Reagan to Let Japanese Car Quotas End; Price Cuts Seen : U.S. Firms Express Dismay

President Reagan today announced he will not interfere with the lifting of restraints on the sale of Japanese automobiles in the United States at the end of this month.

The decision is expected to result in increased sales of smaller, less-expensive Japanese models and an overall drop in auto prices for U.S. consumers. It was greeted with dismay by U.S. auto makers and union officials.

In a brief written statement, Reagan said: “It is my decision not to urge the Japanese to extend their voluntary export restraints on automobiles to the United States. . . . In taking this action, I hope that we can look forward to reciprocal treatment by Japan.”

Lowering Barriers Discussed

The United States and Japan recently agreed to discuss lowering Japanese trade barriers to American-made electronic and telecommunications equipment, forest products, medical equipment and pharmaceuticals.

Those talks are still in the preliminary stages, and White House spokesman Marlin Fitzwater said Reagan had received no assurances from the Japanese that they would agree to accept more U.S. products.

The President’s decision, Fitzwater said, was based on his conclusion that it was “in the best national interest of the United States,” that it would benefit American consumers and that the U.S. auto industry, having recovered from a long recession, is now “able to compete in world markets.”

Free-Trade Philosophy

The action, which had been expected for several weeks, also is consistent with Reagan’s free-trade philosophy and agreements signed at the last two economic summit conferences at which the industrialized democracies agreed to remove trade barriers between them.

Asked whether the Japanese had agreed to consider reimposing voluntary export limits if their sales to the United States exceed some agreed-upon figure, Fitzwater said, “There are no hidden deals.”

The Japanese had limited their sales in the United States to 1.85 million vehicles a year under a system of “voluntary restraints” adopted with Administration support four years ago to ward off tougher congressional action aimed at protecting hard-hit domestic auto makers.

Limit Expires March 31

The agreement is to expire March 31.

The result of the sales limit was that Japanese auto makers tended to export a greater share of their higher-priced models, which generally carry bigger markups and mean greater profits per car sold.

Reagan’s special trade representative, William E. Brock, predicted that without the restraints, sales of Japanese imports are likely to rise to 2.6 million a year, more of which are likely to compete with Detroit’s new small-car lines.

The Administration expects the price of automobiles to go down as a result, but Fitzwater refused to speculate on how much.

Asked about the effect of the decision on jobs in the U.S. auto industry, Fitzwater said the renewed competition was expected to have a “minimal impact.”

Dire Consequences Hinted

Opponents of Reagan’s decision suggested it would have more dire consequences.

Donald Petersen, board chairman of the Ford Motor Co., said the decision “will create jobs in Japan at the expense of jobs for American workers.”

Chrysler Corp. Chairman Lee Iacocca said: “This is a sad day for America--for American workers and American jobs.”