Imported Japanese ‘kei’ cars stranded in Australia after government blunder

EXCLUSIVE

The Australian Government has slammed the brakes on a number of popular imported ‘kei’ cars – a class of ultra-small vehicles from Japan – after it was found they were mistakenly approved for local roads, and do not meet strict crash-safety regulations.

Federal regulators have discovered that over the past two years, they have wrongly certified thousands of kei cars as meeting strict rules for side-impact crash safety which are more stringent in Australia than in Japan.

Hundreds of customers waiting for kei cars have at points in the process been left in limbo after the documents needed to certify them for local roads were suspended by the Federal Government.

The thousands of examples already on local roads are not planned to be recalled, federal regulators have told firms that import kei cars – even though they are in breach of Australian motor-vehicle design rules.

Previously a niche sector focused on rare performance cars or vehicles for people with restricted mobility, recent rule changes have supercharged the popularity of imported vehicles in Australia, both new and used.

From January to March this year, Australian regulators approved 5389 vehicles under the Specialist and Enthusiast Vehicle (SEVS) import scheme – up 770 per cent on the same period 18 months prior.

More than half of those imports were granted entry under 'environmental' criteria for hybrid and electric vehicles, including kei cars – which are roughly between a Smart ForTwo, and a Suzuki Swift in size.

Kei cars must conform to strict limits on engine size, power and dimensions – 3.4 metres long, 1.48 metres wide and 2.0 metres tall – and are eligible for lower tax rates in Japan.

Five popular kei-car models – including the Nissan Sakura electric car – have had their approval documents suspended by the Federal Government, and the permitted years of manufacture for other kei vehicles slashed.

It was discovered they were approved for use on local roads based on concessions in recent side-impact crash safety rules for narrow vehicles, which are present in Japanese law – and global United Nations regulations – but not in similar legislation introduced in Australia.

The version of these rules for regular-size vehicles was responsible for the axing of the Nissan GT-R, Lexus IS, and various other new vehicles from Australian showrooms nearly three years ago.

Importers of kei cars in Australia say the Federal Government did not provide sufficient notice before freezing the approval documents – and has been of little help in assisting affected customers with 'kei' cars in Australia they can not register for road use.

"There's been absolutely no willingness [to make concessions]," Simon Fell, director of Comptune Engineering, a firm specialising in modifying and certifying imported cars to meet Australian motor-vehicle regulations, told Drive.

"The largest impacts have been felt by the consumers that have been caught with vehicles on the way from Japan and unable to have them complied."

The process of importing a vehicle involves a 'model report', documentation filed with the Australian government for a particular make and model – across a certain year range – allowing examples that fall under it to be certified for use on local roads.

Once filed and approved by federal regulators, model reports can be sold and used by other importers to bring in vehicles.

Contrary to popular belief, every new motor vehicle that arrives in Australia is not required to be inspected by authorities to ensure it meets the standards defined by Australian Design Rules.

Rather, regulators instead rely on the word of car makers – or in this case, importers through their model reports – in legal documents that vehicles imported and sold in the country are compliant with local rules.

The Federal Government notified importers of its intention to suspend the model reports – after wrongly approving hundreds of kei cars for use on Australian roads in recent years – in mid-April, and began to follow through later that month.

It takes months for vehicles to be shipped from Japan, meaning that for many customers, the model reports were suspended while cars they had paid for were already in transit to Australia.

Drive spoke with a Melbourne-based customer who purchased a new 2024 Honda N-One hatchback from Japan that was loaded onto a boat in mid-April – as the government signalled its intention to suspend its paperwork.

Many kei cars caught up in the saga have already been shipped back to Japan and sent to auction, in some cases at a cost of $10,000, Mr Fell said.

Regulators have blamed importers for the mistake, and say it is not feasible for the Federal Government to check every aspect of the approval documents for accuracy.

However importers – including those who paid to submit the model reports in the first place – say the government is given three months to check model reports before approving them, and that it should have noticed.

"The advice that was provided by the delegator at a recent industry meeting was that the model report authors should ensure they've got appropriate insurances in place, and that it has nothing to do with the government," Mr Fell told Drive.

"Yes, they [say they] made assessments, but they can't look at every aspect of an application.

"They say it's not their fault and that if consumers are displaced, they should consider legal action against the model report authors."

It is understood some customers have been contacted by the Federal Government to discuss a possible exemption provided their vehicle is used for private use, and is not re-sold within a given period.

However, a spokesperson for the Department of Infrastructure, Transport, Regional Development, Communications and the Arts told Drive it "does not give discretionary exemptions from meeting ... requirements."

"The department ... recently suspended a number of Model Report approvals for Kei cars," a spokesperson said in a written statement.

"The department issued the suspensions after reviewing compliance information from the respective approval holders and determining that the affected Model Reports did not satisfy the requirements of ADR 85 – Pole Side Impact Performance."

"The suspensions do not prevent the entry of all Kei cars to the Australian market. There are several in-force Model Reports approved for makes and models of these vehicles that comply with Australian Design Rule (ADR) 85 and currently listed on the ROVER portal."

Over the past decade, new rules designed to reduce fatalities in side-impact car crashes with poles and trees have been rolled out for new cars sold in many key new-car markets, including Australia and Japan.

The regulations – known as ADR 85 in Australia, or UN Regulation 135 globally – set limits on the forces that can be transferred to a vehicle occupant in a side-on crash test with a pole, which for most vehicles occurs at 32km/h.

Countries adopting the UN regulations had the option of implementing a lower test speed of 26km/h for vehicles less than 1.5 metres wide, on the basis that these vehicles rarely travel beyond the city, and drive mostly at lower speeds.

It is harder for kei cars to meet the higher test speed as the seats are so close to the outside of the car, due to their narrow bodies – although it can be done.

While this criterion was adopted by Japan – where four of the Top 10 selling new vehicles are kei cars – it was declined by Australia.

"There'd been a general way of demonstrating compliance with Australian Design Rules for vehicles from Japan, and that was by quoting adoption dates where the Japanese authorities adopted certain UN regulations [also in force in Australia]," Mr Fell told Drive.

"This [rule] was adopted in 2015 in Japan. Essentially, the model report applicants are all saying this is the relevant date, therefore this vehicle complies.

"However, in the fine print of the ADR, it says that they only accept that standard [of 32km/h] for vehicles over 1.5 metres width. We say the applicants missed that point, but we also say the department missed that point."

Mr Fell said some kei car imports suspended by Australian authorities may have approved in Japan under the 32km/h test – which would allow them to be re-instated locally – but it is unknown which vehicles these are.

While some kei models have had their model reports suspended entirely, others have only had entry denied to examples built after the safety rules came into force in Australia.

Vehicles must comply with ADR 85 in Australia if they were first introduced here – or in this case, in Japan – after November 2017, while models launched prior to that date must comply by November 2021.

Japan made the side-impact rules mandatory for all new vehicles on sale from January 2023 – although some models built after this date have still had their model reports suspended as they may not have been tested to the 32km/h speed used in Australia.

A number of kei cars previously approved for Australian roads have been spared as they meet requirements for the angle of the seat to the front wheels, which exempts them from ADR 85.

"The department has legislated exemptions for other types of vehicles – the rare sports cars, the American [left- to right-hand-drive] vehicles," Mr Fell said.

"You just put a sticker on the windscreen and say it may not comply. So [the government has] taken a hard line on this particular type of vehicle.

"Their concern is that at the higher speed, the pole protrudes further into the vehicle. And because these are narrow vehicles that can potentially have catastrophic results."