Since the kei-car segment was very important in the Japanese market, Subaru tried to compete with this tiny, two-door vehicle named R1. All the Japanese carmakers had something to offer to their home market in the kei-car segment, and Subaru couldn't afford to rely only on the vehicles sold outside Japan. According to Japanese standards, a car that fits into that segment benefited from tax deductions, lower parking fees, and other financial advantages. Subaru already had the R2 on sale, but it tried to offer something even smaller: the R1. Basically, it was the three-door version of the R2, but it was more than that. It featured a shorter wheelbase and a decreased total length. The front fascia featured the same "airplane" design with three scoops on the bumper and a pair of vertically mounted headlights. While the car was similar to the R2 up to the B-pillar, it was different from there. In the rear, it featured small side windows and a sloped rear end. Inside, it was enough room just for two passengers, and there was no option for rear seats. Surprisingly, the carmaker offered the vehicle with an option for leather and Alcantara interior. The carmaker didn't want to make a budget vehicle, and that was easy to notice on the powertrain options. Subaru fitted the R1 with a standard CVT for the entire range and an option for two engines: a naturally aspirated or a supercharged version. The latter was available with an all-wheel-drive system and badged as STi.