A story making the rounds among automobile dealers goes like this:
A California dealer put two Toyota Camry cars on his showroom floor. The cars were identical, except that one had a Toyota nameplate and the other had fake markings identifying it as a Chevrolet.
Most customers preferred the Toyota-marked car to its Chevy-marked twin. They gave the Toyota high marks for quality but criticized the craftsmanship of the "Chevrolet."
The story cannot be verified. But there are many in the auto industry who say it doesn't need to be -- it is a marketplace parable that reflects America's apparent preference for Japanese small cars over comparable U.S.-made models.
Today, the story of the two Toyotas is being played out in real life, much to the chagrin of New United Motor Manufacturing Inc.
NUMMI, a joint-venture company operated by General Motors Corp. and Toyota Motor Corp., assembles front-wheel-drive, subcompact Nova cars in Fremont, Calif. The Nova is a Toyota Corolla dressed up as Chevrolet.
But there is a real difference between the two cars -- the Corolla is selling, sometimes by as much as $2,495 above its option-loaded sticker price. And buyers are waiting in line for the cars.
The Nova is selling, too -- but only when GM offers cut-rate financing to clear its dealers' lots of cars that are waiting in line for buyers.
To some auto industry analysts, the disparity between the two cars' sales performance is evidence that American auto makers have not overcome the public's suspicion of U.S.-made car quality.
To many others, the Nova's laggard sales pace is indicative of a marketing problem facing all domestic car companies that rely on captive imports and joint-venture-produced cars for small-car sales in the United States: If these cars are marketed as "Japanese," the company risks obscuring its own identity; if they are marketed as "American," they risk ending up like the Nova.
The industry is in desperate need of a solution to the problem.
Sales of captive imports and joint-venture cars "will explode over the next six years, from 235,000 units in 1985 to more than 1.1 million units by 1991, or 15 percent of domestic nameplate [e.g., Chevrolet] sales," according to a market analysis report released recently by J.D. Power & Associates of Westlake Village, Calif.
"This will force a change in the character of some domestic makes," the Power report said. "Will Chevrolet and Dodge continue to split their marketing approach, advertising their 'imports from Japan'? It's almost like admitting an illegitimate son because part of the public prefers him to the real thing. Or, will they integrate these products to form a new brand identity?" the Power report asked.
Some analysts say GM has complicated the identity crisis by calling its joint-venture car Nova, a name that appeared in the Chevrolet lineup in 1962 and lasted until the nadir of the domestic auto industry in 1979.
GM's Chevrolet Division "may have committed a major blunder by using the Nova name," said Jack V. Kirnan, vice president of automotive services for Merrill Lynch Economics Inc., New York. The strategy of using the name "Nova" in conjunction with an advertising campaign emphasizing the Nova's Japanese and American heritage "seems to have backfired," Kirnan said.
The problem is consumer perception, said Christopher Cedergren, chief auto industry analyst at Power & Associates. The American public still has a relatively low opinion of U.S.-made small cars compared with those that are made in Japan, Cedergren said. "And the Nova is seen as just another American small car," he said.
"It's embarrassing, but Chevrolet might have to identify more of the Toyota heritage of the Nova to get it to sell," Cedergren said.
Chrysler Corp., meanwhile, is using the "made-in-Japan approach" to set record sales of cars and trucks built by its Japanese partner, Mitsubishi Motors Corp. Chrysler sold 73,916 Mitsubishi products between Oct. 1 and March 31 of the current model year, a 48.4 percent increase over the 49,779 Colt, Vista and other Mitsubishi vehicles sold by Chrysler in the year-ago period.
Chrysler officials said they expect to sell their full, quota-restricted 1986 allotment of 140,000 Mitsubishi cars.
Chrysler's Mitsubishi marketing strategy is working "because we wanted to make sure that people knew the origins of the Mitsubishi cars," said Robert Perkins, vice president in charge of Chrysler's Washington office.
With the Nova, "It appears that GM has had a serious market-definition problem. They did not appear to know what market they were going after. They've advertised the Nova as 'the best of both worlds,' but they failed to give it a home," Perkins said.
Inside the industry, hardly anyone questions the Nova's quality. The five-passenger, 1.6-liter, 4-cylinder car assembled by NUMMI's American workers in Fremont is in every respect equal to the almost identical, Japanese-made Corolla in craftsmanship, said David E. Davis Jr., editor and publisher of Automobile magazine.
"The difference is that a Chevrolet dealer probably will give you a hell of a deal on a Nova," Davis said.
The latest base price on a four-door Nova sedan, the most popular model, is $7,941, including a $290 destination charge. The base price on a comparable Corolla is $7,808, including a $210 destination charge.
The actual sticker-price difference between the two cars when comparably equipped is $23, because the Nova includes $110 of standard equipment, such as cloth seats, optional on the Corolla.
Here is where the dealing begins.
A 60-day supply of cars is considered normal in the U.S. auto industry. But the Nova, introduced in June 1985, consistently has sold in numbers far beneath its monthly production rates -- except during periods of low-cost financing.
Thus, the supply of Nova cars has remained way above the 60-day norm, reaching a 145-day supply in the middle of March, and falling to 134 days at the end of the month. There was a 107-day supply of Nova cars on April 10.
By comparison, the Corollas, affected by high demand and quotas limiting the number of Japanese cars sold in the United States, have been in chronically short supply. According to Ward's Automotive Research in Detroit, Toyota's entire line of U.S.-sales cars was down to a six-day supply last week.
The upshot is a market that offers discounts -- such as the current 6.9 percent, 36-month financing rate on the Nova -- and additional dealer markups on the Corolla. A look at the Washington-area car market, 31 percent of which is import sales, is instructive.
A shopper at Bob Peck Chevrolet in Arlington recently could have picked up a four-door Nova sedan -- fully equipped with automatic transmission, air conditioner, AM/FM stereo and tinted glass -- for $10,002. But a person shopping for a comparable Corolla at Alexandria Toyota would have been asked to pay $11,772.
"Depending on the day of the week, time of the day and the number of customers in the showroom, we put an additional $2,495 markup on the Corolla," said a spokesman for Alexandria Toyota.
"The Chevy dealers are giving the Nova away," he said. "But we don't have much competition with the Nova itself. Our competition is with Honda and the other Toyota dealers, and maybe a little bit with Nissan."
But Washington area Chevrolet dealers say that more customers are beginning to come to them, partly because of the markups on the Corollas and partly because of GM's sales incentives on the Novas.
"People are waking up a little bit," said Peter Mieth, sales manager of Lustine Chevrolet in Hyattsville. "The Toyota dealers are charging them $2,000 over sticker for the same car we're selling, and people are waking up to that."
Still, some analysts say that Chevrolet will be lucky to sell 150,000 Novas in 1986, which is 50,000 fewer than NUMMI is capable of producing this year. Although no Corollas are produced at Fremont now, Toyota has an option in the NUMMI contract to produce Toyota-badged cars there.
"If Chevrolet doesn't get its act together in terms of trying to sell 200,000 Novas annually, Toyota may end up with a yearly production of 125,000 of its own cars at Fremont," said Merrill Lynch's Kirnan.
Why? "Because the Corolla has a strong image and the Nova does not," said David Healy, an analyst with Drexel Burnham Lambert Inc. "People who really want to buy a Corolla want to buy a Corolla."
Thomas A. Staudt, Chevrolet's general marketing manager, said Nova sales have not met his division's expectations. But he said the car is a winner-in-waiting, one that must overcome "a normal pattern of market skepticism." That skepticism is aggravated by a proliferation of new subcompact cars, which account for 39.6 percent of all new cars sold in the U.S. market, Staudt said.
"You're establishing a new car in the midst of an increasingly cluttered market. In our case, we have three new ones [the Nova, Sprint and Spectrum, the latter two made in Japan] out there."
One of Nova's biggest assets might be the quotas that limit the number of cars the Japanese may ship to this country.
Toyota, like other Japanese auto makers, has been introducing more expensive models to reap maximum profits from a quota-restricted market. Toyota, for example, introduced completely restyled Celica and Supra car lines for 1986 sales.
To make way for its higher-priced Celicas and Supras, Toyota must reduce the number of Corolla models it sends to the United States, said Toyota spokesman Jerry Giaquinta. "We can only bring in so many cars. When the new models come in, other models have to come out somewhere," Giaquinta said.
There is a catch. In addition to its available capacity at NUMMI, Toyota is building its own assembly plant near Lexington, Ky. According to some analysts, Toyota presumably could use its U.S.-assembly capacity to replace Corollas that no longer can be shipped from Japan.
Chevrolet officials, meanwhile, are betting the Nova will be a star. They recount the saga of their once-slow-selling, oft-maligned Cavalier, which is now one of the best-selling cars in the United States.
"I want to collect all of the things that people are writing about the Nova today, so that I can show them their words when the car takes off," said one Chevrolet spokesman. "That day is coming, and it's coming soon." CAPTION: Chart, Specs for 1986 Nova and CorollaPicture 1, The Nova is selling, but GM has to offer cut-rate financing to clear dealers' lots. Chevrolet Motors Division, General Motors Corp; Picture 2, The Toyota Corolla LE Sedan sells as high as $2,495 over its option-loaded price. Toyota Motor Sales USA Inc.