Published on .

(Continued from previous page)

continue to sell Toyota and Lexus products," Yale Gieszl, exec VP-sales and operations at Toyota Motor Sales USA, said last week on a Japanese car panel discussion sponsored by Automotive News, Ad Age's sister newspaper.

The car industry consensus is the 100% tariff on wholesale prices will be rescinded by the cutoff date of June 28, to be replaced possibly by a less onerous tariff. The Clinton administration last week ordered the tariffs on 13 Japanese luxury imports, priced from $28,000 to $52,000, to force open the Japanese home market for U.S. cars and parts, though a six-week window was set.

In the next month, Japanese marketers will communicate their story to the public and politicians. They're focusing on U.S. jobs, saying tariffs could force thousands of Americans out of work at import dealerships, car companies and suppliers.

The car marketers will also talk up their massive investments in U.S. plants, though the targeted cars are all imported. They will play up how consumers benefit from freedom of choice. And they will make the case that Japan is open if only Detroit would ship over cars appealing to that market.

One Japanese car marketer is developing an ad campaign promoting its U.S. connections and aimed at Washington.

Mr. Thomas said the Japanese marketers will consider a joint ad campaign, likely through the Association of International Automobile Manufacturers. But that group doesn't foresee a major consumer campaign.

Mr. Thomas said Infiniti may send direct mail to owners to enlist their support. Acura is also considering a mailing to current owners as well as an ad campaign through dealer groups nationwide, said Tim Hart, exec VP at Ketchum Advertising, Los Angeles.

Acura set up a toll-free number so dealers could send Mailgrams to Washington. Acura and others sent out public relations kits to help dealers explain their economic contributions.

The tariff would nearly double the price of all five of Toyota's Lexus models; three of Infiniti's four models; two of American Honda Motor Co.'s four Acuras; Mazda Motor of America's two luxury sedans; and Mitsubishi Motor Sales' luxury Diamante.

In a sluggish car market, traffic is brisk at Japanese luxury dealers as consumers buy and lease before the cutoff. One longtime market observer called the looming tariff the ultimate sales incentive, figuring Japan and the U.S. will reach an 11th hour solution-after dealers have cleared the lots.

Dealers, meanwhile, are descending this week on Washington, where they already had a convention planned. Car marketers say they're sticking with ad plans, such as the $30 million to $40 million Infiniti I30 launch, as well as incentives like lease deals.

But whether the tariff is "5% or 50% or 100%," for dealers it "either reduces their business or eliminates their business," Nissan's Mr. Thomas said.

Should a major tariff stay in place, consumers likely will steer to alternatives, including luxury models from Europe and Detroit as well as the hot-selling domestic and foreign sports-utility vehicles.

Some possible beneficiaries said Japanese tariffs could usher in serious problems for the industry. "Whenever there's uncertainty, sales just seem to drop off," said David Krysiek, director-marketing for Saab Cars USA.

Warned Fred Hammond, director-corporate communications for Volvo Cars of North America: "The imposition of tariffs would cost so many jobs that in two months people will be talking about a recession."

Japanese nameplates last year accounted for 23.2% of U.S. car and light-truck sales, but that share could be at risk. If anti-American rhetoric in Japan and anti-Japanese rhetoric in the U.S. starts to fly, mainstream models like Toyota Camry and Honda Civic-American made but Japanese in ancestry-might lose sales to U.S. nameplates.

Raising prices on a mass car like the Civic to keep down prices on luxury models like Acura isn't an option. Prices on mass Japanese cars are already above domestic models, not leaving room to move.

The startling 100% tariff wouldn't necessarily mean the end of Japanese luxury cars.

Toyota vows to keep Lexus alive. "We're not going to leave our dealers and customers high and dry," a spokeswoman said.

The rise of megadealers makes car retailers less dependent on one brand like Lexus or Infiniti. Dealers also make the majority of their profits on used cars and service, providing more insulation if the bottom falls out of Japanese luxury sales. But megadealers didn't get big by carrying losers.

Still, Jesse Snyder, president of Snyder Research, a Moorpark, Calif., consultancy, predicted the three Japanese luxury marques will find a way to stay alive.

"In the luxury field, you can never come back if you give up and leave," he said. "You need to be perceived by consumers as being dependable and reliable."

Alice Z. Cuneo and Keith J. Kelly contributed to this story.



The end of the road?

Calendar year sales, in units, for

Japanese luxury car brands.

Year Acura Lexus Infiniti

1986 52,869* - -

1987 109,470* - -

1988 128,238* - -

1989 142,061* 16,302* 1,759*

1990 138,384* 63,534* 23,960*

1991 143,708* 71,206* 34,890*

1992 120,100* 92,890* 44,387*

1993 108,291* 94,677* 50,547*

1994 112,137* 87,419* 51,449*

Partial year. Source: Automotive News and Ad Age

Most Popular
In this article: