Japanese auto makers and their dealers yesterday praised President Reagan's decision not to request a fifth year of quotas that would restrict their sales in the United States.
At the same time, they said that they would not take advantage of any elimination of quotas by flooding the U.S. market with Japanese cars.
"Ring out the wild bells! This should be a day of celebration!" exclaimed Robert E. McElwaine, president of the Washington-based American International Automobile Dealers Association, which represents 7,000 foreign-car dealers in this country. "The age of the under-$6,000 car may be about to return."
McElwaine said such an era would not be ushered in by Japanese exports alone. He said that he and other AIDA officials recently completed a tour of auto manufacturers in Japan, where they learned that the country's 13 auto makers "already are operating at 90 percent of capacity."
That means that Japan, at most, will be able to produce an additional 700,000 cars a year for export, McElwaine said. Fears of a surge of Japanese exports "are absolute nonsense," he contended. The dawn of the low-priced-car age would come with the help of Japanese auto makers producing cars on U.S. soil, McElwaine said. Analysts and Japanese auto industry officials agree.
Japanese auto makers last year sold 1.95 million cars in this country, despite quotas officially limiting them to 1.85 million. The overage, which helped Japan capture about 18.5 percent of the 1984 U.S. market, largely came about through cars brought into the United States through third-party territories.
But the Japanese will have the capacity to produce an additional 900,000 cars in this country by 1990, up from about 270,000 today, according to Maryann N. Keller, a director and analyst at New York-based Vilas-Fischer Associates.
That means the Japanese could wind up selling 3 million cars a year in this country by the end of the decade, Keller said in a recent analysis in the JAMA Forum, published by Japan Automobile Manufacturers Association Inc.
In Tokyo, Japanese auto makers praised Reagan's decision.
"We highly appreciate President Reagan's reasonable decision," said Takashi Ishihara, president of Nissan Motor Co. and chairman of the Japan Automobile Manufacturers' Association. "We have been insisting that there were no grounds at all to continue the restraints, because the U.S. auto industry has made record earnings."
Keijiro Murata, Japan's minister of international trade and industry, said his ministry was "considering forming measures on the issue , taking into full consideration the various conditions surrounding it." Murata did not elaborate, but his words appeared to indicate his ministry would move to avoid a free-for-all by Japanese auto makers competing for the American market, The Associated Press reported.
Toni Harrington, a spokeswoman for Honda Motor Corp. Ltd., said, "We're delighted by the president's actions, and we look forward to competing in a free and open market." But she said that Honda will "continue its commitment to the United States" by increasing production capacity at its plant in Marysville, Ohio.
Honda sold 508,420 cars in the United States last year, including 133,601 Honda cars manufactured in Marysville. The company plans to increase Marysville's annual production capacity from 150,000 units to 300,000 units by 1988.
U.S. auto makers had mixed reactions to Reagan's decision. As expected, Chrysler Corp. and Ford Motor Corp., staunch opponents of ending quotas, condemned the move.
But both companies said they would accelerate plans to shore up their small-car flanks and cut production costs by going overseas for needed models.
"This is a sad day for America, for American workers and American jobs," said Chrysler Chairman Lee A. Iacocca. "We expected this decision, and Chrysler is ready. We will play by the new rules and be competitive and profitable," Iacocca said, reiterating Chrysler's plan to triple its small-car imports from Japan's Mitsubishi Motors Corp.
Chrysler brought in 91,718 cars from Mitsubishi in 1984, and is working on an agreement to bring in 200,000 more a year. The reason is that the Japanese produce small cars at a per-unit cost that is at least $1,500 less than comparable American products. Chrysler says it has to use that production-cost advantage to remain competitive in the small-car segment the U.S. market.
General Motors Corp., on the other hand, yesterday revised downward the number of passenger cars it plans to import from its Japanese partners, Isuzu and Suzuki.
GM alone among the domestic manufacturers opposed the quotas, mostly because they interfered with the company's initial plans to bring in 300,000 Japanese cars annually once the restraints were removed. The company said yesterday that it would import only 200,000 units annually, because Isuzu will not be able to produce as many cars as expected.
However, some auto industry analysts speculated that the revision was made because GM expects the smaller Japanese auto makers to rush into the U.S. market once quotas are taken off. Also, Korea and Yugoslavia are sending cars to the United States to compete at the low end -- the $4,000 to $6,000 range -- of the U.S. market.
Those exports, combined with U.S. production of Japanese-nameplate cars and increased Japanese shipments, conceivably could lead to an oversupply in the small-car segment -- a condition that could drive down sales prices and cut deeply into auto makers' profits, analysts say.