We get very excited here at Autoblog when someone brings up a rare car from the Japanese domestic market, even if they are distantly related to cars we can buy in the US, like the Toyota Crown Royal Saloon Hybrid our own Sebastian Blanco tested last month. But while we think often about JDM cars, the reality is that the market is far different than what we imagine. It's largely made up of tiny, 660-cc kei cars that are ultra affordable and sip fuel.

A recent story by The Wall Street Journal (it's behind a pay wall) attempts to analyze the JDM, and see what disadvantages the country's obsession with kei cars create for its manufacturers and for foreign brands that are attempting to make headway in the world's third-largest market.

"The Japanese market is Galápagos. You can test things in Japan. But even if it turns out to be an attractive product in Japan, it would be hard to make it a universal and global product," Shigeru Shoji, CEO of Volkswagen Japan told the WSJ. The Galápagos reference is an apt description of the market, as it's isolated and has developed very differently from other markets. Japanese buyers want their kei cars, but not just for emotional reasons.

Fuel is pricey - the WSJ specifically calls out some of the kei cars that can net Toyota Prius levels of fuel economy for half the price - and there are tax benefits to owning a smaller car. Coupled with the devotion towards kei cars, it's these so-called non-tariff barriers that led General Motors, Ford and Chrysler to skip the Tokyo Motor Show for the third time in a row, with the head of GM Japan telling the WSJ it didn't make economic sense considering how few cars GM sells in the market. "Japan is a unique market. For those operating globally, that could present a barrier," GM's managing director, Sumito Ishii, said.


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    • 1 Second Ago
  • 64 Comments
      Willy
      • 1 Year Ago
      I always wished kei cars came over to the States (honda beat! Suzuki cappuccino! Autozam!). Sure they're small w only 63hp, but in some ways, they are a bit sensible for our needs than wants. Look at our fellow commuters and see how occupants are in it. 1 probably? And how much they're using cargo space to near full capacity? Or its 20 cupholders? A small car would be a good fit for most of our needs, plus we have multiple cars per household, a larger car can be used to occasionaly haul more stuff
        john96xlt
        • 1 Year Ago
        @Willy
        None of the Keis you mentioned are still in production. How many people in the US market have given up their SUVs and gone to Fiestas or Fits or other small cars? Short answer: Not many. So, why do you think they'll go for something even smaller, with even less power?
      groingo
      • 1 Year Ago
      This is a second car for local short hops but Americans want one car for all which does make sense, in the end all the focus groups and questions will never take the place of just putting it out there and seeing what happens.
        VinnieL
        • 1 Year Ago
        @groingo
        You hit the nail on the head. These would make great second cars or commuter cars for people who want to keep the miles off of their sports (or classic) car. Focus groups be damned! Lol
          john96xlt
          • 1 Year Ago
          @VinnieL
          I'd love to see you in one, about 9/10ths of the way maxed out at 60 MPH, trying desperately to not get run over by a Mazda2, and being flung off the road in the wake of a semi truck passing. Not to mention how they'd to in a crash test or in a real-world accident on our 65, 70, 75 and 80 MPH multilane highways. That said, I do like Kei cars and they may have a place in the US in the city. Used Kei trucks are extremely popular in my neck of the woods (where they can be legally registered as road-going vehicles), but they're used primarily around the farm/ranch/property, rarely if ever taken on roads with speed limits higher than 55.
      Teleny411
      • 1 Year Ago
      I find it hard to believe that Fiat who virtually invented mainstream microcars can't build. Chrysler or Fiat Kei car.
      FoxJ30
      • 1 Year Ago
      In the US, the used car market plays a very large part in keeping out small cars. If a kei car were to come over and sell for $8k, it would have to compete with low mileage c-segment cars, and for the majority of the buying public, a five year old Mazda3 is much more comfortable than a 60" wide, 660cc kei. Price the kei car any more expensive, and it starts running into new car prices - Versa, Accent, and Rio don't start much above $11-12k these days. In markets where used cars are scarce (or taxed into oblivion, like Japan), kei cars start making more sense - cheap, reliable, and practically disposable transportation. I could see these being good for India, where road conditions wreak havoc on cars such that they don't last very long - that said, even the homegrown Tata Nano doesn't seem to do too well there. Brazil might be considered another Galapagos of the auto world, given its import tariffs and ethanol usage.
        Peter Middleton
        • 1 Year Ago
        @FoxJ30
        Dont forget the US is very large and different across itself. If you targeted specific markets they would sell. Targeting the USA as a single entity is much more difficult
      bK
      • 1 Year Ago
      I would love to get my hands on a Kei car or Kei trucks.
      AngeloD
      • 1 Year Ago
      If Nissan and Toyota can produce a full size pickup exclusively for the N. American market, then non-Japanese companies ought to be able to produce kei cars for the JDM. Fiat, Ford, etc. all produce small cars for the European market, it's not like they don't have the tech to produce a kei car. Not profitable to do so? Lack of profit does not equate to a trade barrier.
        johnnythemoney
        • 1 Year Ago
        @AngeloD
        Makes sense, but a kei car is significantly different than a Ford Ka or Fiat Panda, something like the the smaller engine from Fiat (0.9 liters) is 50% larger or so than those usually fitted to key cars (0.66 liters). To point is: 30% (by WSJ stats) of the Japanese market (and little else) is made up of these key cars, divided by all the manufacturers involved. I know Subaru and another Japanese automaker (can't remember right now, Nissan?) already teamed up to develop their present car, launching a signal that things are changing faster than what the WSJ decided to think. Actually, there were "rumors" two years ago that the Japanese government was about to completely change the definition of key cars or scrap the idea altogether.
        The Wasp
        • 1 Year Ago
        @AngeloD
        Lack of profit is a trade barrier. It's not a legal one but it is a practical one.
        john96xlt
        • 1 Year Ago
        @AngeloD
        "it's not like they don't have the tech to produce a kei car." LOL, you think it's just as simple as putting a Fiesta in the dryer for an hour? Kei cars could not be based on existing platforms. Likewise, their engines must be specific to them, their bodies and interiors and wheels and suspension, too. Virtually NOTHING can be adapted from larger cars to make a kei car. "Lack of profit does not equate to a trade barrier." The hell it doesn't. A company cannot sustain itself without a profit. I know you libtards think "profit" is a dirty word, but really, it's vital to a company's survival no matter if you like it or not.
      Seal Rchin
      • 1 Year Ago
      Here's the article, subscribe to wsj.com...........like $50 a year. TOKYO—Japan's auto market, once a global trend setter, has become one of the most disconnected from markets elsewhere, putting it at risk of becoming irrelevant, say executives here. More than 90% of cars sold in Japan are Japanese brands. A third of them—ultralight minicars—are sold nowhere else. Originally developed to fill Japan's need for cheap cars after World War II, they are too small or too expensive for other markets. The country's singularly strong appetite for fuel-efficient cars means car makers have developed a series of advanced technologies, such as hybrid cars, that don't necessary translate easily elsewhere. Japan has no tariffs on auto imports. Japanese auto executives say the country's unique tastes are a big reason for global auto makers' failure to thrive in the world's third largest auto-buying country, after China and the U.S. Foreign auto executives say the country's preferential tax treatment for minicars and its unique safety and environmental regulations are nontariff barriers that protect the country from foreign competition. For the third straight year, the Detroit Three auto makers skipped the Tokyo Motor Show; General Motors Co. GM +0.10% 's head in Japan said showing up made little economic sense when weighed against GM's sales here. In some ways, the auto industry's love of minicars here is reminiscent of Japanese smartphone makers, which geared features heavily toward Japanese consumers and struggled to make headway overseas. Their shortcomings led to the coining of the term "Galápagos" to describe the market, like the group of islands cataloged by Charles Darwin : uniquely evolved and ultimately at a disadvantage because of its isolation. Japanese auto makers such as Toyota Motor Corp. 7203.TO -0.48% , Honda Motor Co. 7267.TO +0.94% and Nissan Motor Co. 7201.TO -2.35% sell plenty of cars around the world and have mastered global design and tastes with well-regarded luxury cars, sport-utility vehicles and pickup trucks. Nevertheless, some executives here worry that catering too strongly to demand at home leaves them at risk of being unable to switch gears quickly—especially as many global auto makers introduce new models in as many countries as possible to develop economies of scale. "The Japanese market is Galápagos," said Shigeru Shoji, chief executive of Volkswagen VOW3.XE +0.76% Group Japan KK, on the sidelines of the Tokyo Motor Show. "You can test things in Japan. But even if it turns out to be an attractive product in Japan, it would be hard to make it a universal and global product," he said. That can hurt Japanese car makers, which have been slow to offer large luxury vehicles in China and diesel engines cars in Europe. Others say the specialization makes it tough for outsiders, who must adapt their cars to sell here. "Japan is a unique market," said Sumito Ishii, managing director of General Motors Japan. "For those operat
        Brent Jatko
        • 1 Year Ago
        @Seal Rchin
        Thanks for the post. You saved me from giving that rat bastard Murdoch fifty bucks.
          Seal Rchin
          • 1 Year Ago
          @Brent Jatko
          Brent i know you are all about huffington post and the stuff their unpaid interns write, but WSJ is a serious news source that studies the issues and writes about them in details. If you do not like their politics do not read the editorial section, unlike every other news paper when it comes to news WSJ writes nothing but facts.
          john96xlt
          • 1 Year Ago
          @Brent Jatko
          Damn Seal, I can't believe I just had to give you a +1.
        Seal Rchin
        • 1 Year Ago
        @Seal Rchin
        Others say the specialization makes it tough for outsiders, who must adapt their cars to sell here. "Japan is a unique market," said Sumito Ishii, managing director of General Motors Japan. "For those operating globally, that could present a barrier." Some Japanese car makers say the focus on mini and hybrid vehicles helps them cultivate and improve future technologies for future growth markets. Small-car specialist Suzuki Motor Co. 7269.TO -0.69% now boasts a leading position in India, where its most popular models have been developed based on its mini models in Japan, by tailoring the bodies to local tastes and installing bigger engines. And Honda plans to launch affordable hybrid cars with its local partners in China by 2016 by using technology it has cultivated at home. Still, some executives, such as Nissan Vice Chairman Toshiyuki Shiga, question whether it makes sense for the industry to keep making minicars that are only sold in Japan. "I think it's time to think about it," he said last year. The popularity of small, low-cost and fuel-efficient cars rests on a combination of factors: Japan's narrow roads, high gasoline prices and auto taxes, not to mention two decades of economic stagnation. As the country's economy has improved, so has the auto market. But a planned rise in the sales tax in April is expected to again cut into auto sales. Minicars such as Honda's N Box and the Move by Daihatsu Motor Co. 7262.TO -0.93% , a small-car subsidiary of Toyota, accounted for 34% of the country's passenger car market last year, up from 17% two decades earlier. With an engine displacement of no more than 660 cubic centimeters, the minicars are among the world's puniest. Some are as fuel-effective as the Prius hybrid but carry a sticker price that is only half that of Toyota's flagship hybrid. In Japan, "driving distance is extremely short and when you are driving you repeat stop-and-go often. The way of driving cars is quite different," Mr. Shoji said to explain the popularity of minicars and hybrids, which generate electricity from braking. Narrower and lighter than Daimler AG DAI.XE +0.72% 's Smart cars, Japanese minicars have been seen as too cramped for European customers. Daihatsu, the leading maker, stopped exporting cars to Europe a few years ago. They have also been too expensive for booming emerging markets, despite increasing demand for small cars there. Hybrids are another growth area in Japan. While hybrid cars accounted for just 2.9% and 0.9% of the U.S. and European markets respectively last year, they made up 16% of the Japanese market, according to automotive research consultant Fourin. The Prius, for example, is typically ranked among the top three best-selling models every month. By comparison, in the U.S., the Prius was 17th in popularity in November, said motorintelligence.com. Some of Japan's auto makers—such as Toyota, whose Japan sales account for just 20% of global sales—question whether research and development
          Seal Rchin
          • 1 Year Ago
          @Seal Rchin
          Some of Japan's auto makers—such as Toyota, whose Japan sales account for just 20% of global sales—question whether research and development is focused disproportionately in the home market. "I'm very concerned about developing so much in Japan," said Hiroyoshi Yoshiki, a Toyota managing officer. He tells engineers at home that they have to go out of Japan to get exposed to markets and ideas. Since 2010, Toyota's overseas technical facilities include a research and development center in China, its first own such center in addition to two run with local partners. For foreign brands, Japan's auto market is still too big to ignore. While GM abstained from the Tokyo Motor Show, Mr. Ishii said it still plans to show products like sports and luxury cars at shows in cities such as Nagoya. —Phred Dvorak contributed to this article. Write to Yoshio Takahashi at yoshio.takahashi@wsj.com
      icemilkcoffee
      • 1 Year Ago
      I fail to see how this is any kind of barrier. Full size pickup trucks don't sell in Japan neither. That didn't stop Nissan and Toyota from producing full sized pickups here in the US. Also Kei cars can be sold all over South Asia. The american automakers should quit making excuses. Trade barrier my ash.
        mylexicon
        • 1 Year Ago
        @icemilkcoffee
        The full size truck market was not created by government regulations. Furthermore, fullsize trucks are lucratively profitable so volume manufacturers are basically obliged to participate.
          lne937s
          • 1 Year Ago
          @mylexicon
          Although our regulations support full-sized trucks from the domestic industry. We have the "chicken tax" which applies a 25% tariff on trucks from outside of NAFTA. We apply lower fuel economy standards to full-sized trucks, which is, in effect, a subsidy compared to the CAFE penalties that would be paying otherwise. We apply less stringent safety standards than we do to cars. And, despite the damage they do to smaller cars in an accident, we classify them as light vehicles-- in other countries full-sized trucks would be classified as a commercial vehicle, requiring more strict driver training and testing and lower speed limits (e.g., Germany)... So, while government intervention didn't create the full-sized truck, it does contribute to it.
      FuelToTheFire
      • 1 Year Ago
      I'm glad we don't have these here. I wouldn't feel comfortable or safe driving one. With a 660 cc engine, it would be so underpowered that it would literally be dangerous driving it on the highway. And just imagine what would happen if a large truck hit one of these. The larger object will always win, you cann't overcome I drive a 2008 Hummer H2 for a reason, an M1 Abrams tank isn't street legal. I want my kids to be as safe as possible in the event of a crash, which simply won't happen with a dinky car like this. Besides, any man who dares buy one of these prissy-miss mobiles needs to turn in his testicles. Immediately. Real men know that they are real men and buy cars that show that they are real men. They don't want to look like a metrosexual.
        kevin
        • 1 Year Ago
        @FuelToTheFire
        If you just left out the last paragraph it would have been a good troll. The hardiest thing an artist learns to do is stop painting before the next stroke spoils the portrait.
        William Flesher
        • 1 Year Ago
        @FuelToTheFire
        Another brilliant and popular comment "Fuel". You would drive a TANK to "protect your kids" and "show" other's that you are a "real man". Because it isn't legal to do something so foolish, you drive a Hummer H2, the vehicle (and brand) killed off because there weren't enough status seeking idiots willing to pay extra for a Chevy/GMC in Halloween military drag. As a troll, you are somewhere between hilarious and entertainingly irritating. As a flesh-and-blood human, you are arrogant, short-sighted, paranoid, and insecure in your own masculinity. Either way, you are seeking attention by behaving like an spoiled toddler who's brain and social skills are challenged, and who's testicles are woefully late in descending. Congratulations!
        colin.shark
        • 1 Year Ago
        @FuelToTheFire
        You are a dumb.
        Teleny411
        • 1 Year Ago
        @FuelToTheFire
        One of my cars is a Sunbeam Minx (Badge engineered Hillman) that does 70 on a good day. I don't drive it on highways-it wasn't meant for that. It takes me a bit longer, but I enjoy the drive more. I imagine you would approach an American Kei car in a similar manner,
        Hajime1990 #follow
        • 1 Year Ago
        @FuelToTheFire
        your personal opinion, so i have nothing against it. would be a very big problem if the president had the same kind of idea. and that happened before...
        superchan7
        • 1 Year Ago
        @FuelToTheFire
        "I live in a bunker to protect my kids from potential enemies such as school bullies and jealous cousins from the poorer side of town," said no civilian ever.
      Hajime1990 #follow
      • 1 Year Ago
      Must make this clear. NO ONE IS STOPPING FOREIGN MANUFACTURERS FROM BUILDING CARS IN JAPAN. The Japanese companies build factories all over the world to meet each areas' demands. Americans have the right to do the same; go ahead and build the k cars in Japan. If you can't do so, it's your fault. STOP BLAMING, START WORKING.
      Klinkster
      • 1 Year Ago
      It's about time someone came out and explained the REAL reason the Detriot-3 can't compete in Japan. They choose not to - due to economic reasons. Nothing to do with tariffs.
      Dwight Bynum Jr.
      • 1 Year Ago
      I'm still genuinely surprised that no Japanese automakers have imported kei cars here in recent years. Seems like they would've been a no-brainer back when fuel prices were through the roof and small car sales were white hot, with domestic brands scrambling to come up with smaller offerings (Ford Fiesta, Chevy Spark, etc.) I can't imagine the legalization would've been THAT time consuming, especially since the Japanese "Big Three" already sell multiple models here and know the regulations / standards.
        Brent Jatko
        • 1 Year Ago
        @Dwight Bynum Jr.
        Those cars likely wouldn't pass a crash test here. We too have our non-tariff barriers.
          johnnythemoney
          • 1 Year Ago
          @Brent Jatko
          One of the requirements to have a car street legal in the US is the following: the car in question must be capable to be turned on and driven with no damages to the radiators and other vital parts after a front AND rear impact both at 12 mph or so. It's something pretty much specific to our market, but it doesn't make the car or the situation in which they are involved much safer (even if I can see the benefits of it). Cars sold in great numbers in the EU must be equipped with ABS, ESP and at least the two front airbags. Something perhaps less evolved markets are doing without, for better or for worse. Everyone has various barriers, I don't understand why the WSJ decided that kei cars are the real issue here. The opposite question is, why should Japanese buy full size trucks and cars from our market?
          mary.keana
          • 1 Year Ago
          @Brent Jatko
          USA has a 25% import tariff on some vehicles. And all vehicles are subject to some form of tariff.
        Seal Rchin
        • 1 Year Ago
        @Dwight Bynum Jr.
        If you ever read auto news in details, ignore all the fanboi stuff you will see that Ford has a huge inventory backlog of Focus and Fiestas and Ford reduced the production and had incentives on both. Focus is one of the smallest cars in it's class and Fiesta is simply a small car. Ignore the merits of cars, the sales for the prices Ford wants to sell them are not there, people in USA are simply not willing to pay money for smaller cars in USA. BTW Cruze has been surprisingly popular, also it happens to be the largest car in the segment. People talk about these cars, but when it come to buying them they go to a dealership and seat inside and see that they are pretty small on the inside.
          Bill
          • 1 Year Ago
          @Seal Rchin
          Not to go off topic, but you can get great deals on Focus and Cruze right now if you want one. Friend pointed out plenty of Focus SE hatches around here for 14.5. Tempting.
        johnnythemoney
        • 1 Year Ago
        @Dwight Bynum Jr.
        Some Nissan models were imported in the UK. Google Nissan Figaro. Also, these are half the size of a present day Ford Fiesta.
        jonnybimmer
        • 1 Year Ago
        @Dwight Bynum Jr.
        Toyota bB and Honda Jazz were brought here and they've been pretty successful. Nissan's Cube was brought here too, though not quite as successful as the other two. Remember though that the US largely relies on highways, something Kei cars do not handle too well. A lot of us car folks can be ok with having a car that tops out at 80mph and takes a over minute to get there (VW Bus anyone?) but realistically, I could not see the general public accepting such lackluster performance, even with the increased mileage. I do agree though that if they brought over some actual Kei cars (with the 660cc motors), they will find a market so long as the pricing is kept very low. However, subcompacts with larger motors and hybrids like the Prius that offer great mileage and adequate performance for road systems like the freeways here in the US will always have the advantage in the American market.
          johnnythemoney
          • 1 Year Ago
          @jonnybimmer
          Those are not kei cars at all.
          Brent Jatko
          • 1 Year Ago
          @jonnybimmer
          Yeah, any 660cc car marketed here would have to be really inexpensive. I just don't see that happening here.
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