Each region around the world has its stereotypical vehicle. The US has the pickup and Europe the five-door hatchback; but in Japan, the kei car reigns supreme. These tiny cars are limited to just 660cc of displacement but they've also come with lower taxes to make them more affordable. To make of the most of their small size, they've often had quite boxy styling like the Honda N-One shown above, and because they're Japanese, they've often had quirky names like the Nissan Dayz Roox. However, if the Japanese government has its way, the future popularity of these little guys might be in jeopardy.

The problem facing them is that Japan is an island both literally and figuratively. After World War II, the Japanese government created the class as a way to make car ownership more accessible. The tiny engines generally meant better fuel economy to deal with the nation's expensive gas, and the tax benefits also helped. It's made the segment hugely popular even today, with kei cars making up roughly 40 percent of the nation's new cars sales last year, according to The New York Times. The downside is that these models are almost never exported because they aren't as attractive to buyers elsewhere (if indeed they even meet overseas regulations). So if an automaker ends up with a popular kei model, it can't really market it elsewhere.

The government now sees that as a threat to the domestic auto industry. It believes that every yen invested into kei development is wasted, and the production takes up needed capacity at auto factories. The state would much rather automakers create exportable models. To do this, it's trying to make the little cars less attractive to buy, and thus, less attractive to build. The authorities recently increased taxes on kei cars by 50 percent to narrow the difference between standard cars, according to the NYT.

If kei cars do lose popularity, it could open the market up to greater competition from foreign automakers. Several companies complained about the little cars stranglehold on the Japanese market last year, but since then, imported car sales there have shown some growth thanks to the improving economy.


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  • 63 Comments
      mitytitywhitey
      • 6 Months Ago
      I'm not sold on the J-Government's hypothesis that kei-car development is holding back compact+ car development. Japanese companies don't seem to be miles behind the competition abroad, which would have to be true for this move to make sense. Sounds like money in politics to me.
        Mondrell
        • 6 Months Ago
        @mitytitywhitey
        "Japanese companies don't seem to be miles behind the competition abroad. . ." They aren't. Most of their compact offerings aren't compelling from an enthusiast standpoint, but that's because that kind of buyer constitutes much less of the market than some of us proclaimed gearheads want to admit, especially in regions where auto ownership is unfeasible or prohibitively expensive.
      RocketRed
      • 6 Months Ago
      I'm guessing that the incentives helped lower-income Japanese to be able to afford cars. In this regard it seems a rather harsh idea to get rid of the incentives to promote exports. And from a policy perspective it seems like a rather lame response to the domestic manufacturers demanding that Japan reform its currency and fiscal policies that are hurting exports. Further, given Japan's current post-nuclear energy situation, a policy that encourages more fossil fuel use seems foolish, at least in principle.
      • 6 Months Ago
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        Aaron
        • 6 Months Ago
        @lamazing: And you have to be a very insecure person to judge yourself based on your vehicle.
        • 6 Months Ago
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        superchan7
        • 6 Months Ago
        So what do you drive, and would it fit on Japanese roads? Or any roads outside of the US, for that matter?
      • 6 Months Ago
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        Avinash Machado
        • 6 Months Ago
        Maybe Aaron should ask his employers to send some of the Kei cars over.
          • 6 Months Ago
          @Avinash Machado
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        • 6 Months Ago
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      hypermiler
      • 6 Months Ago
      The solution to this problem is to enlarge Kei-car dimension and apply European/American crash regulations. Rival Korea's Kei cars are sold in the US and in Europe, ie Chevrolet Spark, Kia Picanto, and Hyundai i10(Not sold in Korea, but still complies to Korea's Kei-car standard).
        Spec
        • 6 Months Ago
        @hypermiler
        GM didn't have high expectations for the Spark . . . but it turned out to be a decent seller (the ICE version). The EV version is much better but hasn't sold all that well . . . but is only available in 2 states.
      imag
      • 6 Months Ago
      I wish we could just open our regulations to allow the kei cars in. I was in Japan, and spent a day with a Honda N. That thing is cavernous inside, fuel efficient, and comfortable. It is a shame that we can't get one here.
        superchan7
        • 6 Months Ago
        @imag
        If you're in the US, you would not believe how unsafe these cars are on our open roads. Kei cars aren't allowed on expressways. I'm not even sure if they have crumple zones. The closest comparison is a closed golf cart with sound insulation. Imagine selling a 660 cc car in the US. After getting ratings from the NHTSA and IIHS crash test, who would buy one? These work in dense downtowns like San Francisco and New York, but in Japan every city is like that. The cars are made to navigate one-lane alleys which form the bulk of Japan's residential districts.
          GR
          • 6 Months Ago
          @superchan7
          Kei's are a lot more than "a closed golf cart with sound insulation". They are more like an ultra-compact economy car. The newer ones like the Honda N are actually nice. However, I agree that they aren't suited for American roads because they are not built to US crash specs. However, in Japan, it doesn't matter because people don't (and arguably can't) drive that fast. Even tolled highways have a 60 KPH speed limit in many places. They are great as city/suburb runabouts which is what most Japanese need in a car. That being said, they would be great for inner-city use in the US and I'd take one many times over a Smart ForTwo which unsurprisingly, was a colossal flop in the JDM.
          superchan7
          • 6 Months Ago
          @superchan7
          To be fair, the Smart ForTwo was probably a worse product than modern Kei cars.
          Hajime1990 #follow
          • 6 Months Ago
          @superchan7
          of course k cars have crumple zones . actually quite a few of them are exported to europe, with bigger engines packed. this means that the k cars meets european standards, which means it will fairly suit american crash regs as well.
          wreckedum
          • 6 Months Ago
          @superchan7
          A lot of people would be happy to see the IIHS and NHTSA cut down a notch. We have (in the USA) golf carts, motorcycles, trikes and even bicycles on the roads. None of them meet any crash testing standards, and yet lots of people ride/drive them. I don't even wear my safety helmet in the shower anymore. I'm going rebel. Look out! I'd love to see all kinds of foreign cars on the road, that aren't currently available. If you could just acknowledge that the manufacturer isn't going to pay you millions of dollars if you get hurt in a wreck and choose the car you want, that would be awesome. I have one reservation though. Call me racist or whatever, but I'm sick of seeing "Made in China" on EVERYTHING. No offense to any Chinese people.
          Justin Campanale
          • 6 Months Ago
          @superchan7
          Yes, kei cars are allowed on expressways:either that, or the number of Samurai owners I have seen driving on expressways must be breaking the law.
      2 wheeled menace
      • 6 Months Ago
      Their president ( or whatever the official title is ) is a complete jerk and has been acting like an even less competent George Bush. He's got their monetary policy set to 'inflation' and the govt. wants to hurt the primarily the poor by increasing already high tax rates on the cheapest and most efficient vehicles on the road.. There's no excuse for this.
        Actionable Mango
        • 6 Months Ago
        @2 wheeled menace
        I know nothing about Japan's leadership, nor its competence or lack thereof. However, I have been reading for literally decades now about Japan's economic stagnation due to deflation. As much as I dislike inflation, and I really dislike it, pretty much everyone agrees that deflation is much, much worse. Also, all the other countries have been bad and inflating like crazy, thus making the Yen too strong and hurting Japan's exports. Really they're just joining the club of "let's all inflate together". Even Switzerland, one of the greatest stalwarts against inflation, got tired of everyone else inflating so much, thus making the Swiss Franc too expensive, thus hurting their exports. So they've pegged their Franc to the Euro and now they inflate too. Pump, pump, pump, pump, pump, pump, pump.
      LW
      • 6 Months Ago
      This is just dumb Ab3's being brainwashed by swallowing the western neo1iberal trade agenda. US got tons of niche regulations (whether safety or otherwise) that keeps other countries' product out of their land, while telling everybody else to ditch their own regulation so the multinationa1, staeteless c0rporations could take over.
      waetherman
      • 6 Months Ago
      The economics of this whole scheme don't make much sense to me. If Kei cars are popular because they meet the market needs, then they actually prevent importers from taking market share with larger cars and it saves domestic resources. If there were more demand for exported cars then capitalism suggests that the factories would shift to the higher profit models on their own.
        Kumar
        • 6 Months Ago
        @waetherman
        I think you're close. If kei cars are lower margin vehicles, we may be looking at a large effort to force people to purchase vehicles that make more money for car makers, dealers, etc. per vehicle. Just think of how much we fork over in the USA for jacked up station wagons over the price of a shorter station wagon.
          Mondrell
          • 6 Months Ago
          @Kumar
          "Just think of how much we fork over in the USA for jacked up station wagons over the price of a shorter station wagon." Or pickups and SUVs. Not trying to instigate a flame war over purchasing habits, but it's no secret that there's so much more margin in them because the public is willing to pay what they perceive as a fair price for their size and utility.
        Mondrell
        • 6 Months Ago
        @waetherman
        ". . .then they actually prevent importers from taking market share with larger cars and it saves domestic resources. . ." I was also thinking about that. Aside from opening the door to foreign competition, won't forcing people into larger cars incite a rise in Japan's oil demand? I also imagine that their transit infrastructure, especially in urban areas, has been influenced by the tenure of the kei car. Will it or future endeavors require modification if the mean size of an automobile in Japan increases?
      Technoir
      • 6 Months Ago
      This is stupid. Kei cars are ideal for Japan, and visibly, they ARE what the Japanese people want.
        • 6 Months Ago
        @Technoir
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      TreeWeezel
      • 6 Months Ago
      Any time your business is based on advantageous yet arbitrary Laws, you can't count on lasting forever. At the same time, any country could suddenly decide kei cars are okay and the business quadruples. You don't want to be sleeping on your kei car production when that opportunity arises! Driving an automobile has societal costs, and Japan is probably the best at fairly monetizing those costs. Kei cars are a very good stopgap between suburban car-dependence and some ideal, all-encompassing public transit. Much more so than electric cars.
      jonnybimmer
      • 6 Months Ago
      Wish they could bring them over here, that Honda N would be a great urban car. Without question would pick over a Smart or iQ.
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