Almost a quarter of all the cars sold in the Washington area last year were made in Japan. From providing just a small proportion of the few cars imported into the United States 15 years ago, Japanese autos today have leaped into first place in the ranks of U.S. auto imports.
Washington, Maryland and Virginia consumers are at least as fond of Toyotas, Datsuns, Hondas and others imports as the rest of the country, consumers and others in the Washington area who would be affected by any more toward restricting Japanese imports.
And although several of the dealers believe that restrictions, whether voluntary or not, would be harmful, these have been under intensive discussion in the administration, and there is now a bill before the Senate that would impose controls for three years.
It is not just the auto industry that would be affected by such controls. At present the port of Baltimore handles imports of between 200,000 and 300,000 foreign-made automobiles a year, said Port Director Gregg Halpin. Last year's tally was 250,000, with Japanese models accounting for about 170,000 of these.
At 4 percent of total tonnage, car imports are "not a substantial amount of tonnage" in relation to the total 6 tons of cargo shipped through the port each year, Halpin says.
However, a car has a bigger economic impact than other cargo, he said, because there is a lot of work to be done on imported cars when they arrive at the docks. They usually have to be washed, and often air conditioners are put in, sports racks added or minor repairs carried out. Each car is worth about $60 to $70 to the area in terms of salaries and taxes paid, goods bought and so on, Halpin said.
Cutbacks may not affect the port itself so much, Halpin explained, as the two biggest importers -- Datsun and Toyota -- are unlikely to reduce their demand for storage and terminal facilities. Datsun handles its imports through a leases terminal in the port, which the company would still have to pay for even if it were bringing in fewer cars. Toyota has overflowed from its storage space in the port, so probably would cut back on outside space first. So, "very frankly, while it would reduce the number of cars coming through, it would not have any great overall impact on the port" itself, Haplin said.
What about local auto dealers? For many, restrictions on the number of Japanese cars that can be sold here would be double-edged: a number of dealers now sell both domestic and imported models, hedging their bets about how consumer preferences will move. A reduction in their supplies of Japanese models could be offset by some increase in sales of U.S. cars.
But, perhaps surprisingly, a number of big dealerships in the area claim it will be hard to force consumers to switch away from Japanese cars, even if supply tightens and prices rise. Asked whether people will switch to considering U.S. autos in those circumstances, Pohanka Oldsmobile President Jack Pohanka said "not necessarily so."
Pohanka has twin companies, one selling Honda imports and the other the full Oldsmobile line. He sells about two domestic cars for every import at the moment and is opposed to any controls at the moment and is opposes to any controls on Japanese imports. "I believe in competition. It's good for small business, and it's good for big business," he said.
Imports were not the real problem for the U.S. automakers, he contended, but high wages in the industry were. People who want to buy Hondas believe the smaller, fuel-efficient cars are "quality products," Pohanka said, and those who have bought them often are pleased enough to tell their friends and families and to come back again themselves. It would take a big price hike and very, very long waiting lists to put these people off, he believes.
Another dealer with a duel domestic-import automotive dealership agreed. He thinks that while import quotas would "cause additional problems for inflation" with imported cars being sold at well over sticker prices, "the differential won't be enough to switch."
When asked why he thinks consumers have such a strong attachment to Japanese cars, he replied that the Hondas he sold "were perceived as very high mileage cars, which interests people who are worried about fuel." He agreed that as all the Japanese cars he stocks are in the small-car range, they get higher mileage, but he added that personally he thought they were "over-perceived" as low-mileage vehicles.
This dealer said he would point out to customers that there were suitable American cars available if he had long waiting lists but short supplies of the Japanese imports. But as the dealership operates with separate sales forces, a customer inquiring about a Japanese model from a salesman who specializes in the Japanese range is unlikely to be shown a comparable or substitute domestic model until he clearly has decided against a Japanese car. Similarly, Pohanka has two separate companies for his imports and domestic sales.
Those dealers who just sell domestic models only will benefit from import restrictions if people can be persuaded by long waiting lists or higher prices to switch away from Japanese models.
Joseph Gerard, vice president of Arlington Ford, thinks there should be some restraints on imports to give domestic manufacturers a breathing space. He said one or two years "for an opportunity to catch up is essential. The attrition rate of domestic dealers shows a problem, and something ought to be done."
Not all domestic dealers would agree. "American manufacturers are now very close to catching up" with the Japanese, said John Lumpkin of Chevy Chase Chevrolet. He hopes there will not be any controls, but agreed that General Motors dealers in the area are happier at that prospect than those dependent on the weaker Ford or Chrysler companies.
For example, most local Ford dealers agree with him, Gerard said, that a slowdown in the flow of imports for a short while would help them. However he did not believe that prices would go up much. "The American people are already paying high prices for imported autos," he said, and "it is not possible that prices would increase, with people paying $600 to $700 over the price already."
But most economists believe that controls would add to auto prices, although opinions differ about how far prices could be forced up if the administration does strike a bargain with the Japanese.
Norman Lean, senior vice president of Toyota Motor Sales USA Inc., told Washington Post reporters recently "If we are whacked back . . . we would raise our price by an appropriate amount, so that we could maintain our profitability."
Unsurprisingly, Lean was against any move to restrict free trade in cars here. He said in the event of quotas, Toyota would allocate its cars by region, and within region by dealer, according to their recent sales share. They would go for a balanced reduction in all models so as not to hurt particular factories more than others.
But he made no bones about his belief that prices would shoot up if imports were restricted. "The dealers in turn would handle [prices] on the basis of whatever the market could bear," he said and added, "They would just run it up to maintain profits." American car prices would follow upward, he believes. "No question about it," he said recently, adding that otherwise it would not be of much help to them.
In earlier shortages, as much as $1,000 or $1,500 had been added to the sticker price by dealers selling popular cars in short supply, he went on, and even today many are charging well above the sticker price and still selling all the cars they have.
A local Datsun dealer disagrees. Robert V. Tedd, president and general manager of Bob Tedd Datsun, said the first effect of controls on him probably would be to "let some people go." With "the poor consumer getting beaten to death anyway," higher prices are not "the answer," he said. He has been unable to get enough cars to sell anyway, and suspects that the Japanese manufacturers may be putting a slight brake on supplies to the United States already.
He still has plenty of customers who want to buy, but if he raised his prices he would be "pricing myself right out of the market," he said. A midsized-car dealer, Tedd says his sales are down about 50 percent this quarter on a year ago because he cannot get enough to sell.
Other dealers with Japenese imports commented that, although there had been long waiting lists six months or a year ago, this now was much less of a problem. This would leave them in a better position to withstand the early effects of any import slowdown.
Pohanka and another big domestic-import dealer in the area both thought dealers would raise prices, but not by as much as $1,500. "Sure they will" put up the price, said the dealer, who asked not to be identified. But he thought only $200 to $300 would be added.
Clearly, it is hard to predict just how much prices would go up and how long waiting lists would become if Japanese imports were slowed down. Perhaps just as important, no one knows quite how consumers would react. The past few years have shown how determined Americans can be to buy foreign -- and, in particular, Japanese -- cars even when they can get no discounts and perhaps even have to pay a surcharge and wait several weeks or months before they can drive home the car of their choice.
Gerard is one dealer who believes that U.S. manufacturers now are building cars that are just as good as Japanese ones. But, he says, "It's taking time to get people back to where it's neat to own a Ford."