The previous Datsun 11 had continued to use the old 495cc 10hp side valve engine, which dated back to the days when the company was called DAT. For 1933 the regulations regarding maximum engine size for small cars was changed in Japan. Datsun had successfully petitioned the government asking that the capacity be increased, as they felt that the existing 500cc class was too restrictive. It probably didn't hurt that Takeuchi, one of the major investors in Datsun, was the cousin of the ex-Prime Minister of Japan, and he likely still had connections.
The new regulations now stated that small cars must be under 750cc, and Datsun's response to the changes was the introduction of the new bored and stroked version of the DAT engine, which now grew to 748cc and produced 12hp. A 2hp increase may now sound like much, but it was a 20% jump in performance.
