"Cars are cars, all over the world," sings Paul Simon in one of the many lyrics that make motor vehicles a metaphor for life.
Oh, Paulie, if only it were that simple.Cars are a metaphoric vehicle all right, and consumers are going to get taken for a ride by last Thursday's tariff ruling by the U.S. Customs Service and Treasury Department that cars are not cars, all over the world.
In what they described as a "logical and common sense" decision that was "purely technical," a team of bureaucrats who once worked for the Red Queen in "Alice in Wonderland" spelled out when a car is not a car. According to the U.S. government:
Cars are cars if they are trucks with four seats.
Cars are cars if they are trucks with four-wheel drive and four doors.
Cars are not cars if they are trucks with four-wheel drive and two doors.
Jeeps are not cars, but it doesn't matter if they're made in the United States.
Cars that look like Jeeps are not cars, and it does matter if they're imported. Unless they're imported from Canada, which is not a foreign country for car purposes.
Jeeps that look like cars are not cars either.
Cars that look like Jeeps that look like cars are cars if they are imported and have four doors.
Cars that look like Jeeps that look like cars are trucks if they are imported and only have two doors.
OK, then what does it all mean?
The short answer is that no matter whether you call them cars, trucks, Japanese Jeeps, sport utility vehicles, minivans or multipurposes vehicles, they're going to cost more.
Technicalities aside, the real difference between a car and a truck is that imported cars carry a 2.5 percent tariff while the tariff on imported trucks is 25 percent. (How the truck tariff got to 25 percent is another protectionist proverb.) Throw in the "voluntary restraints" otherwise known as import quotas on Japanese cars and you can see how badly government interference can distort a market.
Remember the Suburu Brat, that weird minipickup with two plastic seats bolted in the back? Those seats made it a car, hence no truck tariff. When Nissan became the first Japanese carmaker to open a U.S. plant, it made trucks, because without the 25 percent duty it could sell them for less and hence sell more of them. When Suzuki first decided to ship its Samurai pseudo-Jeep to the United States, the quota for Japanese cars was full, so Samurais were trucks; paying the tariff was better than not importing them at all. Later when the quota wasn't being used, some Samurais became cars.
Even before the Samurai, the Japanese Jeep-wannabes like the Mitsubishi Montero and Isuzu Trooper were stealing sales from the GMC Blazer and Ford Bronco. Then came the Nissan Pathfinder and Toyota Four-Runner, four-wheel-drive pickups with back seats snuggling beneath steel bed caps, that have replaced the BMW as wheels-of-choice for teenage drug magnates. Then the Japanese started bringing in minivans to compete with Chrysler, et al., and Detroit turned to Washington for help.
As usual when Detroit plays Washington, the consumer lost. Whatever you call these vehicles, their prices will go up and the selection may shrink as the result of last Thursday's ruling.
It could have been worse. The government's preliminary decision in January was that everything remotely resembling a van or a Jeep was a truck, including the Volkswagen Vanagon, which had been classified as a car for more than 30 years. That brought the Germans into the fray along with the dealers and importers who were selling more than 200,000 of these vehicles every year. The government compromised and came up with its absurd definitions that seemed to be based more on politics than practicality.
"Caving in to foreign governments," complained Lee Iacocca, chairman of Chrysler, whose Jeep and minivan divisions were hardest hit by Japanese competition.
It's unbelievable to a lot of people that the Treasury Department has ignored the auto companies' outrageous profits in giving Detroit any more import protection at all.
On the day the decision was issued, Ford announced record profits of $5.3 billion for 1988, up more than $600 million from the previous rec-ord the year before. Together Ford, Chrysler and General Motors made $11.2 billion last year, almost $1.5 billion more profit than they have ever made before.
Those record profits will only go up as the result of the cars are not cars decision. Whether it is tariffs or import quotas or the climbing value of the yen, anything that raises the price of Japanese cars allows the domestic manufacturers to raise the prices of vehicles that compete with imports.
Since two-door, four-wheel-drive vehicles will have to pay the 25 percent truck duty and four-door versions of the same conveyence will not, there will be a rapid change in model mix - from 80 percent two-doors to 80 percent four - doors as fast as the manufacturers can convert. What consumer will pay 25 percent more for two fewer doors?
Nissan and Toyota will soon be selling four-door Pathfinders and Four-Runners. The two-door versions of those vehicles may be doomed, along with the two-door Trooper and Montero.
The car-truck classification dispute is only for tariff purposes and has nothing to do with the car and truck safety standards. All the vehicles involved - imported and domestic - are considered trucks by the National Highway Transportation Safety Administration and don't have to meet the more rigorous safety standards for cars. So the consumer gets hit from both directions: higher prices and no safety standards.