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Car dealers brace for threat of tariffs

Swerving to avert a financial disaster, Tampa Bay area car dealers are taking steps to protect themselves from a government threat to impose 100 percent tariffs on 13 Japanese luxury car models.

Barring a last-minute agreement by trade negotiators, the tariffs take effect tonight at midnight.

If tariffs take effect and nearly double the price of the top-of-the-line Diamante at Crown Mitsubishi in St. Petersburg, sales manager Ralph Perry plans to start buying and selling used Diamantes. Unlike new models, they won't be subject to the tariffs and still will be affordable to consumers, he said.

At St. Petersburg's Lindell Mazda, sales manager Mike Hadad has already cut back his orders for the upscale Mazda 929 and newer Millenia model. "If the tariff doesn't go through, we can always order more next month," he said.

In Tampa, outspoken Lexus of Tampa Bay owner Ron Salhany planned to criticize the tariffs sought by President Clinton on a scheduled appearance this morning on NBC-TV's Today show.

If tariffs are imposed? Salhany and the owners of four other affected dealerships plan to get together with the American International Automobile Dealers Association on Thursday to seek a temporary restraining order from the U.S. Court of International Trade in New York.

While such a challenge to a presidential action would be unusual, this move would be more than just symbolic. The Court of International Trade would be empowered to issue an injunction if it felt one was warranted.

If the tariffs take effect, they would be the heaviest trade penalty levied against Japan by the United States since World War II.

"It's not fair to single out 13 luxury car lines for political purposes that could devastate the lives of many Americans," Salhany complained.

Dealers selling high-priced Japanese autos have chosen different ways to deal with high tariffs, but they agree on one issue. No matter if it is an Acura, Lexus or Infiniti, they say slapping a 100 percent tariff on any of the 13 luxury Japanese cars will kill their new-car business.

More than 200,000 of the listed models were sold in the United States last year.

As today's tariff deadline loomed, several luxury Japanese car dealers in the area and others across the country said they saw no surge of buyers seeking deals. One exception was Lexus of Tampa Bay, which said business was brisk.

Most dealers said customers were waiting to see what would happen in Geneva, Switzerland, where American and Japanese negotiators are trying to resolve their trade dispute.

The United States said it would impose the tariffs at midnight tonight unless Japan agreed to open its market to more sales of American cars and parts. Of the 13 models, the tariffs would affect two Acuras, three Infinitis, five Lexus, two Mazdas and one Mitsubishi.

Even if the threat is carried out, sticker prices won't be higher on most of the targeted luxury cars when dealers open their doors Thursday morning. Dealers said the timing of price increases would vary by make and model.

At Crown Mitsubishi, prices from higher tariffs wouldn't show up until fall when the new 1996 Diamante is scheduled to arrive, Perry said. Two of Mitsubishi's other expensive vehicles _ the 3000 GT sports car and the Montero sport-utility vehicle _ are not targets of the tariffs.

Lindell Mazda has an inventory of 15 to 20 929s and Millenias that it can sell at current sticker prices. But any new deliveries will carry new price tags if the tariffs hit, Hadad said.

In sales, Mazda's bread-and-butter car is the 626 sedan, which is unaffected by the threat of tariffs. Other dealerships like Infiniti, Lexus and Acura have fewer models that will evade tariffs.

Clearwater's Crown Acura, which faces tariffs on its Legend and soon-to-arrive 3.2 TL models, is counting on stronger sales from Acura's Integra and the 2.5 TL to help carry it through the trade spat with Japan.

In the event tariffs are imposed and remain in place, U.S. auto manufacturers still won't benefit much from the overpriced Japanese luxury cars, said Salhany, who also runs a Cadillac dealership.

"The fact is, a wealthy customer who wanted a Lexus will just turn around and purchase a BMW, Jaguar or Mercedes," he said.

_ Information from the Associated Press was used in this story.

Rising price tag for 13 luxury cars?

Here are the 13 Japanese luxury cars that could be subjected to a 100 percent tariff, if United States-Japan trade talks aren't successful. The 100 percent tariff is on the "transfer price" _ what a U.S. subsidiary pays its Japanese parent company for the car. That price is confidential, but the transfer price runs about 70 percent of sticker price.

Number sold

Luxury car in United States, Base price Price after

model January-May before tariff 100% tariff

Acura Legend 10,112 $37,000 $62,000

Acura 3.2 TL + $33,000 $56,000

Infiniti I30 1,756 $29,000 $49,000

Infiniti J30 12,415 $39,000 $66,000

Infiniti Q45 4,578 $53,000 $89,000

Lexus LS 400 10,453 $52,000 $86,000

Lexus GS 300 3,030 $44,000 $74,000

Lexus SC 400 1,802 $50,000 $84,000

Lexus SC 300 1,487 $42,000 $71,000

Lexus ES 300 16,196 $32,000 $54,000

Mazda Millenia 7,670 $28,000 $47,000

Mazda 929 1,962 $36,000 $61,000

Mitsubishi

Diamante 3,837 $28,000 $48,000

+ Not yet available n U.S.

Source: American International Automobile Dealers Association, Associated Press and Times research

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