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posted: 12/29/2013 5:33 AM

In Japan, automakers bet that small will be profitable

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  • At the Tokyo Motor Show opening this week, Honda will unveil the two-seat S660 convertible, its first mini sports car since 1996. Daihatsu has a rival model with panels that can be changed like an iPhone cover. More than a third of the show's debuts will be mini vehicles, up from about 14 percent in 2011, data compiled by Bloomberg show.

      At the Tokyo Motor Show opening this week, Honda will unveil the two-seat S660 convertible, its first mini sports car since 1996. Daihatsu has a rival model with panels that can be changed like an iPhone cover. More than a third of the show's debuts will be mini vehicles, up from about 14 percent in 2011, data compiled by Bloomberg show.

 
Bloomberg News

TOKYO -- Japan's automakers are betting that small will be the next big thing.

At the Tokyo Motor Show, Honda unveiled the two-seat S660 convertible, its first mini sports car since 1996. Daihatsu has a rival model with panels that can be changed like an iPhone cover. More than a third of the show's debuts will be mini vehicles, up from about 14 percent in 2011, data compiled by Bloomberg show.

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Manufacturers are jazzing up the "kei" car, as they're known in Japanese, to escape their image as boxy utility vehicles driven by country bumpkins and older people, and attract new buyers into the biggest bright spot for the world's No. 3 car market.

"People who drove minicars used to be made fun of," said Takeshi Miyao, a Tokyo-based auto analyst at Carnorama Japan. "Now, even those who drive sedans are looking."

Distinguished by their yellow number plates, kei cars were originally created as a cheap means of transportation as the country industrialized after World War II. Typical minicars today are narrow and boxy, with an engine no bigger than 0.66 liters. About two-thirds of drivers are women, and a third are older than 60, according to the Japan Mini Vehicle Association.

While small cars have proved popular in other countries -- think Britain's Hillman Imp or Italy's Fiat 500 -- they don't come close to Japan, where mini vehicles accounted for 39 percent of new cars sold in the first 10 months of this year. Researcher IHS Automotive says it sees no sign of the market share changing.

Kei car sales have gained 3.4 percent this year, compared with the 6.8 percent drop for larger passenger vehicles, industry association data show.

Automakers will be competing for customers like office worker Ritsuko Yamasaki, who owns a 1.2 million-yen ($12,000) Daihatsu Tanto but wants a car that stands out from those driven by her neighbors in Okayama prefecture, 730 kilometers (450 miles) southwest of Tokyo.

"Minicars now are all alike, and don't look cool or cute," said Yamasaki, 50, who bought her van-type Tanto two years ago. "My next minicar should be roomy, look different from a delivery vehicle, and be something we can be proud of."

Suzuki Motor Corp.'s offering is a curvy mini crossover that looks like an SUV. Nissan Motor Co. will display the Dayz Roox wagon, the second minicar developed with Mitsubishi Motors Corp. after its debut into the market earlier this year.

To be sure, demand may suffer if the government raises the levy on minicars as part of reforms tied to Prime Minister Shinzo Abe's decision to raise the national sales tax next year.

Owners of minicars now pay 7,200 yen in tax a year, compared with 29,500 yen to 111,000 yen for cars with larger engines, according to the transport ministry.

Any increase will hurt lower-income families and small businesses in rural areas, where minicars are the main mode of transport, the mini vehicle association and Japan Automobile Manufacturers Association said in a joint briefing on Nov. 15.

Automakers will debut a total of 157 models at this year's show, with 76 due for global release and 81 for the domestic market. That will make it the biggest display of new models since 2007, before the onset of the global financial crisis and natural disasters in Japan, according to the organizers.

"At this Tokyo Motor Show, I want everyone to get a vision of Japan's future," Toyota Motor Corp. President Akio Toyoda, who chairs the organizing committee, said this month.

The future, as envisioned by Toyota, may take the form of a chameleon-like vehicle that changes color according to the driver's mood and suggests destinations based on facial expressions. The world's largest automaker will display a concept car that uses facial and voice-recognition technology derived from its research into humanoid robots.

Toyota's luxury Lexus division will also unveil the new- generation RC Coupe and a compact SUV concept.

Nissan, Japan's No. 2 carmaker, will show an electric-car concept, called the "BladeGlider," that offers a sense of glider-like piloting with a swept-back wing design and driver's seat in the center of the vehicle.

Foreign automakers will display a total of 109 models, led by Volkswagen AG, the biggest overseas carmaker by sales in Japan. Registrations of imported vehicles are up 9.7 percent this year, the Japan Automobile Importers Association says.

VW will display 17 models, including the all-electric compacts e-up! and e-Golf hatchback. Daimler AG's Mercedes-Benz, the second-biggest foreign brand in Japan, will show two models for the first time in Tokyo, including a special edition of the AMG super sports car.

Tesla Motors Inc., the electric carmaker founded by billionaire Elon Musk, will be the lone U.S. carmaker at the show. The Palo Alto, Calif.-based company opened its second dealership in Japan this year and will exhibit its Model S.

The Tokyo Motor show will be open to the public Nov. 23-Dec. 1 at Tokyo's Big Sight in Odaiba.

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