A US-Japanese debate over 'Datsun dumping'
Datsun has a catchy advertising jingle: "Datsun. We are driven." But, to the chairman of the United States Steel Corporation, David M. Roderick, the jingle should be changed to: "Datsun. We are dumping."
In a recent speech in Detroit, Mr. Broderick, chairman of the nation's largest steel company, put into words the frustration of the US automobile companies these days as they lose an increasing share of the American market to the fuel-efficient Japanese cars. The decline in sales in their own home market has become so steep that Detroit insiders, as well as Washington officials, expect that some form of relief, through import quotas or legislation, will be suggested this year.
Already the Detroit automakers are making noises about the Japanese "invasion." At a National Automobile Dealers Association meeting in New Orleans this week, William O. Bourke, a Ford executive vice-president, suggested a combination of an allocation system and local-content rules that would limit imports until the US automakers got their small cars on stream. (Local-content rules would require that a certain portion of the work to complete imports be done in the US.)
And Douglas A. Frazer, president of the United automobile Workers, has flown to Japan, where on Tuesday he met with the president of Nissan Ltd.Mr. Fraser is lobbying hard for either Japanese plants in the United States or some facility that would finish cars built partly in Japan.
General Motors, still declaring it is a "free-trader," nevertheless warned the Japanese to examine their export policies carefully. Roger B. Smith, executive vice-president, said that "to reap short-term gains might trigger protectionist moves that could damage us all in the long run." (In Japan, the government, sensitive to the criticisms, has suggested to Nissan and Datsun that they limit their sales to the US. The Wall Street Journal reported that the Japanese government is trying to promote "orderly exports.")
Behind Detroit's concern is a genuine surge in Japanese imports. In 1979, these imports constituted 16.5 percent of total US car sales and some 67 percent of all imported cars sold in the US. In January, the Japanese share of the market soared to 21.6 percent; imports of all makers accounted for 27 percent of all autos sold.
In Washington, Richard Self, director of the office of policy for the Commerce Department's assistant secretary for trade, suggests that just because the Japanese have increased their market share, it doesn't mean they are competing unfairly. "We have no knowledge that the Japanese are dumping automobiles," he says. In 1976, a Treasury Department study concluded that the Japanese were not dumping them, although the Europeans were. He adds, however, that "circumstances could change."
To Mr. Roderick of US Steel, the circumstances seem to fit the crime.He says he decided to do a little "comparison shopping" for some of the most popular Japanese cars sold here and in Japan. US Steel compared prices in Los Angeles, New York, and six other cities. For the Toyota Corolla 1800 SE liftback, he found the wholesale price of the car in Japan was around $4,800. He concludes, "The margin of dumping is some $800 -- a margin of about 20 percent." Both cars were standard models, minus optional equipment.
Similarly, Mr. Roderick found the Toyota Corolla 1800 SR coupe, known here as the SR-5 sports coupe, $600 cheaper in the US. The Datsun 210 hatchback deluxe, sold by Nissan Motors, was $700 cheaper and the Datsun 210 four-door sedan, $650 cheaper.
Mr. Self, in Washington, says he does not think Mr. Roderick's shopping trip necessarily indicates the Japanese are dumping. "The simple fact that the cars are sold in Japan at a different price does not mean it is being dumped on an ex-factory [from the factory] basis," he states. He concludes that it would take an close investigation to determine if they are being dumped. No one has asked for such an investigation.
A spokesman at Ford in Dearborn, Mich., says he does not believe the Japanese are "technically" dumping. He claims that "there are so many loopholes in the trade agreements, they don't need to be technically dumping."
Datsun Motors, however, loudly proclaims it is not. In reply to Mr. Roderick , Datsun says: "Mr. Roderick may be an expert on the steel market, but he's way off base on auto prices. His study managed to mix up retail prices in Japan and FOB prices on exported cars to the US. . . . Our policy is for our prices to exceed dumping levels by a wide margin."
(The final retail price in the US may be higher than the FOB price, which Datsun claims Mr. Roderick cited, because of charges tacked on by the various importing companies -- all owned by the parent company.)
US Steel, in reaction to Datsun's statement, says its study was not meant to be a formal survey, but was the result of numbers it got from independent investigators in Japan. It stands by its numbers as indicative of the prices on a "first tier" basis.
Datsun says the "true" reason its cars sell better is because of "the escalating price of gasoline, resulting in an overwhelming demand for fuel-efficient automobiles, both imported and domestic."
Ford, however, maintains that price is an important part of the picture. Thus, the company has begun a rebate and marketing program, like Chrysler and GM. Louis E. Lataif, general marketing manager in the Ford division, says, "Yes , the rebates are related to recapturing some of the market."
Ford has nicknamed its rebate program "The Ford Fuel Economy Celebration," to counter public opinion that "imports are more fuel efficient." Rather than put its rebates on models with the largest inventories, Ford is rebating models with "the strongest names," Mr. Lataif says. This includes the Mustang and Fairmont, with a $400 rebate, and the Thunderbirg, with a $500 one.