Chrysler Plans to Triple Imports of Japanese Cars

Chrysler Corp. will announce plans to more than triple its imports of small Japanese cars as soon as the Reagan Administration and the Japanese government announce an end to voluntary restraints on Japanese auto imports, company officials warned Thursday.

In the company’s most overt threat to date about the possible consequences to domestic auto production from the elimination of quotas, Chrysler said it will sign an agreement with its Japanese affiliate, Mitsubishi Motors Corp., to increase its imports of subcompacts from 87,500 to 287,500 units as soon as quotas are dropped.

If, as expected, the import restraint program is ended when its fourth year expires March 31, Chrysler will immediately increase its purchases of cars from Mitsubishi and could reach its target of importing nearly 300,000 units within a year, a top company official who asked not to be identified said. Chrysler, which has been importing subcompacts from Mitsubishi since the early 1970s, already has a well-established import distribution system, and could rapidly expand its shipments of Japanese cars, officials said.

‘The Hard Choice’

In testimony Thursday before the House subcommittee on trade in Washington, Chrysler Executive Vice President Robert S. Miller Jr. said the Reagan Administration’s apparent willingness to let the Japanese end quotas this month will force Chrysler to “make the hard choice of adopting a Far East strategy” similar to one already being implemented by General Motors Corp.

Last fall, GM began importing small cars from two of its Japanese partners, and plans to import up to 300,000 units from Japan if quotas are dropped.

“I’m here to say that Chrysler is forced to demand its share of the trade deficit too,” Miller said. “In a matter of days, Chrysler will be confirming to its Japanese partner, Mitsubishi, that we will require an additional 200,000 small Mitsubishi cars a year from Japan. We are preparing to roughly triple our imports of built-up Japanese cars.”

By itself, Chrysler’s expanded deal with Mitsubishi would increase total Japanese imports more than 10% over the 1.85 million units allowed under the current quota program.

Final Decision Awaited

Later, another company official said Chrysler has told Mitsubishi that it will sign an expanded import agreement as soon as President Reagan makes a final decision on whether to extend quotas. (Although Reagan has not announced a decision yet, his Cabinet council on trade has already recommended that he let quotas lapse.)

Chrysler thus becomes the first U.S. auto maker to explicitly tie its decisions on new product programs to a pending White House decision on bilateral trade with Japan.

Some analysts questioned Thursday whether Mitsubishi could expand its production fast enough to meet Chrysler’s needs, but Chrysler officials said Mitsubishi now has the capacity in Japan to build between 300,000 and 400,000 more cars than it is now producing.

John Hammond, an automotive analyst with Data Resources Inc., a Lexington, Mass., economic forecasting firm, also wondered whether the expanded Chrysler production wouldn’t limit Mitsubishi’s ability to increase its shipments to its own dealer network in the United States.