Low-priced minicars are regaining market share in Japan as the end of government subsidies for eco-friendly vehicles approaches.

Daihatsu and Suzuki together have 70% of the minicar market although Honda is gaining ground with its new N Box.

Suzuki started sales of its new Wagon R, the most fuel-efficient minivan in Japan, earlier this month a year ahead of schedule but the roll out has been hampered by a recall involving the left rear door latch of the vehicle, prompting speculation that the car might have hastily rushed out.

Honda, meanwhile, has increased its minicar market share by 8% from last year to 17%. Its N minivehicle series, launched last December, has gained popularity with its spacious interior, holding a commanding lead in the minicar sales ranking since April.

In autumn the company will begin sales of its N One minivehicle, an updated version of its once-popular N360.

All the eight major automakers, including Toyota and Nissan, are competing fiercely in the minicar market which had been declining after peaking in 2006. With income levels growing more slowly, many people are shifting back to minicars because they are cheaper and are taxed at lower rates.

The ending of government subsidies are unlikely to have an effect on minicar sales as consumers are turning to smaller, cheaper cars anyway.

The boom in minicar sales is not entirely good news for manufacturers because profit margins on such cars are slim. One major carmaker executive said that his company can make more profit by selling one luxury vehicle than by selling 10 minivehicles.