Japanese Carmakers Downsize To Minicars

Minicars racked record sales last year in Japan and now account for more than a third of all new cars sold annually.

TOKYO (AP) - Japanese carmakers are once more proving that small sells big.

After first pioneering the gas-sipping compact, then subcompact, the country's auto companies are scoring again with another downsizing—the so-called ''minicar.''

Tiny, cheap and super fuel-efficient, minicars are essentially motorcycle-sized engines on four wheels. But demand for these runty runabouts is anything but petite. Last year, minicars racked record sales in Japan and now account for more than a third of all new cars sold annually here. The automakers have no immediate plans for mass export of the minicars, but some analysts predict they may eventually catch on in developing economies like India and China.

At a time of soaring oil prices, it's little surprise Japanese drivers are turning to more wallet-friendly rides, just as Americans are abandoning their lunky sport utility vehicles. But perhaps only in a country famed for its ''small-is-beautiful'' culture of pocket electronics and bonsai trees could the trade-ins be so diminutive.

Known as ''kei,'' or light, cars in Japanese, minis are limited to an engine size of up to 660 cubic centimeters—less than half the size of a Honda Civic—and restricted by law to being no bigger than 3.4 meters long and 1.5 meters wide (11.2 feet long, 5 feet wide).

The first mini dates back to poverty-stricken post World War II Japan as a rattletrap people's car for those who couldn't afford ''real wheels.'' They never really went away, but only recently became popular again, largely due to improvements in technology, styling and looser size restrictions on cars. Today's generation stretches the limits of engineering and styling, with models sporting four-wheel drive, satellite navigation, antilock brakes and even turbocharging.

''They used to be sold as cheap cars,'' said Kurt Sanger, an auto analyst for Macquarie Research in Tokyo. ''Now they are actually decent cars that just happen to have a wimpy engine in them.''

Japan's minicar boom is the silver lining of an otherwise dismal domestic market. While Japanese automakers have marched from one success to another overseas, sales at home have slumped for three-straight years—hurt by the country's shrinking population and a trend of increased urbanization.

Minicar sales, however, have been climbing since 2004 and jumped 5.2 percent to a record 2.02 million vehicles last year. And surprisingly, it's not the big names like Toyota or Nissan riding the tide, but second-tier players once dismissed as also-rans, like Suzuki, Daihatsu and Mitsubishi, that locked up the niche market.

Price is a big factor. Minicars cost around just US$10,000 (euro7,250) and get tax breaks from the Japanese government. Then there's the savings from fuel efficiency that hits 47 miles a gallon—a boon in a country where gasoline sells at about $4.75 a gallon.

They are popular in crowded cities because they are easy to park, and a hit in less affluent rural areas where public transportation is limited.

Minis also pay cheaper registration fees and taxes than regular cars, noted Masa Ogawa, a managing director for J.D. Power Asia Pacific, an automotive consulting company. The basic flat tax on a minicar can run around US$96 (euro70) a year, compared with more than US$830 (euro600) for high-end performance cars.

Yet the class got its biggest boost in 1998, when government loosened restrictions on minicar sizes, expanding the overall dimensions to 3.4 meters and 1.5 meters wide (11.2 feet by 5 feet), from 3.3 meters by 1.4 meters (10.9 feet by 4.6 feet).

The added dimensions allowed for roomier cabins, more bells and whistles and sturdier frames. The latter was crucial in helping allay consumer concerns that the whole car could end up a crumple-zone in a crash.

Suzuki's Wagon R has not only been Japan's best-selling minicar for the past three years. It has been the country's best-selling car, period—even outselling Toyota's universally adored Corolla.

Typical of modern minicar styling, the Wagon R looks like a shrunken-down four-door minivan balanced on pie tin wheels, and is disproportionately tall for its length. The maxed-out passenger compartment nearly overwhelms the chassis, and the hood is compressed into a pug-nose to further save space.

Indeed, gone is the 1980s heyday of Japan's booming bubble economy, when looks mattered more than utility and customers were prepared to shell out big time for a little highway cachet, particularly if it involved a German import.

''Japanese thinking about driving cars has changed a lot,'' said Kentaro Nakata, spokesman for the Japan Automobile Dealers Association. ''It's no longer a big status symbol. It's more about getting from place to place.''

Some analysts predict that minicars may eventually catch on in developing economies like India and China, or even be manufactured there. Suzuki is already making slightly larger cars in India based on its minicar technology. It experimented with limited exports to Britain of an open-topped sportser called the Cappuccino in the 1990s, a venture that mostly flopped.

''We have no plans to sell the minicar overseas as it is,'' Suzuki spokesman Yoichi Kojima said.

Japanese minicars are sold mostly in Japan. Partly because profit margins are so low, it's not cost-effective to ship them abroad.

Germany's DaimlerChrysler AG is hoping to sell its own minicar, the tiny two-seat Smart car, in the United States next year. But some observers doubt whether American drivers—used to big, open highways—are ready for such a radical revolution in size and horsepower.

''The minicar is one or two sizes below the compact,'' said J.D. Power's Ogawa. ''American consumers would probably perceive the minicar as a kind of toy.''

More in Global