The Smart K, which debuted at the Tokyo auto show, offers Japanese buyers substantial savings over the standard Smart - although the retail price is only slightly less.
The taxman, not the carmaker, offers the discount.
By changing just the fenders and tires, and with no costly changes to the suspension, the two-seater's overall width has been reduced by 45mm to 1470mm.
That was enough to allow the Smart K to qualify for the tax breaks given to minivehicles with engines smaller than 660cc.
The Smart K costs 1.27 million yen, or E11,590 at current exchange rates, against E12,140 for the standard Smart.
But a buyer who chooses a Smart K instead of the standard Smart will immediately save an estimated E755 in various taxes and standard insurance rates. By shopping for competitive insurance, the savings could rise slightly. In each subsequent year of ownership, the tax and insurance savings will be between E280 and E373, depending on regional tax rates.
The Smart K's name comes from the Japanese word for minivehicles, 'keijidosha.'