Posted by: Ian Rowley on November 1, 2006
Strange things are happening in Japan’s domestic auto market. Despite a glut of models and Japan’s economic recovery, regular car sales are still slumping—down 6.2% in October, the sixteenth consecutive year-on-year monthly decline.
But perhaps of more interest is the growing role of kei or mini cars—low cost, tiny cars limited to 660cc engines and mass produced by just a few automakers, such as Suzuki, Mitsubishi and Daihatsu. Bucking the wider trend, through October, kei car sales rose 4.4% and are expected to break the 2 million sales barrier for the first time this year. Kei cars now account for 35% of unit sales in Japan’s 6 million a year car market.
One reason is price. Kei cars, already cheaper to produce, receive tax advantages from the government, and typically cost around a million yen ($9,000). Another is that many Japanese car users increasingly perceive cars as commodities and don’t want to pay more to make a big statement. It also helps that new kei cars, like the cool Mitsubishi i, have higher specs and better designs than they used to.
All of which is have a big impact on Suzuki, the kei car leader. In October, Suzuki’s domestic sales, fuelled by its 660cc gas sippers, overtook Honda, making it the third best selling auto maker in Japan following Toyota and Nissan. In the ten months through October, Suzuki’s sales were 587,874, compared to Honda’s 581,249. For most other Japanese automakers, though, the country remains a tough sell.