For Japan’s largest automakers, the kei car has outlived its usefulness. The government is aware of this and is ratcheting up taxes on the uniquely Japanese microcars to make their cost of ownership more on par with regular passenger cars. The move could signal the end of the kei car era as we know it.
According to the New York Times, as the automaking business gets more global, there’s growing concern among Japanese marques that pouring R&D into a car that can’t be sold in other countries is a waste of money and manpower. Shared platforms are on the rise, single-use ones are not.
Kei cars emerged during Japan’s post-war recovery as a class of “people’s cars” limited to 360cc and strict dimensions in length, width and height. In exchange for buying a smaller car, owners got significant tax breaks. It was an effort to promote car culture and kick start the Japanese auto industry, and it worked.
But now, 60 years later, what was once a boon to automakers has become a burden. Keis make up a whopping 40 percent of all new car sales in Japan, and their dominant market share is actually hurting car culture now. Many young buyers it Japan’s sprawling metropolises are downsizing from regular cars to far more affordable keis.
In April, the government raised the light vehicle tax, which kei cars are subjected to, by 50 percent, severely narrowing the cost gap between kei and traditional car ownership. Many lower income drivers are furious about the change, but the government is looking at a healthy bump in tax revenue. Companies like Suzuki, whose lineups consist mostly of keis, might even face extinction.
Sadly, one of the casualties of the new rules just might be a new wave of enthusiast kei cars. Honda is reviving the famous “S” moniker in a mid-engined roadster reminiscent of the 1991 Beat. The S660 was greenlit for production just last month, and would be the only sporty model in Honda’s once-prolific portfolio. Toyota’s kei specialist division Daihatsu is also set to re-introduce the Copen later this year.
With the cost advantage of kei ownership gone, hope for a 90s-like Cambrian explosion of innovate and grin-inducing sportsters has been all but squashed. Even worse, it’s likely that any poor sales of Honda and Daihatsu’s new roadsters will “prove” that there’s no business case for sports cars.
That’s our angle, but the full New York Times story is worth a read as well.