Japanese Car Price Hikes Overstated, Study Shows

Japanese car prices may not be increasing as fast as many industry observers believe, according to a new study.

A survey just released by J. D. Power & Associates, a Westlake Village market research firm, has discovered that “transaction prices” on Japanese cars--the prices retail customers actually pay dealers--have only gone up about 2% in the past year, the same increase posted by the domestics.

Chris Cedergren, a sales analyst with J. D. Power, says the numbers may explain why Japanese car sales have not plunged in the face of soaring sticker prices. Although direct imports from Japan are down, the Japanese companies have been able to make up for those losses with cars built in this country, which carry the same sticker prices as the cars coming directly from Japan.

The survey’s findings are surprising in light of the fact that most industry analysts estimate that Japanese car companies have raised sticker prices by an average of 40% since September, 1985, when the Japanese yen started its dramatic rise in value against the U.S. dollar.

Cedergren says that import dealers are often absorbing the difference, offering car buyers cut-rate prices in order to move their merchandise. As a result, import dealers, who just two or three years ago were demanding huge premiums over sticker because of a shortage of Japanese cars, are now faced with shrinking profit margins.

“It’s hard to pinpoint a percentage, but dealers are absorbing some of the increase,” noted Jud Gregory of Alhambra Motors in Alhambra.

“We’re discounting quite a bit,” adds John Hardy, sales manager at Glendale Toyota.