U.S.-JAPAN TRADE ACCORD : For Dealers, Advertisers--Oh, What a Feeling : Trade: Pact allows everyone involved in luxury Japanese car sales to breathe easier. And even customers may have something to smile about.
Consumers who test-drive Lexus, Infiniti or other luxury Japanese cars in the next few days might do well to check the seats for hors d’oeuvre crumbs and champagne spills. And prepare for some possible bargains.
With the threat of 100% tariffs on 13 high-end models fading like the memory of a near-miss with an uninsured driver, celebration was the order of the day at the office of anyone who makes a living designing, promoting, distributing, advertising or selling the pricey vehicles from Japan. But dealerships that had stocked up in anticipation of sanctions might now be willing to offer deals to move the merchandise.
“You want me to scream loud or just scream lightly?” quipped Fred Miller, who briefly shut the doors of his Infiniti dealership in Van Nuys on Wednesday to throw a celebratory luncheon for employees.
“It’s dancing-on-the-tables time,” said one relieved executive at a public relations company.
Southern California is not just a big market for the luxury cars from Toyota, Nissan, Honda, Mazda and Mitsubishi, which accounted for $5.9 billion in sales nationwide last year.
The region is also home to the U.S. headquarters of those Japanese car makers as well as to agencies that plot advertising campaigns, designers who craft bits and pieces of the vehicles and other companies that have linked their fortunes in some way with the Japanese auto makers.
So the news that U.S. and Japanese trade negotiators had reached an agreement avoiding punitive tariffs was greeted with a huge collective sigh of relief, even among those who initially doubted that the Clinton Administration would risk, by some tallies, thousands of U.S. jobs and the health of hundreds of U.S. companies to gain a bigger piece of the Japanese auto market.
Many predicted that the new trade agreement will bring benefits ranging from the global--a better trade atmosphere marked by increased honesty and understanding--to the local--the potential for bargains at dealerships that hoarded pre-tariff cars and now find themselves slightly overstocked.
At Team One Advertising, extra hours spent planning, writing and filming new Lexus commercials about the tariffs have given way to party planning “to thank our employees for hanging in there,” said Tom Cordner, co-chairman and creative director of the El Segundo advertising agency, a division of giant Saatchi & Saatchi. Team One was created to handle the Lexus account, which remains the 175-employee company’s biggest source of business.
“If Lexus went away, we would go away,” Cordner said. The tariff threat “was like an elephant walking around in your house. You know it’s there but you try not to acknowledge it.”
“It’s been extremely difficult,” said Infiniti dealer Miller, chairman of the Miller automotive group, which has two Mitsubishi dealerships in Southern California in addition to the Infiniti store in Van Nuys. Miller also is a spokesman for the Alliance to Save California Jobs, an organization formed to fight the tariffs. If the barriers had gone into place, Miller said, “obviously, we would have had to close, because we would have had no products to sell.”
“The impact would have been on all 906 Mazda dealers,” said Jay Amestoy, a vice president of Irvine-based Mazda Motor of America Inc., reacting with the same officially muted pleasure shared by the other U.S. arms of the targeted Japanese car makers.
Amestoy said markets for luxury models already had been soft before the U.S. announced plans to enact tariffs, thus it could have been a knockout punch for many dealers. He explained that Mazda had stopped shipping cars to the United States and had been taking a “wait-and-see attitude” before Wednesday’s eleventh-hour agreement.
Many dealers who scrambled to find extra cars so that they could maintain prices if tariffs were imposed now are preparing for a wheeling-and-dealing 4th of July weekend.
Lexus of Santa Monica packed its lot with cars in preparation for the trade war, said general sales manager Bill Rinker. With 100 cars crowding a lot that normally holds 60, Rinker hinted that price breaks are afoot.
George Oakes, a salesman at Vista Lexus in Woodland Hills, began to get a little nervous Tuesday night, when an informal poll of the Vista sales force found that 70% thought sanctions would go into effect as threatened. Oakes was in a state of “mild elation” to hear that they didn’t.
“We’re not drinking champagne, because we’re still in the middle of a recession, and business is down in the auto industry,” Oakes said. “This is one obstacle out of the way, and we’re glad about it.”
The relief spread throughout the country.
In New York, Infiniti dealer Howard Koeppel, declared: “Happy days. I can now order stationery and toilet paper again because I am not going out of business.”
Marc Lisenco, senior sales representative at BMW Gallery in Norwood, Mass., said he was pleased for his competitors because he never wanted a trade war.
“Once you start a trade war, who’s to say next year it won’t be against our cars,” he told Reuters news service.
Warren Waugh, a partner in a BMW dealership in Peabody, Mass., said, “I think I’m a pretty competitive guy, but I don’t think I would like to see other dealers unemployed.”
Times staff writers Rebecca Mowbray in Santa Monica, Nicholas Riccardi in the San Fernando Valley and Dan Margolis in Orange County contributed to this story.
