Toyota and Lexus dealers from across the U.S. — along with other members of the American International Automobile Dealers Association — plan to fly to Washington on April 9 to lobby Congress and the Trump administration against imposing import tariffs on vehicles and auto parts coming into the U.S. Lentz said he remains hopeful the industry's warnings will be heard.
"In the end, people look at the importance of the auto industry, and I don't think anyone wants to take action that's going to reduce vehicle sales by 2 million units, and the impact that that would have on employment," Lentz said.
"I believe, in the end, rational decisions will be made," he said.
The threat of a trade row between Japan and the U.S. hangs like the Sword of Damocles over an otherwise healthy market: If the trade thread breaks, damage could be widespread.
"The market's driven by interest rates and consumer confidence, and right now, consumer confidence is pretty good," Lentz said.
"The economics are pretty good, and if interest rates stay low, I think that bodes very well for a good industry."
Lentz predicted U.S. sales in 2019 of 16.6 million to 16.8 million, down from 17.33 million last year. But, he cautioned, "we have to see what happens with trade. Trade can derail that, if we're not careful. Affordability can be driven by vehicle costs going up, either through vehicle inflation, regulation or other things. So, if all of a sudden, the average price of a car goes up $1,000 or $2,000, my forecast changes rapidly."
Lentz said a 25 percent Section 232 tariff on automobiles and other goods entering the U.S., as the administration has threatened, would have a harsh and immediate effect on Toyota and Lexus. In 2018, 31 percent of the company's vehicles sold in the U.S. were imported from outside North America; about half come from outside the U.S.
With 25 percent tariffs, the price of the Toyota Camry, "which is one of the most American-made cars, goes up about $1,800," Lentz said, adding that prices would jump about $2,800 for the Tundra pickup made in Texas and $3,000 for the Indiana-built Sienna minivan. He said he hopes "cooler heads will prevail, but we've got to get there."
In mid-February, Lentz's boss, Toyota President Akio Toyoda, in his role as chairman of the Japan Automobile Manufacturers Association, took issue with the U.S. Commerce Department's ongoing study under Section 232 of the Trade Expansion Act of 1962, which could potentially result in Japanese imports being labeled as "threats" to national security.
"These vehicles clearly do not threaten United States national security," Toyoda wrote in a written statement issued by JAMA. "Introducing import restriction measures would not only negatively affect our U.S. customers, but would also disrupt the operations of U.S. vehicle and auto parts manufacturers as well as auto dealerships. Adverse effects on the U.S. economy and American jobs should be avoided."