'm not employed to represent anybody. My role is pro bono. I gain no financial benefit from my work. But, if you want to cut to the mustard, one of the reasons you are able to have a business like you do, is from the work and time given by my predecessors to ensure our industry sits on a level legislative playing field. It's a role I treat with respect and honour.

And my reply is not protecting anyone- if anything, it's probably of less protection to the industry members than the general public. If I was just "protecting second hand car importers" as both you and I are, I'd wax lyrical about the absolute need to ask for auction sheets and insist everything is grade-4 and above.

I'm giving a measured and considered view on an issue that I believe is being used to place more importance on car condition than it should, based on the false expectation it gives buyers who THINK they are now informed. That's not representing, or protecting, anyone. Including me.

Thanks for your support!

Westwyn is 100% spot on in his summary.
There is no universal grading system, every auction house and every inspector is different and has different criteria. Inspectors in auction houses have to grade hundreds of cars in a very short time frame. How good do you think thats going to be? The big auction houses have thousands of vehicles to process every week.
In my experience, the bigger the auction house, the more worthless the grading is.
Probably 90% of the people in this marketplace (both sellers and buyers) who are quoting auction grades have never been in a Japanese auction house and are in no position to judge what it actually means.
And of those 10% that have been, very few of them very a full understanding of how it works.
It is purely a sales gimmick.
The compliance testing regime here is one of the strictest in the world. This test is far more important to a NZ buyer than a Japanese auction grade.
As a buyer here in NZ all you want to know is the end result of the compliance inspection.
The grading system such as it is, is designed purely for Japanese domestic market dealers. Most of it has no bearing on NZ standards.
As Westwyn rightly points out, grading is a fools paradise and a lazymans way of importing and selling cars. Unforunately this industry is now infested with fools, amateurs and part time dabblers who are happy to seize onto auction grades as a substitue for real experience and knowledge.
To anyone looking to buy a car here i would suggest you should ask just as many questions about the importer as about the car.