May 17, 1995 in Nation/World

Auto Dealers Worried About Tariffs Sanctions On Luxury Vehicles From Japan Could Cause Layoffs

Rachel Konrad The Staff writer
 

Punitive tariffs that could double the price of Japanese luxury import vehicles will be particularly devastating to import-intensive states such as Washington, officials in the auto industry predict.

“We have a lot - literally hundreds - of employees who rely on import car sales, from the port authorities to the dealers. It’s unfortunate, but it will hurt the people here most who have the least to do with the dispute,” said Janet Cunningham, executive vice president of the Seattle-based Washington State Auto Dealers Association.

On Tuesday, the Clinton Administration proposed 100 percent tariffs on all Japanese vehicles in the $25,000 to $50,000 price range.

“If this would be enacted, you’d see employees at dealerships out of jobs. To survive, they’ll have to lay off all kinds of people,” said Don Reichert, past president and executive board member of American International Auto Dealer Association. The Washington, D.C.-based agency represents 10,000 businesses and 300,000 employees in the United States. Reichert owns Reichert Nissan-Isuzu of Wenatchee.

Rather than penalize American dealerships of Japanese automobiles and the 315,000 employees who work at them, the AIADA is urging the United States and Japan to go before the World Trade Organization for a resolution without sanctions.

In Spokane, where the demand for luxury imports traditonally has been mediocre, sanctions could have a ripple effect that could spell disaster for the regional automobile market, local dealers say.

The escalating trade tensions between the United States and Japan comes at a poor time for auto dealers, who have watched sales slow as interest rates have risen.

“The luxury end - I don’t care if you’re talking imports or anything - that’s not the fast end of sales here,” said Dan Taylor, general manager of Ponderosa Acura in the Valley.

“Previously, we were having about average sales … any slowdown would affect us. This is going to hurt. We can’t afford to lose more,” Taylor said.

The tariffs target 13 models of cars, including all five models of Toyota’s Lexus, three of Nissan’s Infiniti models, two models of Honda’s Acura, Mazda’s 929 and Millenia and Mitsubishi’s Diamante.

Most Spokane luxury car dealerships also carry models not targeted for sanctions. Still, in a business where cash flow is important, the sudden loss of a major product line would hurt.

“It’s a vacuum. If a luxury division goes down, it could suck an entire dealership down with it. It’s devastating. I just cringe at the thought of it,” Reichert said.

The sanctions, scheduled to go into effect June 28, are designed to help the U.S. auto industry. The Big Three American automakers have complained that Japanese laws hinder their ability to sell cars there.

But some dealers, who would suffer from the sanctions while the manufacturers would reap any eventual benefits, have a different view.

“We look at everything from an American perspective without taking a look at cultural differences. We’re basically dictating what the Japanese dealers should sell,” said Tim Pring, president of the Appleway Group. Appleway sells Mitsubishi, Chevrolet, Toyota, Subaru, Volkswagen, Audi, Mazda and Lexus vehicles.

“In the United States, we would never tolerate it if Japan did the same to us,” Pring said.

The only good thing that might come of the sanctions for dealers will be an increase in the price of used Japanese luxury vehicles, Taylor said.

“When you’ve got a supply and demand problem, things in supply will hold their value better. Used cars will be more valuable,” he said.

The following fields overflowed: CREDIT = Rachel Konrad Staff writer The Associated Press contributed to this report.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email