Honda N Box may look like a gridge on wheels but it is the biggest selling microcar in Japan. Honda N Box may look like a gridge on wheels but it is the biggest selling microcar in Japan.
Japanese automakers such as Honda and the Toyota-Daihatsu group have a problem: the smallest cars they make are very big in Japan - and only Japan.
Consider Honda's hi-tech N Box, a four-seat microcar that combines some of the utility features of a much larger SUV - the seats roll down to load a bicycle or two - and the fuel-sipping economy of a tiny, 660cc engine.
For the first half of 2013, the zippy N Box was the best-selling car in Japan's popular vehicle category that now represents almost 40 percent of vehicles on the road.
But outside Japan, the concept of the so-called kei car, a term derived from the Japanese word light, is mostly unknown. Now, however, that could change; the Japanese auto giants are considering exporting the technology to emerging market countries.
Honda spokesman Masaya Nagai said: “We have fairly low-priced cars in those markets already, but in India and markets such as Indonesia, we need even smaller, even more affordable cars.”
MICROCAR CUSTOMERS
Rising fuel costs and a fast growing middle class in the world's second and fourth most populous states make them likely to be the first microcar customers.
As a first step, companies such as Honda have designed their kei cars - the kei is pronounced like the letter “k” - in a way that makes its easier to produce them overseas.
Honda chief executive officer Takanobu Ito told reporters in June: “We spent a long time nurturing the kei car technology in Japan, and we think it has the potential to be useful not only in developed markets but also in emerging markets.”
Honda is not alone.
Toyota is using technology from its affiliate Daihatsu, a kei-car specialist, to develop minicars for Indonesia, while Mitsbubishi is looking at selling kei-concept cars in Africa, where president Osamu Masuko plans to attend a distributors' conference in July
CREDIBLE PRESENCE
Nissan chief operating officer Toshiyuki Shiga also said in June that kei cars have a potential of going global.
While few Japanese carmakers have tried to popularise microcars outside of Japan, there are exceptions.
Suzuki and Daihatsu have targeted India and Southeast Asia since the early 1980s, building a credible presence although their technology differs from that used to build Honda's kei.
More recently, General Motors and its Chinese affiliate Wuling have been making an aggressive push for micro minivans in China. Their next bet is India.
Honda believes its advanced microcar technology and the favourable marketing conditions in India and Indonesia mean that the time is right to export the kei concept.
MICROS IN MACRO RACE
Now the race in the microcar market is heating up. Honda, best known for its Civic and Accord cars, is betting on small cars to meet its aggressive target of selling selling million vehicles globally a year by March 2017, from current sales of about four million.
To do so, Honda aims to double sales in emerging markets to account for half of total vehicle sales, and its kei car technology could play a key role in that.
Indonesia, where more than a million cars were sold in 2012, is one such market. Last month, Jakarta reduced fuel subsidies, raising motor fuel prices by an average of 33 percent. At about the same time, Indonesia signed into law a Low Cost Green Car (LCGC) programme to promote small cars such as the kei, though it is on hold pending review.
IN TUNE WITH THE JAZZ
Hiroshi Takemura, who oversees Honda's small car operations, said in June Honda was looking at taking the microcar technology to Indonesia and neighbouring Malaysia, while managing officer Yoshiyuki Matsumoto explained that the N Box shares some structures with the Jazz, a global compact that’s built in 10 plants around the world (including Indonesia and Thailand), meaning the two cars could be asembled on the same production line.
One challenge for Honda and other Japanese automakers is pricing. Honda's N Box starts from ¥1 263 500 (R124 750), slightly more expensive than the outgoing Jazz, starting from model of the Fit that starts from about ¥1 233 000 (R121 750).
To produce a no-frills car that will sell in Indonesia for less than $10 000 (that’s roughly the equivalent of ¥1 million or R100 000) in Indonesia, features such as the turbocharger, vehicle assist system and airbags may have to go, and an old-fashioned key used to start the car instead of an electronic smart key. - Reuters