Widening Beachhead

For U.S. automakers, the combination of inflation, recession and energy crisis has spelled sales disaster. For sellers of imported cars, the same combination spells bonanza. By capitalizing on the fuel-saving appeal of their lightweight autos, many importers are broadening their beachhead on the American market to almost its widest point since the first boatloads of Volkswagens rolled ashore in the early 1950s.

Indeed, sales of imported cars are rising even more rapidly than sales of the Detroit makes are plunging. So far in 1975, foreign-car sales in the U.S. are running more than 20% ahead of a year earlier -- when they were down in line with the general market -- while American-made cars are off 12.9%. At last count in February, the imports grabbed 21% of all sales, up from a supposedly normal 16% last year and their biggest market share since the 22% in August 1971, when dollar devaluations had not yet driven up the prices of foreign cars and Detroit had not yet brought out subcompacts to compete with them.

Inflation has raised the prices of most American cars above those of competing foreign models, and no U.S. automaker can match the gas-mileage claims of some of the imports: 38 m.p.g. for the Volkswagen Rabbit, 39 m.p.g. for the Japanese Honda Civic. Those cars are in the forefront of the import surge, along with Fiat, Datsun, Toyota and British Leyland's Marina. Says Honda's U.S. sales manager, Cliff Schmillen: "There seems to have been a change in people's thinking. It has sunk in that energy shortages and high gasoline prices will be with them for the rest of their lifetime." Johnie Leake, a 26-year-old Manhattan Cadillac owner who last week shopped for a Toyota as a second car, explains its sales appeal: "You get good mileage in a foreign car, and it looks all right too. You just get more for your money."

Given the power of that sales pitch, federal energy officials believe that the foreign cars' share of the U.S. market will rise even further, probably for the next two or three years or until U.S. automakers introduce models now on the drawing boards that can compete more effectively on price and gas mileage. Meanwhile, some foreign-car sellers are beginning to wonder whether their share of U.S. sales may be increasing a bit too fast for their own good. Though Detroit has not asked for tariff protection, a recent statement by the Motor Vehicle Manufacturers Association said: "In America, which is in a truly deep recession, one question is how will we be able to continue to support the principle of free trade?" Leonard Woodcock, president of the United Automobile Workers, is trying to document a suspicion that the Rabbit, at a U.S. sticker price of $2,999, is being sold below cost, which would be grounds for a "dumping" complaint to the Treasury Depart ment. Robert Link, a Datsun executive, says nervously that "we don't really want to sell less, but we sure wish Detroit would sell more," thus taking the spotlight off the importers' prowess.

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