Big 3 Claim Toyota, Mazda ‘Dump’ Vans
The Big Three U.S. auto makers joined forces and took their competition with the Japanese into new territory Friday, filing an “anti-dumping” complaint against minivans imported by Toyota and Mazda.
The complaint--the first formal charge of unfair pricing brought against Japanese auto makers--accuses Toyota and Mazda of pricing their Previa and MPV minivans as much as 30% and 27%, respectively, below “fair value.”
A Toyota executive labeled the charge absurd, and experts say such cases are difficult to prove. But analysts said the mere filing of the complaint might pressure the Japanese to raise their U.S. prices or otherwise ease up the marketplace pressure.
The joint action appeared to signal a growing unity on public policy issues among General Motors, Ford Motor Co. and Chrysler Corp., all of which are suffering massive losses in their U.S. car and truck operations. In the past, GM has staked out a strong free-trade position.
“I think it’s very significant that all three companies are jointly behind this,” said Clyde Prestowitz, a former top Commerce Department trade negotiator and president of the Economic Strategy Institute in Washington. “It’s the first time they’ve been able to get together on a trade issue. That tells me they’ve got a pretty good case.”
With their share of a recessionary auto market steadily eroded by Japanese competition, the domestic companies this year have appealed directly to President Bush, his trade envoys and Congress for relief from import and regulatory pressure. Those efforts have met with little success.
But the anti-dumping complaint was seen as an avenue more acceptable to the White House and Commerce Secretary Robert A. Mosbacher, who recently warned the Japanese against aggressive price cutting.
“There have been pretty clear signals from Washington that they don’t want trade restrictions,” said David Cole, head of the University of Michigan’s Center for the Study of Automotive Transportation. “But, where dumping is involved, it might be another matter.”
Dumping is the sale of imported products either for less than it cost to produce them or less than the price charged for the same product in the home market. To be considered dumping, such pricing must cause injury to a domestic competitor.
Many economists point out that anti-dumping petitions are harmful to U.S. consumers, who stand to benefit from low prices. On the other hand, if dumping of foreign products undermines U.S. manufacturers, Americans will lose jobs and the nation will be weakened economically.
About 50 dumping cases have been filed annually in recent years, most involving obscure products such as ball bearings.
Within 45 days, the six-member International Trade Commission will make a tentative finding on whether U.S. minivan producers are being injured. The Commerce Department then would decide whether the Japanese are dumping. If the charges stand up, duties ultimately would be slapped on the products to raise their U.S. price.
The Japanese have just 12% of the U.S. market for minivans, which was pioneered and is dominated by Chrysler. But the Previa and MPV are considered the first serious Japanese competition in minivans, and the U.S. firms portrayed Toyota and Mazda as dumping their vans to steal market share.
The petition charges that Toyota is underpricing its minivans by 5.4% to 30.5% and Mazda by 14.8% to 27%.
About $6 billion in Big Three minivan investments “and the thousands of jobs which they support are being threatened by the decision of Japanese minivan producers to aggressively seek a major share of the U.S. minivan market through unfair pricing practices,” said Thomas H. Hanna, president of the Motor Vehicle Manufacturers Assn.
Mazda on Friday said it doesn’t believe it is dumping the MPV. But Toyota executives, noting U.S. dominance in the minivan business and the fact that leader Chrysler has increased its market share lately, called the dumping charge ridiculous.
“Make no mistake, Toyota is not dumping minivans, and the U.S. auto industry has not been injured by reason of imported minivans,” said a Toyota spokesman in Detroit.
But the choice of vehicles to single out for investigation is less important than the fact that a dumping complaint was filed, said Maryann Keller, analyst at Furman, Selz Inc. in New York. The complaint probably will lead to changes in Japanese practices, she said.
“This is one more piece in a mosaic,” Keller said. “More than the dumping allegation is going on here. What all these things are meant to do, in total, is to change behavior.”
The signature of GM, the nation’s biggest industrial company, on the anti-dumping complaint reflects both the seriousness of the industry’s plight and a new militancy under Chairman Robert C. Stempel, several observers said.
“Who was the big loser to Japan in the 1980s? It was GM, they lost 12 percentage points” of the market, Keller said. “Yet it was GM who was always taking the free-trade stance. This is a reflection of reality. The industry is likely to take a more cohesive posture on all public issues from this point forward.”
