Imported vehicles are expected to take their biggest ever share of the Japanese market this year as European automakers expand their offerings of small cars and get a lift from the economic recovery amid rising last minute demand ahead of a sales tax hike.

In the first 10 months of 2013, sales of imported, foreign brand autos reached 224,497 units in Japan, the Nikkei said. Based on this and the sales plans of automakers, the full-year figure is likely to surpass 280,000, with their share jumping to about 8.5% of the car market, excluding minivehicles. Five European brands - Volkswagen, Mercedes-Benz, BMW, Audi and Volvo - accounted for more than 70% of import sales. Their 2013 sales volume will likely grow more than 10% from 2012 to a little over 200,000 units, approaching Mazda Motor's 216,257 for last year.

European-brand vehicles are growing more popular as the companies add more affordable models to compacts, a segment that has traditionally appealed to Japanese tastes and which has been the stronghold of domestic carmakers.

Volkswagen released the Up! compact in October. The four-door version - priced at JPY1.86m (IS$18,542) - is particularly popular, the Nikkei said, and about 40% of buyers are switching from Japanese cars, according to VW. The car is attracting many young consumers and people who previously drove minivehicles.

Mercedes-Benz and Volvo are also trying to win new customers by offering relatively reasonable prices. The A-Class compact is priced at JPY2.84m and the starting price of a Volvo five-door compact is JPY2.69m.

The Europeans are aggressively expanding their sales networks in Japan. Audi has opened large showrooms in Yokohama, Kyoto and Hiroshima, and Volvo set up nearly 10 new dealerships in the past year, the Nikkei said.

With the nation's consumption tax set to rise in April, the automakers are moving to launch special discount campaigns to capture the anticipated demand surge before the tax hike.

Volkswagen's Japanese unit will increase this year's orders to its German parent by up to 20% from original plans.