Why Japan Is Cracking Down On Its Tiny Kei Cars

You're unlikely to ever see one in the U.S., but for decades Japan's domestic market minicars have provided drivers with efficiency, practicality, ease of parking, style, and even fun behind the wheel. Today, the kei car has never been more popular. So why do Japanese automakers want to wean buyers off of them?

The New York Times reports that the gas-sipping little vans, hatchbacks and trucks that make up the kei car market have just been hit with a series of stiff tax increases. In addition to raising gasoline and sales taxes, the government increased the kei car tax 50 percent to where it's nearly in-line with the taxes on normal-sized cars.

The reason for this, the newspaper reports, is that automakers and the government fear there's too much of a focus on JDM-only vehicles. Most of the kei cars, which have sub 1.0-liter engines, aren't exported, and that's starting to not make much sense in today's era of globalized volume sales.

Remember the "One Ford" plan, where Ford sought to eliminate the concept of having wildly different vehicles in different markets in order to cut costs? Dumping resources into their Japan-only vehicles flies in the face of that idea, and it's getting harder for Japanese automakers to justify. From the story:

That means much of the research and development that go into kei models is wasted, officials warn. Producing kei cars just for domestic drivers also hurts automakers' efforts to achieve economies of scale, which has become increasingly important in an era of cutthroat global competition.

As with other big automakers, Japanese car manufacturers are using the same basic components to build a wide range of models. Servicing a niche, Japan-only market is a luxury that Japanese automakers increasingly cannot afford, some government officials argue.

The problem is Japanese buyers love their kei cars and this is reflected in their sales figures. Thanks to sharp gas prices, high taxes, and crowded city streets, and the cars' general affordability, the kei car is pretty much the perfect vehicle for many parts of Japan. They're even popular among younger city dwellers, a demographic that automakers have had a tough time cracking.

But while incentives helped get postwar Japan off scooters and motorcycles and into kei cars, some argue that the car's role is now over. The problem is that many Japanese buyers, especially in poorer and more rural areas, may not be able to afford the high costs that come with owning a larger car.

Could this mark the beginning of the end of the kei car? If that's coming, it's bad news for a lot of Japanese buyers.

Hat tip to Kat!