U.S.-JAPAN TRADE DISPUTE : Car Dealers Say They Can Sell at Old Prices for a Few Months

With trade sanctions looming that could nearly double the price of 13 luxury auto lines from Japan, dealers in Southern California and around the country say they have enough inventory to keep selling cars at the old prices--at least for a while.

In some cases, stocks of the luxury cars have actually increased in the month since the 100% punitive tariffs were announced by the Clinton Administration. The fees are scheduled to take effect Wednesday.

For some dealers, the impending sanctions have been a short-term boon. Dan Malloy, sales manager at Lexus of Cerritos, said business at the dealership has been so good in the last month that inventories are dwindling.

“We’re running 35% above where we were at this time last month,” said Malloy. “I wouldn’t say it’s a feeding frenzy, but it hasn’t hurt us particularly.”

The dealership has no plans to raise prices and has received no notification that the importer will increase prices as of Wednesday, Malloy said.

“If they stopped sending us cars today, we’re still good for a couple of months,” said Rick Nunley, sales manager of Infiniti of Scottsdale, Ariz. “We’ve been stocking up. We’ve been taking everything allocated to us.”

Infiniti, a division of Nissan Motor Co., and other Japanese luxury marques have continued to import cars since May 20, though those arriving after that date will be subject to the 100% tariffs if trade talks fail and sanctions go into effect.

The targeted imports include Infiniti’s I30, J30 and Q45 sedans; all five of Toyota Motor Corp.’s Lexus models; Honda Motor Co. Ltd.’s Acura Legend and 3.2TL sedans; Mazda Motor Corp.’s Millenia and 929 models, and Mitsubishi Motors Corp.’s Diamante sedan.

Infiniti said its dealers currently have a 60-day supply of cars--about the level that auto makers consider ideal, up from earlier supplies ranging from 45 to 60 days.

“It’s safe to say that our dealers will have more Infinitis going into July than they did going into June,” spokesman Ed Lewis said.

Lexus has imported about 8,000 cars into the United States since May 20 but recently cut its U.S.-bound production to 3,000 cars a month. Lexus dealer inventories now average a scarce 33 days, down from about 40 at the start of May.

A Lexus spokesman said the auto maker has not decided whether to continue to import cars after the tariff deadline.

But supplies of the Acura Legend are running at more than 90 days, while the Mazda luxury models surpass 100 days, according to industry analysts. And Mitsubishi has inventories of Diamantes rated at more than 200 days.

What’s more, buyers seem to lack the sense of urgency needed to persuade them to buy cars ahead of the deadline. Dealers report very little panic buying.

Sales this month are at normal levels after spiking up 25% last month immediately after the announcement of the proposed tariffs, said A.J. D’Amato, general manager of Tustin Lexus. He said he has enough cars on the lot and on the way to last until the end of July at current prices. After that, all bets are off.

Susan Jacobs, president of Jacobs & Associates Inc., a luxury car consulting firm, said the consumers who were worried about the sanctions probably bought in late May and early June. That could hold down demand in July and August.

Jack Kendall, president of Westside Lexus in Houston, said even a short-lived cutoff of his stock would put him at a disadvantage, because it would take a while for new Lexuses to begin flowing through the delivery pipeline again.

“We’ve probably got 35 to 40 days of good inventory, and then you get down to demos and colors that aren’t as popular,” he said.

But if the tariffs drag on, Lexus and Infiniti, the two brands most affected by the sanctions, will have to find a way to support their U.S. dealers or they’ll be forced to drop out of the market, analysts say.

They could continue to pay the tariffs, estimated at $1.7 million a month per dealer--and risk dumping charges--or they could compensate dealers for their profit margins on the cars, estimated at $350,000 a month per dealer.