THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, May 17, 1995 TAG: 9505170058
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Long : 139 lines
If you're thinking about buying a fancy Japanese import, prepare to pay more, a lot more.
Sticker prices on Honda Acura Legends, Nissan Infinitis, Toyota Lexuses and several other posh models could double if U.S. and Japanese officials can't settle a trade dispute. That could not only hurt consumers but also jeopardize auto dealerships that sell those makes.
On Tuesday, the White House announced that 13 Japanese luxury cars would face up to 100 percent tariffs. That could make a $50,000 Lexus the same price as the sleekest Mercedes sports coupe.
``It's a nice car,'' Judith Turner, a Chesapeake nurse, said of her purring Lexus. ``But I wouldn't pay twice the amount for it.''
In fact, hefty pricetags just might lead consumers like Turner to Ford, Chrysler or GM showrooms.
That's what the administration and U.S. automakers are hoping for.
The sanctions, which wouldn't go into effect until after a 30-day public comment period, are designed to force Japan to open its auto markets to the Big Three.
Many of the Japanese-car dealers wonder whether the sanctions would work. Some analysts say those who prefer status imports will bypass American-made vehicles for German imports like BMW and Mercedes.
And there are always ways around the rules. Consumers can easily figure out that a loaded Toyota Camry has the look and feel of a low-end Lexus, and a jazzed-up Nissan Maxima might even seem like the new Infiniti I30, said auto analyst George Hoffer, a professor at Virginia Commonwealth University in Richmond.
``If they would sell more American cars by doing this, then I'd be in favor of this,'' said Thomas Riddle, owner of Acura and Honda dealerships in Hampton Roads. ``What I'd like to know is how this is going to help the consumer.''
U.S. automakers say they have been locked out of the Japanese market. Last week, a Ford Motor Co. executive attending the company's shareholders meeting in Norfolk said Japanese consumers should be given a chance to buy American cars.
In Hampton Roads, dealerships selling Lexus models, Honda Acuras and other targeted imports warned that the sanctions could hurt their businesses.
``I've got all my life savings in this business,'' said Charles Barker, who owns Lexus, Infiniti, Toyota and Volkswagen franchises in Virginia Beach. ``I started out with nothing. And now, the government is recommending ridiculous sanctions that could ruin me.''
To Barker, there is no getting around them.
``I don't think I could survive,'' he said.
The proposed tariffs, which could begin June 28, would affect $5.9 billion in imports. On the hit list are all five of Toyota's Lexus models, three of Nissan's Infiniti models, two Honda Acuras, two Mazdas and the Mitsubishi Diamante model.
The cars represent Japan's top-of-the-line cars, with prices in the United States ranging from $25,000 to more than $50,000 each. None of these models is assembled in Japanese factories in the United States.
Lexus, Infiniti and Acura dealers would be hardest hit, said Hoffer, the analyst. The impact on Mazda and Mitsubishi dealerships, he said, would be minimal.
If the sanctions are approved, Hoffer estimates that about 600 dealerships nationwide could fail. Tens of thousands of jobs are at risk, he said.
``It is unbelievable that the U.S. government would wipe out an entire U.S. business segment in an attempt to send a message to Japan,'' said Walter E. Huizenga, president of the American International Automobile Dealers Association.
It may seem like customers anticipating price hikes would rush to the dealerships. But analysts don't think it will happen.
The reason? If the dealerships fold, customers will be stuck with ``orphan'' cars that depreciate faster and become expensive to maintain.
Many analysts and dealers said they expected a settlement, but others weren't too sure. The United States and Japan had reached an impasse in negotiations.
``I don't think these are potential sanctions,'' said Ken Hall, owner of Hall Auto World, which has two Acura dealerships and one Mitsubishi outlet in Hampton Roads. ``I think they're going to happen.'' ILLUSTRATION: Graphics
Color photos
Best-selling luxury cars last year
Luxury autos ($30,000 on up)
1. Cadillac DeVille
2. Lincoln Town Car
3. Cadillac Seville
4. Acura Legend
5. Lincoln Continental
11. Nissan Infiniti J30
16. Toyota Lexus GS300
17. Nissan Infiniti Q45
20. Toyota Lexus SC400
22. Toyota Lexus SC300
Near luxury automobiles ($22,000-$30,000)
1. Chrysler New York LH-LHS models
2. Buick Park Avenue
3. Volvo 800 series
4. BMW 3 series
5. Toyota Lexus ES300
7. Mazda Millenia
10. Mitsubishi Diamante
12. Mazda 929
*Source: Automotive News
13 Japanese luxury autos targeted for tariffs. They range in price
from $25,000 to more than $50,000.
Nissan Infiniti Q45
Nissan Infiniti J30
Nissan Infiniti I30
Toyota Lexus LS400
Toyota Lexus SC400
Toyota Lexus SC300
Toyota Lexus GS300
Toyota Lexus ES300
Honda Acura Legend
Honda Acura 3.2 TL
Mazda 929
Mazda Millenia
Mitsubishi Diamante (four-door sedan)
by CNB