When U.S. and Japanese negotiators reached an 11th-hour agreement on auto trade, it eliminated the threat of 100% tariffs on 13 Japanese imports priced from $28,000 to $52,000.
But for Toyota Motor Sales USA's Lexus, Nissan Motor Corp. USA's Infiniti and American Honda Motor Co.'s Acura, it didn't blunt the hard realities of a weak U.S. dollar, a lagging luxury car market and reinvigorated competition from European nameplates.
There's even some short-term fallout from the tariff uncertainty, said Art Spinella, VP-general manager of CNW Marketing/Research, a Brandon, Ore.-based auto marketing consultancy. That's because new-car prospects who originally intended to buy one of the cars on the tariff list have been shopping around.
In early June, CNW and Time Inc. conducted a phone survey of 514 luxury-car shoppers who had one of the tariff-targeted models as their No. 1 choice.
About 94% said they would still buy or lease a new vehicle, but a different make, if the tariffs went through. Of that group, 46% said they would move to a European luxury nameplate, and 18% would switch to a sport-utility vehicle. Margin of error was 4 percentage points.
Mr. Spinella said a follow-up survey done after the trade agreement showed most of the respondents still planned to change from their original choice of a Japanese luxury model.
Lexus might be in the best position to stave off short-term losses because it continued to ship models from Japan to the U.S. during the tariff talks. Acura and Infiniti temporarily suspended exports.
The ad launch for the Acura 3.2TL, originally scheduled for this month, has been moved back to September. Infiniti, however, has continued with its I30 ad launch, begun before the proposed tariffs were announced.
Lexus has maintained ad schedules and ran a "thank you" ad created by Team One, El Segundo, Calif., in The Wall Street Journal on July 3. The ad was directed at trade negotiators and loyal Lexus customers.
Ronald Salhany, owner of Lexus of Tampa Bay in Florida, said his dealership stockpiled inventory in anticipation of a surge of business during the talks.
"There are dealers that have a shortage of inventory. Some of us, though, lucked out," said Mr. Salhany, whose store sold 142 cars in June vs. average June sales of 100 cars.
The Japanese luxury brands established themselves early on as a smart alternative to higher-price European brands. But as the dollar has weakened against the Japanese yen, it has forced dramatic price hikes for cars like the Lexus LS400, priced at $35,000 for the 1989 launch and now costing more than $50,000.
"When you can buy a Mercedes-Benz for what you would pay for a Lexus, then the heritage and traditional values of European cars may be a deciding factor," said John Bulcroft, president of the Advisory Group, a Cresskill, N.J., auto consultancy.
Sales reports support that argument. Through June, every upscale European brand-Audi, BMW, Jaguar, Land Rover, Mercedes-Benz, Porsche, Saab and Volvo-is on the upside compared with the same period a year ago. But of the three Japanese marques, only Infiniti has posted a sales increase so far.
European luxury cars aren't the only ones putting a dent in Acura, Infiniti and Lexus sales. Sport-utility vehicles from the Isuzu Trooper Limited to the new Chevrolet Tahoe are topping out over $30,000 and are claiming country-club prestige.
Sales of sport-utilities surged to more than 1.5 million vehicles last year, about double luxury car sales of 765,139 units, according to J.D. Power & Associates, an Agoura Hills, Calif.-based marketing research consultancy
Julie Ralston contributed to this story.
A rocky road
Although a threatened 100% tariff was averted, Japanese luxury marques are losing ground to
Lincoln 79,941 -10.2%
Cadillac 78,474 -24.3%
BMW 46,629 +11.9%
Acura 45,929 -19.1%
Volvo 45,706 +8.4%
Lexus 40,208 -2.1%
Mercedes-Benz 36,710 +2.8%
Infiniti 32,532 +28.0%
Sales figures are for the year to date through June 30. Change compares the same period from last year. Source: Company sales reports