Why Irving Wilens Just Bought a Lexus
FOR months, Irving and Leah Wilens have been doggedly doing their luxury car-shopping homework: comparing auto magazine reviews and taking test drives.
But what finally compelled them to fork over $50,000 for a white Lexus LS400 on a recent Friday afternoon were the words of a man who is the son of a car salesman - President Clinton.
"When the president threatened to impose the 100 percent tariff, I decided to do the deal sooner rather than later," says Mr. Wilens, a retired developer. "If I didn't do this now, my $50,000 car would cost me $80,000 after the tariff is tacked on."
The Wilenses aren't alone.
At JM Lexus, the largest volume Lexus dealership in the world, business has been booming since the Clinton administration announced in late May that it would impose 100-percent tariffs on the 13 models of Japanese luxury cars unless an accord with Japan could be reached by June 28.
"Just last week, we closed 28 sales on one day, and most of those numbers can be attributed to the tariff threat," says David Mullen, the general manager of the $100 million a year dealership. "But of course we recognize that sales may fall sharply if the tariffs are enacted."
This sprawling 7.5-acres of wall-to-wall chrome and rubber is no ordinary dealership. That's clear the moment you walk in the door. There are no polyester leisure suits. No white shoes. No faux Rolexes.
The salespeople, or "associates" as they prefer to be called, are as comfortable with latest Armani styles as are their clientele. Here, an average of 300 "clients" a month make a "lifestyle" decision and drive home in a high-end Japanese auto.
But the uncertainty of what happens if the trade dispute is not resolved is testing the polished aplomb of the JM Lexus associates.
"The tariffs will most certainly hurt business," says Moez Sachedina, a veteran Lexus salesman dressed impeccably in an olive Burberry's suit. He expects potential customers will "now look to Mercedes and BMW."
One associate with a hefty mortgage and two car payments, momentarily drops the salesroom bravado and admits he's worried. "No sales means no commissions. And that's what I depend on to take care of my family."
Lexus, the luxury division of Toyota, is the manufacturer that would be most affected by sanctions. Unlike Acura and Infiniti, every Lexus model falls above the $30,000 tariff threshold.
The worst-case scenario has forced JM Lexus and other Japanese luxury car dealerships to seize on the tarriffs as a selling point. And JM executives expect record revenues this month.
"We'd be foolish not to mention the possibility of tariffs to customers," says sales manager Syed Madni. "No one can predict what will become of the trade talks, but we tell customers, 'You can buy now, or pay later."'
The Lexus hawkers take great pains to explain that they're not taking advantage of this seller's market. Instead, they see their recent sales as helping the customer possibly save some money.
"Obviously, if there is an agreement between Japan and the US, we've benefited to some degree just from the president's threat," says Jim Cochran, a relatively new salesman at JM Lexus. "But if there isn't, we expect some very lean times."
JM Lexus employs more than 140 people, and executives say these are the real victims of any trade sanctions.
"Lexus only represents 1 percent of Toyota's total worldwide sales, so I don't believe the tariffs will damage Toyota or Japan," says Mr. Mullen. He repeats the most common refrain now heard in the faux-granite gray tile showroom. "The only people who will be hurt by the tariffs are the hard working people in America who make their living selling luxury cars from Japan."
JM Lexus is preparing its own sanctions solution. It's doubling the size of its complex with a used Lexus lot next door - second-hand autos aren't subject to tariffs.