The kei-car legal class originated in the era following the end of World War Two, when most Japanese could not afford a full-sized car, but many had enough money to buy a motorcycle. To promote the growth of the car industry, as well as to offer an alternative delivery method to small business and shop owners, the kei- car category and standards were created.[1] Originally limited to a displacement of only 150 cc (9 cu in; 150 cm3) (or just 100 cc for two-stroke engines) in 1949, dimensions and engine size limitations were gradually expanded (in 1950, 1951, and 1955) to tempt more manufacturers to produce kei cars. In 1955, the displacement limit increased to 360 cc (22 cu in) 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[13] and the 1958 Subaru 360, the first mass-produced kei car,[14] 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 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 the smaller cars, or the larger "national car". The small exterior dimensions and engine displacement reflected the driving environment in Japan, with speed limits in Japan realistically not exceeding 40 km/h (24.9 mph) in urban areas. Keis were not allowed to be driven any faster than 40 km/h until the mid-1960s, when the kei speed limit was increased to 60 km/h (37.3 mph). The class then went through a period of ever increasing sophistication,[15] with an automatic transmission appearing in the Honda N360 in August 1968, with front disc brakes becoming available on a number of sporting kei cars, beginning with the Honda Z GS of January 1970.[16] Power outputs also kept climbing, reaching a peak in the 40 PS (29 kW; 39 hp) Daihatsu Fellow Max SS of July 1970.[17] Sales increased steadily, reaching a peak of 750,000 in 1970. 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.[15] Honda and Mazda withdrew from the contracting passenger kei-car market, in 1974 and 1976, respectively, although they both maintained a limited offering of commercial vehicles. Until 31 December 1974, kei cars used smaller license plates than regular cars 230 mm × 125 mm (9.1 in × 4.9 in). As of 1975, they received the medium-sized standard plates, which are 330 mm × 165 mm (13.0 in × 6.5 in). To set them apart from regular passenger cars, the plates were now yellow and black rather than white and green.
Sales had been steadily declining, reaching a low-water mark of 150,000 passenger cars in 1975, 80% less than 1970 sales. Many were beginning to doubt the continued existence of the kei car, with both Honda and Mazda withdrawing in the middle of the 1970s.[18] 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.[19] 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, especially Suzuki, a relatively small company whose entire production consisted of two-stroke kei cars.[20] Daihatsu, though, had both the engineering backing and powerful connections of their large 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 200 mm (7.9 in) and 100 mm (3.9 in), respectively. Engine size was increased to 550 cc (33.6 cu in), taking effect from 1 January 1976.[20] The new standards were announced on 26 August 1975, leaving very little time for manufacturers to revise their designs to take advantage of the new limits.[21] Most manufacturers were somewhat surprised by the decision; having expected a 500 cc (30.5 cu in) 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.[18] These interim versions (with displacements ranging between 443 and 490 cc) were "feelers", developed to see if indeed a continued market existed for the kei car.[18] As sales improved, they only lasted for a model year or so until manufacturers had the time to develop "full-sized" engines. Only Daihatsu managed to avoid developing transitional engine versions that did not take full advantage of the new regulations. Kei-car sales remained stagnant, however, while combined passenger and commercial kei car sales reached 700,000 for the first time since 1974,[19] the small cars still lost market share in a quickly growing market. As the kei cars became larger and more powerful, another benefit appeared, as exports increased considerably. In particular, export sales of trucks increased, while kei passenger car exports increased at a lower rate. In 1976, combined exports of kei cars and trucks were 74,633 (up 171% year-on-year), despite exports of passenger kei cars decreasing.[22] In 1980, another record year occurred as exports climbed 80.3% (to 94,301 units), of which 77.6% were microtrucks.[23] Nearly 17% of exports went to Europe, dwarfed by Chile, which took nearly a quarter of the exported keis.[23] Due to the difficult economic environment, low-priced cars sold well and 1981 marked another successful year as Japanese midget car sales reached their highest since the 1970 record (at 1,229,809 units for cars and commercials).[24] As the 1980s progressed, kei cars became increasingly refined, losing their utilitarian origins, as Japanese customers became ever better off. Features such as four-wheel drive, turbochargers, and air conditioning began to become available on kei-car models. Conversely, van versions of the small hatchbacks were now marketed to nonbusiness users, to take advantage of even lower taxation and laxer emissions rules; this move in the market was spearheaded by Suzuki with their 1979 Alto, and competitors soon followed suit, with the Subaru Family Rex and the Daihatsu Mira appearing within a year's time.[25] In the 1980s, the speed limit for kei cars was 80 km/h (50 mph). Government rules also mandated a warning chime to alert the driver if this speed were exceeded.[10]