Taxing Decision : Higher Tariffs Against Japan Worry Auto Dealers
Japanese luxury car dealers in Ventura County don’t believe the Clinton Administration will carry out its threat to slap a 100% tax on certain imports.
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But the threat does have them worried.
They wonder how they would be able to sell cars that may soon almost double in price. And they complain that a measure designed to punish Japan for its trade policies will instead threaten American jobs.
“We’re American labor-- we’re not Japanese,” said Mitch Bohn, fleet and leasing manager for SuperCare Auto Group in Oxnard. “This is going to hurt us.”
The tariffs would hit 13 car models, each of which costs more than $30,000. Almost all Lexus and Infiniti models would be included.
Cars already on the lots of American dealerships would not be affected. Instead, the tax would be levied on cars brought into the country after 12:01 a.m. Saturday, said Ann Stanley, a senior import specialist with the U.S. Customs Service in Los Angeles. The tax would be paid by the auto importers and would eventually be passed along to the consumer.
Customs officials would not assess the tax immediately. If the Clinton Administration decides to carry through with the sanctions by its self-imposed June 28 deadline, Stanley said, the 100% tax may be applied retroactively to the cars imported since Saturday.
Walt Oliver, general manager of Lexus of Oxnard, said he has enough cars on the lot to last him about two months before he would be forced to raise prices. Eight new Lexus LS400s, with a suggested retail price of $51,200, arrived Tuesday at his lot on Auto Center Drive, and he expected four or five more by the end of the week. Under the tariffs, that model Lexus would have a suggested retail price of more than $86,000.
The tax, Oliver said, could destroy his dealership. “If it’s implemented, it will effectively put us out of the business of new cars,” he said.
He worried about what would happen to the roughly 30 people his dealership employs and said he felt some resentment that the Administration was using the auto industry to make its political point.
“Autos aren’t the only thing we import from Japan,” he said. “I don’t understand why we’re being singled out.”
Tony Lyon, general manager of Jack Weber Infiniti in Ventura, said his business also would suffer.
“I don’t think there’s going to be much of a market for a 100% price increase,” he said.
All but one of the new car models he carries would be subject to the possible tariffs. Although Lyon said he understood the reasoning behind the move, he said it could endanger American jobs and cut the tax base of cities with affected dealerships.
“What about the entrepreneur adding tax dollars to local economies?” he asked. “That has to be taken into consideration.”
The Ventura Auto Center accounts for about 9% of the city’s $12.7-million annual sales-tax revenue. Last year, Oxnard collected more than $1.5 million from its dealers, or 13% of the total. And Thousand Oaks City Manager Grant Brimhall said his city receives more than $2 million annually from auto dealers.
Ventura Mayor Tom Buford didn’t know how the tariffs, if imposed, would affect his city. He was concerned, however, about the effect on local businesses.
“Like any city with an auto mall, it’s very important to us,” he said.
Brimhall said local car shoppers who had intended to buy a Lexis or Acura might simply purchase one of the other cars available at the Thousand Oaks Auto Mall.
“I think there’ll be a lot of transference from one line to another,” he said.
Although many imports sold in Southern California enter through the Port of Hueneme, William Buenger, executive director of the Oxnard Harbor District, said the proposed tariffs would do little to dampen port business.
Only two of the companies on the tariff list, Mazda and Mitsubishi, bring cars through the port. Most of the 130,000 to 150,000 cars that enter annually come from European companies that would likely increase their imports to exploit the opening left by Japanese luxury car makers’ being effectively priced out of the market.
“In our case, because we handle the European luxury cars . . . we could actually see an increase in business,” he said.
Whatever the effect on local communities, many dealers doubted the tariffs would ever become a reality. Bohn said the White House was just using the tariff plan for leverage. Implementing it, he said, would hurt too many Americans to be politically effective.
