By on June 11, 2014

Nissan Moco

For ages, the kei car has been one of the darlings of the automotive world, owing to its tiny size and equally tiny engine (that also netted owners a smaller tax bill). Alas, Japan’s littlest cars may soon be put in a toy box destined for Goodwill as the nation’s government puts the pressure on both automakers and owners to move toward supporting bigger offerings.

The New York Times reports the Japanese government introduced three tax increases on kei owners, including a 50 percent boost in the kei car tax meant to bring their tax burden close to larger vehicles. Officials claim the cars are becoming a drain on the Diet’s coffers both on the tax and free trade fronts, and as they cannot be exported to other markets — college campuses withstanding — the keis are a waste of profit and R&D for automakers.

The Abe administration may see push back from owners and automakers alike, however. Smaller automakers such as Suzuki and Daihatsu use the R&D from their kei offerings to better compete in other markets where similar offerings are sold, as well as adding more content to make their cars more attractive to their local market base. Owners, meanwhile, opt for keis because of the low ownership costs involved, and the greater mobility offered in areas where mass transit is few and far between.

The tax increase on the kei has affected both parties, with automakers losing sales and owners who may decide not to buy any vehicle altogether; sales are expected to drop from 2.23 million in 2013 to 1.7 million in 2015.

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23 Comments on “Abe Administration Pushes Automakers, Nation Away From Kei Cars...”

  • avatar

    If I were Japanese I’d be p1ssed as hell at any attempt to force me into buying a stupidly big car like some half-bright, hairy gaijin.

    Little people + hypercrowding = little cars. Is Abe also proposing enlarging the islands for more roadable space?

    • 0 avatar

      Japan territory is twice the size of California or about the same as Germany, so there is plenty of road space. Just get outside of any big city.

      It’s not like Kei is being taxed more than other cars. It seems like they want to remove the preferential tax treatment for the kei cars.

      • 0 avatar

        “Just get outside of any big city.”

        Like, find what little arable land there is and put highways on it?

      • 0 avatar

        Germany’s twice the size of California? Huh.

      • 0 avatar
        juicy sushi

        The roads are much narrower however, and the kei cars do have some advantages. That being said, they aren’t forcing anyone to buy cars for big, hairy gaijin. Just more of the b-class cars that were already the top sellers anyway, and roughly the same size, just faster and safer.

      • 0 avatar

        Almost 3/4 of that land area is mountainous and as “juicy sushi” pointed out roads are narrower even in flatter rural areas. It is not uncommon on side streets to have to pull over to the side if another car is coming from the other direction.

        That said even if kei cars are taxed at the same rate as regular cars, I don’t see them losing much popularity nor market share. Many have fuel economy that rivals the Prius at less than half the cost and are adequately powered for Japanese roads and driving habits.

        It also somewhat disingenuous that R&D is being wasted on kei cars as they are exported to many markets around the world albeit with larger engines dropped in. It is sad that a developed country with little hydrocarbon resources would discourage these efficient little vehicles.

        • 0 avatar

          They’re not really all that different in dimensions from B cars, though — for instance, the Mazda2/Demio is about 6″ wider and 21″ longer than the maximum for a Kei car. (And the width is US measurements — I’m not sure if they count the mirrors the same way.)

          It’s not like people are going to suddenly trade up to Land Cruisers if they equalize the tax rates — but they might well opt for a B car, particularly if they’re made available with smaller engines.

    • 0 avatar

      “Is Abe also proposing enlarging the islands for more roadable space?”

      It has more to do with fast-tracking a free trade deal with the European Union.

      One of the European auto industry’s objections to a free trade deal is over the kei car preferences. This would take one of their grievances off the table.

      (Personally, I think that the automakers are bluffing, but scrapping kei car favortism would compromise their attempts to derail a trade pact.)

  • avatar

    “Dropped three tax increases.”

    Interesting phrasing.

  • avatar

    So this is Japan’s contribution to the reduction of carbon emissions?

  • avatar
    schmitt trigger

    I bet there are, as we talk, plenty of threads on Japanese auto-blogs discussing this issue.
    With the same ferocity that some posters here argue against an increase of MPG on the CAFE rules.

  • avatar

    I think kei cars are a good thing, as far as space organization and traffic.I was there a few months ago, and I wanted to put a few in my suitcase and bring them back to the states.

    Is there any more information regarding why exporting them is difficult? I would think that there’d be a market for small affordable compact cars like that in developing markets such as African countries and India.

  • avatar
    Jeff S

    The Japanese government has a brilliant idea, discourage saving fuel and encourage people to either buy larger cars or not own one. Sounds like the Abe administration would fit into the Washington DC crowd. Actually a Kei car would be a perfect car for larger cities in America. I wouldn’t want to drive one on the interstate with semis but in a large city or a suburban errand runner or to commute to work for shorter distances.

  • avatar

    If making these cars competitive overseas is the actual goal, there’s no reason they cannot update the Kei standard to match this need. It’s not the first time the standard has been updated to match the need of its time. (The first Kei standard had the limit at 150cc engine and max dimension of 2.8m L x 1.0m W x 2.0m H)

    The Kei standard already can use some update, like the engine limit of 660cc and 64hp which results in automakers using turbo to get usable power. This results in cars that are more costly and less efficient than they can be with, say, a similar 1L NA engines. Some of the dimensional restrictions can be modified if needed too.

    These cars do fill a big niche of basic transportation for many people, so a move to do away with the standard outright is out of touch with the real world (which is probably why the people promoting this is mostly conservative politicians and enthusiast car magazines).

  • avatar

    The most notable difference when sitting in a kei car is the narrower width. There is usually no center console and the shifter is mounted on the dash. 6″ is more than you might think. But you are right, if kei cars were to disappear most Japanese would likely only move up into a B segment car which are already the best selling segment in Japan behind kei cars. And they already have smaller engines than the same model would have for export. For example the base engine in a JDM Toyota Vitz is a 1.0 while the Yaris here in the US has a 1.5L.

  • avatar
    Jeff S

    I would much rather have a Kei than a Smart Car. Looks a lot more usable and probably is less expensive. Better fuel economy.

  • avatar
    daniel g.

    Hi guys, I got experience with a daihatsu new move from 2000, driver + passenger in front seat is almost the same size of vw bora/jetta, plus variable configuration of back seats, very confortable litle car.
    Aerodinamics like a brick but confortable in the city with 1000cc 3 cyl engine.

    Brand new in 2000 almost US$ 11000, good fuel economy.

    Ohh this in argentina.

  • avatar

    Fuel imports are already killing Japan’s balance of payments. Abe is a fool.

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