By on November 12, 2012

Japan’s minivehicles or “kei” cars could lose their (next to their cuteness) biggest attraction: The tax benefit. The Japanese government is thinking about charging the same tax for regular cars and mini vehicles alike, The Nikkei [sub] writes.

An end to the favorable kei car tax treatment could be the price to pay for a new car tax system demanded by the Japanese automaker association JAMA. Japanese pay a multitude of taxes on their cars, and with the consumption tax doubling to 10 percent in 2015, automakers complain about double taxation.

An end to the favorable tax treatment of keis would please the Japanese auto importer association JAIA and the American Automotive Policy Council (AAPC) which demanded an end to the preferred tax treatment of keis.  Japanese automakers already say that an end of the tax treatment also would mean an end of the keis.

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22 Comments on “Demise Of Kei Cars Predicted...”


  • avatar
    lzaffuto

    I always like to see unnecessary taxes disappear, especially in Japan where they pay too many penalties to own an automobile. I am sad to see the Kei cars go though. I suppose there just like it is here, there aren’t enough people that actually WANT to own a car that small to justify producing them once the incentive goes away, correct?

    • 0 avatar
      th009

      Changing the tax doesn’t necessarily mean Kei cars will disappear completely, but surely they would drop significantly in market share. City cars such as the Smart, Ford Ka, VW Up! and Peugeot 107 have good sales in Europe, too, even though they are taxed on the same basis as larger cars.

      Especially if the new tax regime is CO2-based, the Kei cars could still be attractive — there just wouldn’t be the differentiation between a Kei car and, say, an Up!, if the two have equivalent fuel consumption and CO2 emission levels.

  • avatar
    Viquitor

    That’s sad. Say what you might, but Japan’s tax model should be replicated, and not changed in any way.

    Our cities are overflown with cars, most of them carrying only one person. The Kei car is an answer to that. We all should be making Kei cars as well. They make more sense from an environment perspective as well – Kei cars use less metal to be built since they are smaller; they are lighter, and their smaller engines are more frugal; the tires are smaller.

    With Kei cars the traffic would improve, the parking spaces would be better used.

    • 0 avatar
      Robstar

      @ Viquitor>

      I can’t speak for Japan, but I think the real solution to congestion is not smaller cars, but less cars/vechicles overall. The issue of getting more than 1 person into a single car is scheduling. No two people have the same schedule, especially with shools, after school activities, babysitters, etc. I think the abundance of cars is due to societal design. Fix the reason people don’t carpool and you will fix the traffic issue.

      This is only my opinion. Take it with a HUGE grain of salt.

      • 0 avatar
        Viquitor

        Well in a way I do agree with you. But that isn’t how human nature manifests itself. I for one hate carpooling. That one hour I spend alone in the car, listening to music or the news, is a bonus traffic jams give me. Also, I hate not to have the freedom to go anywhere I want by myself after I leave my job.

        So I prefer smaller, more efficient cars as a solution to that single problem. Maybe individual little cars such as Toyota’s prototypes.Since those belong to a rather distant future, Kei cars could be a more immediate answer.

        I mean, if we can’t get our heads around public transportation, then smaller cars are the answer. I rather drive a Kei car than not driving at all.

      • 0 avatar
        Robstar

        I wouldn’t mind carpooling, but 6 months of the year I ride a motorcycle. To fit suspension limits my passenger would have to be 130 pounds or less (something my wife may not like *LOL*)

        The other issue is I am part of an on call rotation. If I get a call while driving, I may have to pull over for an hour+ to fix something if it’s an urgent. I can imagine then that my carpool mates wouldn’t be happy about that. I also start work at 6am, so finding someone who leaves for work at 5am is very, very difficult around where I am….

      • 0 avatar
        blowfish

        now with email, text messages and whatsapp car sharing, car pooling can made easier.

    • 0 avatar
      lzaffuto

      That may be a solution once you can no longer live outside a major city, but as long as there are rural roads to drive I certainly hope I don’t see that solution in my lifetime. I love driving too much to be penalized for owning a car, and I believe people should be able to own any car they want whether it be a Kei car, a gas sucking SUV, or an ariel atom. If city traffic bugs you, you have a choice. Move! Find somewhere else not as congested. Don’t penalize everyone else because it isn’t the way you want it to be.

      • 0 avatar
        Robstar

        @lzaffuto> I agree with you! I live 40 miles outside of Chicago and am 5 minutes to major shopping in one direction and 5 minutes to fields, horses & forest preserves in the other.

      • 0 avatar
        Viquitor

        Unfortunately I can’t part ways with the concrete jungle, not at least until I retire or until I get that golden lottery ticket. So do most people these days. The big city still is the international trend, as it has been for more than a century now.

    • 0 avatar
      th009

      @Viquitor, the problem with using Kei cars to take less space is the sharp cutoff with the length, width, power and engine size. Basing taxation on a gradually increasing scale of CO2 or size would be reasonable, without giving a specific advantage to cars that fit the traditional Kei template.

      • 0 avatar
        Viquitor

        But how would that work? Emission numbers vary a lot in a car’s lifecycle, and depends on maintenance. How to tax the car properly then?

        And that does not solve directly the traffic jams. Picture the combination of smaller cars and autonomous driving for the highways. That would solve a lot of problems.

        Maybe the exact formula of the kei car isn’t the ideal, but in my opinion would be a nice start.

      • 0 avatar
        th009

        In many European countries, the taxes are based on the new vehicle’s emission ratings, regardless of a particular car’s age.

    • 0 avatar
      zeus01

      It would certainly be a better solution to the carpooling option since carpooling depends on finding a partner or two that has your exact same daily schedule, including to-and-from work, picking up needed grocery items, getting to that after-work appointment or second job or picking the kids up after soccer practice.

      But two things muddy the waters:

      1. They’re only good in the city or on low-speed-limit secondary routes.

      2. The bicycle/enviro-nazi lobbyists on city councils just about everywhere are slamming ANY solution that involves the burning of fossil fuels and/or utilizes elecricity for propulsion.

      Having everyone switch to kei cars, E-scooters,mopeds or lawn tractors for their commutes, in the nazis’ minds, only prolongs the use of fossil fuels. These morons simply want the production of oil to stop. this. very. minute. And woe betide anyone who tries to muck up their ultra-socialist, equal-sharing-of-misery agenda.

      As for parking being improved by the use of smaller vehicles, good luck with that. These same enviro-flakes have been working overtime turning any freed-up asphalt into bicycle lanes. Look no further than the otherwise-common-sense city of Calgary, Alberta, Canada to see a blatant example of this trend.

      A more sane solution would involve muzzling the nazis and having designated parking lots outside the downtown districts for commuters to park their regular cars en route into town and switching to their Kei cars for work/business in town. Since speed limits and traffic flow in downtown is much slower than elsewhere, these cars could be built without the added expense of airbags and other safety features that are currently required on normal cars. The simpler construction (preferrably with Honda Fit-like utility) would make it possible to sell these cars for Tata Nano-like prices, allowing buyers to afford them along with their out-side-of-downtown vehicles. Depending on their regular rides, the gas savings alone could allow the new Kei car to pay for itself in as little as five years.

  • avatar
    L'avventura

    As Japan’s car tax system scales based on engine displacement and weight, even without the ‘kei’ classification system, current kei cars will have a significant tax advantage over larger ‘normal’ cars.

    Keis will still fall in the sub-1000cc for road tax and sub-1 metric ton for weight tax. Moreover, keis will still qualify for cheaper car insurance (not to mention charged less for parking). The real difference is the excise tax which currently has a 2% difference versus ‘normal’ cars, but excise tax will go up to 10% anyway.

    Personally, I think Japan should remove all kei restrictions and have their domestic brands make more export-relevant minicars. Its a booming market in developing Asian nations, artificial engine & dimension restriction makes the relevant technology harder to export.

  • avatar
    Angus McClure

    The size of cars and bikes has been impacted by tax since WW2. Nothing much wrong with that. Would love to be able to buy a minitruck here.

    One thing is constant and that is change. Don’t know if it’s for better or worse but I am sure it will change.

    • 0 avatar
      CoreyDL

      At my college the landscaping crews had little minitrucks (Chinese?). Four doors, a little bed in the back, and no bigger than a Golf. So there IS a way to get them here, just got to research it. I’d love to know the brand.

  • avatar

    Kei cars would still remain popular without the lower tax rate due to high gas prices in Japan. The automobile association and Japanese automakers would want to do away with kei cars because they are unprofitable. There would still be a huge market for them and the automakers would be forced to continue selling them if they don’t want to risk losing market share. Kei cars are perfect with their smaller footprint, reduced fuel consumption and co2 emissions. More companies should be selling them.

  • avatar
    icemilkcoffee

    That’s too bad. The tiny Kei car derived Suzuki vans, trucks and Jimmy’s form the infrastructure of numerous asian countries. These are solid cars.

  • avatar
    nvdw

    I’m not surprised even Japanese manufacturers themselves would rather see the keijidoshi go. The associated restrictions in size and engine displacement and power (660cc, 47 kW) mean they have very limited to no appeal anywhere outside of Japan. The only brands actually still producing kei cars are Honda, Mitsubishi, Daihatsu and Suzuki. Except Honda, they sell their cars to the others so they can sell a few too with their own badges on it. In terms of economies of scale, the kei car is already a dying breed.

    As a small car however, as said by others, they still have a place in Japan but also in the rest of the world. Wouldn’t it be better for everyone involved if Honda could make a ‘kei car’ that could be sold anywhere on the globe by making it a tiny bit wider and giving it a 1.0 engine instead of a ’0.66′?

  • avatar
    SpinnyD

    kinda off the subject, But was this picture taken in front of the castle hotel in Toyotashi, Bertel?

  • avatar
    MadHungarian

    Kei cars lost all their cuteness a number of years ago when they all turned into rolling telephone booths. I understand the incentive for building tall and boxy; it’s the only way to gain more interior space and remain within the kei criteria. However, the resulting vehicles are not attractive in the least.


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