The car that hacked the Japanese tax system with a rotary engine

Technology · Published 20 October 2026 · Updated 20 October 2026 Swipe more like this →

In short: In the 1970s, Japanese car buyers discovered a clever loophole: the Mazda Capella. By installing a rotary engine, owners could bypass heavy taxes on high-displacement engines while still enjoying high-performance power. It was a masterclass in engineering as a tool for financial navigation.

The Mazda Capella (known as the 626 in many markets) was a mid-size staple produced from 1970 to 2002. While it competed with stalwarts like the Toyota Corona and Honda Accord, its most distinctive technological move occurred during its first generation. Mazda offered an optional Wankel rotary engine, which provided a unique mechanical advantage in the Japanese domestic market.

The mechanism was simple but effective: Japanese road tax was often tied to engine displacement. By using a rotary engine, buyers could obtain a vehicle with power output exceeding traditional inline engines without falling into the higher tax brackets reserved for 1.5-litre and larger engines. This specific generation was the only time Mazda offered the rotary engine in the Capella lineup, making it a targeted solution for the savvy consumer.

The Capella's legacy is one of global adaptation. In South Africa, the rotary version claimed 97 kW (132 PS) SAE, while in New Zealand, it became the first and only rotary-engined car ever assembled in the country. From its 1970 debut with 1.5-litre engines to its 1982 transition to a front-wheel-drive platform, the Capella served as a versatile testbed for Mazda's engineering—balancing aerodynamic efficiency, diverse global tax laws, and the pursuit of high-revving performance.

The model eventually paved the way for the Mazda6 in 2002. Over its long production run, it sold millions of units worldwide, proving that a car's value isn't just in its horsepower, but in how it navigates the specific constraints of its environment.

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