Rules and Regulations

So I'm talking to a friend of mine who just started college, and he's talking to his economics teacher about Japan and she says to him that in Japan it's very rare to find used cars being sold. She also said that you can get fined for having rust visible on your car (since she's supposedly been to Japan). I told him I could believe the used car point, but what the hell is that about the rust?!
For those of you currently living (or those who have spent EXTENSIVE time) in Japan, can you confirm what this lady said, or is that a load of bull? Thanks.

actually i beleive you can find used cars being sold for really cheap, but you dont see people driving them because its so expensive with all the taxes and what not to keep an older car legal.

What do you mean by old? There is a huge used car market for cars made in the last ten years.

After about more than ten years, a car has to go through a yearly inspection which can cost a bundle (before around the ten year mark it is a tri- and bi- yearly inspection system. I'm skipping over a lot of stuff though). Then it becomes more economical to buy a newer used car with more time left before the inspection comes due.
I haven't heard the rust thing before. There are plenty of work trucks and small min-pickups with visable rust on them (esp in the countryside).