Luxury Car Tariff Draws Buyers : Autos: Consumers fear doubling of price for some Japanese models. Others refuse to be stampeded.
Visions of $100,000 price tags on $50,000 Japanese luxury cars are pulling some Southern California shoppers into dealer showrooms to jockey for position ahead of threatened federal trade sanctions against 13 popular models. But at other dealerships, uncertainty and anxiety are more prevalent than crowded sales floors.
A few dealers, like Steve Shuken of Vista Lexus in Woodland Hills, said sales shot up from two a day to five on Wednesday and that the tariff threat is driving the action.
But many other dealers haven’t seen the growing groups of potential customers buying more cars yet.
“People are coming in to ask what we think will be happening,” said Frank D’Agostino, general manager of Campbell Mazda in Costa Mesa. “They want some inside information, but mostly they still aren’t ready to jump just because prices might go up.”
The uncertainty has the entire Japanese luxury car industry on edge. Trade negotiators could still break the stalemate with a new agreement that opens the Japanese market to U.S. cars and auto parts. Or the fledgling World Trade Or
ganization could rule on Japan’s petition that the retaliatory 100% tariff proposed by the Clinton Administration is too tough.
“Everything is up in the air,” Shuken complained. “It’s like the O.J. trial. There’s a new spin on it every day.”
Barring a negotiating breakthrough, the sanctions would be imposed June 28 and made retroactive to cars that arrive in the United States after midnight today.
Importers would love to stockpile the models that could be hit by the sanctions, if only they could figure out how to make the huge cargo transports that ply the Pacific move faster. It takes 10 to 14 days for a ship crammed with 3,000 to 4,000 autos to cross the Pacific and “we can’t get out there and row the ships any faster,” said a spokeswoman for Toyota Motor Sales USA in Torrance.
Toyota Motor has about 3,000 Lexus models at sea--all slated to arrive after Saturday’s deadline and, thus, subject to the punitive duty.
The 13 luxury models from Toyota, Honda, Nissan, Mitsubishi and Mazda on the government’s hit list accounted for $5.9 billion in sales last year. The importers maintain that if the tariff is imposed and prices double, there will be no sales next year and hundreds of luxury dealerships could close, throwing thousands of sales and service employees out of work.
While the political debate rages, the ships keep coming: Mazda has three on the way, Nissan and Toyota have about a dozen each and Mitsubishi has one in transit. American Honda Motor Co. in Torrance, the U.S. arm for Honda sales, won’t disclose how many cars are en route.
None of the Japanese auto carriers are due at the ports of Los Angeles and Long Beach before tonight’s deadline, according to Capt. Richard McKenna of the Marine Exchange, which publishes daily lists of ship arrivals and departures. Spokesmen for the five companies said they did not know of any scheduled to dock anywhere else in the United States before midnight tonight.
But at least two ships already near shore will be unloaded before Saturday, though that will add only about 1,200 targeted luxury cars to the roughly 52,000 already in the country.
Both Toyota and Nissan had weekend landings scheduled at the port of Newark, N.J., and have diverted the ships to Jacksonville, Fla., to unload them before Saturday. That will put about 1,000 Lexus and 200 Infiniti models on the ground before the deadline.
Lexus has about 12,000 cars in dealers’ hands and in distribution warehouses already, and there are about 16,000 Infinitis, 5,800 Mitsubishi Diamantes and 6,500 Mazda Millenias and 929s in the United States. Honda won’t disclose its stock on hand, but most car companies try to keep at least a 60-day supply in the pipeline at all times. That would amount to about 12,000 Acuras.
The supply means that dealers are unlikely to run out of pre-deadline cars before June 28, unless a jittery public becomes convinced that the tariffs will go into effect and launch a buying binge. That opens the possibility that some cars that arrive after Saturday could be sold before June 28 and later be made subject to any trade sanctions.
Importers are divided on how to handle the situation, but none said they would seek more money from customers or dealers.
Toyota Motor Sales will pay any punitive tariffs in such situations, said spokeswoman Nancy Hubbell. Nissan’s Infiniti and Honda’s Acura divisions say they’ll do the same.
At Cypress-based Mitsubishi Motor Sales of America, however, the plan is to warehouse luxury Diamante models subject to the tariff. A boat loaded with 400 of the four-door sedans is scheduled to land at the Port of Los Angeles in the next two weeks. If the automotive trade conflict isn’t resolved, Mitsubishi “most likely” will ship the cars back to Japan for sale in other countries, spokesman Kim Custer said.
Sullivan, at Santa Monica Lexus, said that Lexus already has assured him that it would pick up the tab for any cars that were sold and later hit by the tariff. So for him, it is business as usual for now.
But not all dealers are that comfortable.
Clarence Minton, general manager of Mazda of North Hollywood, says he thinks the tariffs “will never fly.” But to be safe, he has stopped ordering Mazda Millenia and Mazda 929 models.
“I don’t want to be ordering cars and all of a sudden have the price double or triple,” he said.
Minton, who has about 125 cars on his lot at a time, said he sells only about 10 Millenia and one 929 a month anyway. These high-end cars “are not the bread and butter cars of the Mazda line,” and he has plenty of other models in stock, he said.
A.J. Patterson, owner of Nissan of Thousand Oaks, is so nervous about the proposed tariffs that he’s cut back 75% on his orders of Nissan cars for the summer, even though none of the cars he sells is on the current hit list for tariffs.
“We don’t know if it’s going to spread to other models,” Patterson said. He also sells Buicks and GMCs, so he can afford to be cautious. He said the threat of tariffs has sent ripples of confusion through the new-car industry. “Everyone’s unsure,” he said.
