Detroit Is Fighting Back

By Alexander Taylor

Automakers win quotas on Japanese imports and roll out new models

American carmakers last week had one eye firmly fixed on the cashbox and the other on Japan. As the seemingly endless flood of auto company losses continued, the Reagan Administration finally won an agreement with the Japanese government for a "voluntary" cutback of up to three years in the number of autos exported to the U.S. Meanwhile, Detroit was preparing for this week's launching of the latest answer to sluggish auto sales and the Japanese imports: the General Motors J-cars.

The agreement came only after some last-minute shuttle diplomacy across the Pacific. Japanese automakers were firmly opposed to any export reductions, and the Ministry of International Trade and Industry was having little luck bringing them into line. But after a Tokyo dinner of shredded sea eel soup and fried abalone, U.S. Trade Representative William Brock and Minister of Trade Rokusuke Tanaka began moving toward an agreement.

Brock warned the Japanese that if they did not take action themselves, Congress would almost certainly impose formal import quotas. Tanaka at first proposed a one-year reduction of auto exports from last year's 1.82 million to 1.7 million. Finally, Brock accepted a limit of 1.68 million vehicles annually for two years, ending in March 1983. If U.S. auto sales pick up during the second year of the agreement, Japan will be able to boost exports by 16.7% of the amount of the increase. The number of imports allowed in during the third year was left open for future discussion.

Japanese automakers immediately protested the agreement. Nissan Motor President Takashi Ishihara, whose firm makes Datsuns, said he feared that it would "cast dark shadows on the system of free trade around the world." Toyota President Eiji Toyoda said he was "greatly disappointed."

But President Reagan was "pleased" with the plan, and a Senate bill to legislate a limit on imports was withdrawn. Said GM Chairman Roger Smith: "I think it is good news." Less pleased will be U.S. car buyers. The agreement seems destined to make Japanese cars sharply more expensive and also enable U.S. automakers to boost their prices.

Although GM last week reported a $190 million profit for the first three months of the year, Ford announced a $439 million loss, and Chrysler was $298 million in the red during the same period. At tiny American Motors, unit sales slipped 31%, and the company lost $53 million. The rebates that all the automakers offered earlier this year helped sales, but cut sharply into profit margins.

The best way to rebuild profits is for Detroit to produce the kind of cars that the American public wants. GM's new J-cars, a line of front-wheel-drive small autos, represent the strongest effort yet to attack the successful Japanese models. Said Robert Lund, the general manager of GM's Chevrolet division: "We're tired of hearing about how the domestic auto industry let the Japanese take the subcompact business away from us. The whole Chevrolet organization is spoiling for a fight."

Like the successful X-car series that GM launched in the spring of 1979, the J-cars (Chevrolet Cavalier, Pontiac J2000 and Cadillac Cimarron) are designed for the new era of scarce and expensive energy. The four-passenger subcompacts, which replace models like the Chevrolet Monza and Pontiac Sunbird, fall in size between the bigger X-cars and the smaller Chevrolet Chevette. Powered by four-cylinder engines, the new autos are expected to get about 26 m.p.g. in the city and 43 m.p.g. on the highway. While the economy and styling of the J-cars are appealing, the prices are likely to be shocking to buyers who have not recently been in an automobile showroom. The Cavalier will carry a base sticker price of about $7,000. The J2000 will cost several hundred dollars more.

The most startling version of the J-car is the Cadillac Cimarron. For years the Cadillac name has equated luxury with size, and buyers have spent $20,000 or more for opulent, lengthy Fleetwoods and Eldorados. The Cimarron represents a bold attempt to transfer that 78-year-old image to a car that is 4 ft. shorter than the now standard Cadillac and nearly the same size as a Toyota Celica. The mini-Caddie will carry the expected gewgaws and gimcracks, including electric remote-controlled side-view mirrors, an array of interior lamps and leather upholstery. But it will also have some unusual features for a Cadillac, like a tachometer, usually found only in sports cars. Price of the car: about $13,000.

The Cimarron represents a major gamble for Cadillac, which hopes to sell 30,000 of them in the first year. Asks one skeptical competitor: "Can you hang a Cadillac name plate on something as thinly veiled as the Cimarron? I doubt it." The new model is designed to appeal mainly to a new Cadillac customer: well-heeled younger drivers who can afford a $12,900 BMW 3201 or an $11,100 Audi 4000. But will a sports sedan customer be attracted to a car that has traditionally been synonymous with conspicuous consumption? And will he pay several thousand dollars more for a Cadillac than for a similarly equipped Pontiac J2000 that is built in the same plant? Admits one GM executive: "It will be a real test for the Cadillac name plate."

Neither Ford nor Chrysler will be coming out this spring with a totally new line to match the GM J-cars, but both companies are introducing sporty versions of existing front-wheel-drive subcompacts. Ford has launched its first two-seater models since the 1957 Thunderbird: the Ford EXP and the Mercury LN7. The cars are smartly designed versions of the successful Ford Escort and Mercury Lynx, which were introduced last fall. Though they have a Government fuel-economy rating of 29 m.p.g. in city driving, the anemic performance of their 1.6-liter engine is hardly up to sports car traditions. The EXP's base sticker price is $7,253.

Later this month Chrysler will introduce more new sporty versions of its Dodge Omni and Plymouth Horizon models: the Dodge Charger and the Plymouth Turismo. Both use a K-car 2.2-liter engine that sacrifices some fuel economy (city rating: 25 m.p.g.) in order to provide neck-snapping acceleration. The base price: $6,488. Chrysler is hoping that the J-cars will create buyer interest and more traffic in its own showrooms. Says Harold Sperlich, president of North American automotive operations at Chrysler: "When GM comes out with a new product, it gets people to come out to shop and compare. We'll trade on that."

Meanwhile, back at the test track, the automakers are developing still newer and more fuel-efficient models. GM, the first company to begin making smaller cars, will continue to lead the industry in new products through the early 1980s. Next fall it will introduce the new intermediate-size Chevrolet Celebrity, Pontiac A6000, Buick Century and Oldsmobile Cierra. One size larger than the X-cars, these front-wheel-drive models will eventually replace rear-wheel-drive cars like the Chevrolet Malibu. In about a year GM expects to launch its radically designed two-seater P-car.

Ford, which has been the laggard in the move toward smaller cars, is gradually changing over its fleet. This fall a second-generation slimmed-down Lincoln Continental will be introduced. Ford, though, is reluctant to follow Cadillac and produce a truly small luxury car. Says Executive Vice President Louis Ross: "We have difficulty with downsizing for the luxury car buyer." In the spring of 1983 the Ford Fairmont will be replaced by a front-wheel-drive compact that is code-named Topaz.

The next models at Chrysler will mostly be modifications of the company's K-cars. This fall a plusher version of the K-car will be out and will carry the Chrysler LeBaron name plate. Arriving next spring will be a convertible model of the LeBaron. This will be the first convertible built by Detroit since production of the Cadillac Eldorado was stopped in 1976. Cost of the new car: about $14,000.

As Detroit's fuel-efficient models continue to move from drawing board to test track to main street, the old gas guzzlers that carried more than a generation of Americans to work, shopping centers or school are slowly fading into history. A week ago, the last of Chrysler's rear-wheel-drive cars to be built in the U.S., an old model LeBaron, rolled off the assembly line at the firm's plant in St. Louis.

This summer when the factory reopens, workers will produce a new version of the K-car. --By Alexander Taylor. Reported by S. Chang/Tokyo and Barren Seaman/Detroit

With reporting by S. Chang, Barren Seaman

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