Up to 360 cc era (1948–1975) SS The kei legal class originated in the era following the end of
World War II, when most Japanese citizens could not afford a full-sized car, though many had enough money to buy a light
motorcycle. To stimulate growth of the car industry, as well as offer alternative commuting means, and small delivery vehicles for shops and businesses, the kei-car category, reduced tax-burden, and accompanying legal maximums for "essential transportation" vehicles were created. At first limited to a
displacement of just 150 cc (or just 100 cc for
two-stroke engines) in 1949, dimensions and engine size limitations were gradually expanded in 1950, 1951, and 1955, to make kei cars more attractive to buyers, and production more viable to manufacturers. In 1955, the displacement limit was increased to 360 cc for both
two-stroke and
four-stroke engines, resulting in several new kei car models beginning production in the following years. These included the 1955
Suzuki Suzulight and the 1958
Subaru 360 (considered the first truly mass-produced kei cars), which were finally able to fill people's need for basic transportation without being too severely compromised. In 1955, the Japanese
Ministry of International Trade and Industry (MITI) also set forth goals to develop a "
national car" that was larger than kei cars produced at the time. This goal influenced Japanese automobile manufacturers to determine how best to focus their product development efforts for kei cars or the larger "national" cars. The small exterior dimensions and engine displacement reflected the driving environment in Japan, with
speed limits in Japan realistically not exceeding in urban areas. Kei cars were not allowed to be driven any faster than 40 km/h until the mid-1960s, when the kei speed limit was increased to . The early vehicles were comparable to the European
'bubble-cars' of the era. In 1968, with the introduction of the
Honda N360, the domestic market for kei passenger cars began to grow rapidly. Before the model was launched on March 6, 1968, the monthly kei passenger car market consisted of less than 10,000 cars. This had swelled to 16,000 cars by March 1968 and over 18,000 by May. In May 1968, the 5570th N360 was registered, making it the market leader. Most kei cars registered were still in the commercial class, however. The class then went through a period of ever increasing sophistication, with an automatic transmission appearing in the Honda N360 in August 1968, and front
disc brakes becoming available on a number of sporting kei cars, beginning with the
Honda Z GS of January 1971. Power outputs also kept climbing, reaching a peak with the
Daihatsu Fellow Max SS of July 1970. Sales increased steadily, reaching a peak of 750,000 in 1970. Until 31 December 1974, kei cars used smaller
license plates than regular cars, at . From 1975, they received medium-sized standard plates, which are . To set them apart from regular passenger cars, the plates were now yellow and black rather than white and green.
550 cc era (1976–1990) Throughout the 1970s, the government kept whittling away at the benefits offered to kei vehicles, which combined with ever stricter emissions standards to lower sales drastically through the first half of the decade.
Honda and
Mazda withdrew from the shrinking passenger kei car market in 1974 and 1976, respectively, although they both maintained a limited offering of commercial vehicles. Sales had been steadily declining, reaching a low of 150,000 passenger cars in 1975, 80% less than 1970 sales.
Emissions laws were another problem for the kei car industry in the mid-1970s. From 1973 to 1978, emissions standards were to be tightened in four steps. Meeting the stricter standards, which were to be introduced in 1975, would be problematic for manufacturers of kei cars. This was particularly hard for
Daihatsu and
Suzuki, which focused on two-stroke engines, and especially Suzuki, a relatively small company whose entire lineup consisted of two-stroke kei cars. Daihatsu, though, had both the engineering backing and powerful connections of their owner,
Toyota, to aid them in meeting the new requirements. All manufacturers of kei cars were clamoring for increased engine displacement and vehicle size limits, claiming that the emissions standards could not be met with a functional 360-cc engine. In the end, the Japanese legislature relented, increasing the overall length and width restrictions by and , respectively. Engine size was increased to 550 cc, taking effect from 1 January 1976. Most manufacturers were somewhat surprised by the decision; having expected a limit, they had already developed new engines to fit such restrictions. These new engines were quickly introduced, usually mounted within widened bodies of existing models. In 1980, another record year occurred as exports grew by 80.3% (to 94,301 units), of which 77.6% were microtrucks. Nearly 17% of exports went to Europe, dwarfed by
Chile, which took nearly a quarter of the exported kei vehicles. This was also thanks to a new phenomenon: To help boost their sales, Suzuki developed a new car which could be sold as a commercial vehicle although it was really intended for private use, thus avoiding the 15.5%
excise tax. Efficient, bare bones design meant that the resulting
Suzuki Alto was considerably cheaper than any of its competitors, and it set the tone for kei cars for the entire 1980s. Until the excise tax was abolished in 1989, light commercials like the Alto and its competitors nearly completely supplanted the passenger car versions. In the 1980s, the speed limit for kei cars was . Government rules also mandated a warning chime to alert the driver if this speed was exceeded. For the first time, a
power limit of was also applied in addition to the limit on engine size, in response to the ever-increasing power outputs available with turbocharging and multivalve technologies popularized in the late 1980s. Engine technology was also shared with
sports bikes, which are designed more for rider enjoyment and less so for fuel economy, going against the idea of small people's cars and putting the kei cars' tax and structural advantages at risk of a governmental backlash. This power limit matched the highest output reached by any kei manufacturer at the time and was a
gentlemen's agreement amongst the manufacturers in an effort to avoid a kei-class horsepower war. The only kei car to have exceeded this limit is the
Caterham 7 160, a lightweight British sports car that was not expected to qualify as a kei car, though it is small enough (in dimensions and displacement) to fit the regulations. Its engine is rated at —since that is how the car is
homologated in the United Kingdom, Japanese authorities told the importer that its power should remain unchanged. The
Japan Automobile Manufacturers Association also self-imposes a speed limit of for kei cars. Kei cars were rather unsafe in accidents, and as a response, the Ministry of Transport decided to increase the standards. New kei cars would have to pass additional tests, including a head-on collision at and a side impact test. To enable manufacturers to fit additional reinforcements and crumple zones, the maximum overall length and widths were both increased by . The new rules went into effect on 1 October 1998 and all manufacturers introduced revised lineups to meet the new requirements. This was the largest, simultaneous introductions of new models in Japanese automotive history. The model was not a success, and sold the fewest examples of a kei car when it was marketed. The process of consolidation in the kei class continued when, in 2008, Subaru announced that they would no longer develop and build their own kei vehicles. As Toyota had recently taken a stake in the company, Subaru was to sell rebadged Daihatsus instead to focus on their core vehicles and exports. The last true Subaru kei car left the band on the last day of February 2012, after 7.97 million examples had been built by the company over 54 years. Starting in 2011, Toyota entered the kei car market for the first time. The resulting Toyota Pixis Space, a rebadged
Daihatsu Move Conte, which was expected to increase competition in that market.
Nissan and
Mitsubishi began to jointly produce the
Mitsubishi eK (also sold as the Nissan Dayz and formerly the Nissan Otti). Honda's kei car lineup—the
N-one,
N-Box, and
N-WGN—accounted for around a quarter of the company's overall sales.
Reduced incentives (2014–present) In April 2014, the Japanese government significantly reduced advantages for kei car owners, imposing a higher sales tax, a higher gasoline tax, and a higher kei car tax, the last of which was raised by 50 percent—greatly reducing tax benefits compared to regular-sized cars. Daihatsu, Honda, Suzuki and Nissan-Mitsubishi (through the
NMKV joint venture) are currently the only mass-production manufacturers of kei cars. Mazda sells rebadged Suzuki models, Toyota and
Subaru sell badge-engineered Daihatsu models, and Nissan-Mitsubishi sources their commercial kei models from Suzuki. == Electric kei cars ==