China's Chery is preparing to enter one of the most closed and specific automotive segments in the world – the Japanese kei car market. The AIM and Chery joint venture is developing a compact city car specifically tailored to Japanese regulations and tastes.
For the global automotive industry, this is a serious challenge. The kei car is a unique Japanese class of ultra-compact cars with strict size and power limitations. Typically, such vehicles are less than 3.4 meters long and have an engine up to 660 cc. Thanks to tax breaks and convenience in cities, they remain extremely popular in Japan.
This is why the segment is considered almost impregnable for foreign brands. Suzuki, Daihatsu, Honda, and Nissan have dominated here for decades. But the situation began to change after the appearance of BYD's ultra-compact EV – the Racco model, aimed at Japanese megacities. Now Chery is trying to occupy the same niche.
The future car is being created jointly with the Japanese company AIM, known for engineering projects for the local market. This is an important point: instead of directly exporting a Chinese model, Chery is effectively using Japanese engineering adaptation to meet the expectations of local buyers.
The main focus is urban mobility and low ownership costs. Kei cars are especially in demand in Tokyo, Osaka, and other dense cities where large SUVs become inconvenient and expensive. In addition, the Japanese market is gradually opening up to compact EVs thanks to government subsidies and rising fuel prices.
For the first time, China is trying to attack the Japanese automotive industry not through large crossovers or cheap sedans, but through the country's most local and culturally specific segment. For Japanese brands, this could turn out to be much more dangerous than it seems.
If Chinese companies learn to make kei cars to Japan's tastes, they will gain access to one of the last major markets that has until now been almost entirely controlled by local manufacturers.
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