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#95 – Dumping Charges Sought Against Toyota/Lexus

by | Apr 6, 2017



The political atmosphere was anti-Japanese. Faced with a continuing loss of sales, General Motors, Ford, and Chrysler filed an anti-dumping petition with the U.S. Government concerning Toyota vans. “Dumping” is the sales of a product from another country in the United States at an unfairly low price to gain market share. “The Big Three” charged that Toyota was underpricing the Previa van in the United States. Trade tensions would continue to escalate in the coming years. This was a harbinger of things to come for Lexus.


Lee Iacocca complained, “The administration tells us, ‘Give us a good case, and we’ll move on it.’ Why do we, the victims, have to take the lead? Why doesn’t the government do its own investigation and enforce the law?” He added sarcastically, “It could be that the Japanese automakers just have a soft spot in the hearts for the American consumer.”


Toyota had just entered the market for the first time with a new van. Toyota spokesman, John McCandless, said, “This is just more Japan bashing and threatens the U.S. consumer’s freedom of choice.” Bob McCurry, executive vice president of Toyota, fired back, “Mr. Iacocca has run out of excuses. They (Big 3) have over 80 percent of the van market, and they’re crying that they are an injured party.”


The news stories about Lexus dumping started to appear. Lexus never targeted the Cadillac and Lincoln buyers, although Lincoln sales over time declined substantially. The Germans were unable to take a case to the U.S. government against Toyota or Lexus because only the U.S. domestic manufacturers could petition the U.S. government.


Jim Harbour, a manufacturing consultant from Troy, Michigan, studied the Lexus phenomenon. He concluded that a Lexus luxury car was taking about 30 hours to build versus 85 hours to build a German luxury car. Adding to this inefficiency, the German workers had a 37.5-hour work week, 30 days of vacation, and costly social programs.


Harbour ask the question, “Is Toyota dumping Lexus cars to gain market share? I don’t think so.” He went on to add, “The German car producers have had the U.S. market to themselves for years, but now they are getting a real taste of some real competition. Toyota is pocketing $10,000 for every Lexus it sells—much like Ford does for each Lincoln Town Car.”


It would take a year before the U.S. Government would rule on the dumping charge filed against Toyota. By that time Cadillac and Lincoln would take notice of Lexus, and the domestics would start pushing the incoming Clinton administration to try new and even more oppressive taxes to hurt Lexus.


“Bless your enemies; no cursing under your breath.” Romans 12:24


Lexus was to set a new standard for customer satisfaction. After a year in business, the independent J.D. Power rankings would be released to let us know how we were doing.


(To be continued in “Customer Satisfaction – Triple Crown”)