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Yugo Struggling to Hold On

February 26, 1989 GMT

DETROIT (AP) _ It was just Hollywood when, on a recent ″Moonlighting″ episode, a car looking suspiciously like a Yugo plopped into a grave.

Little did the television show’s executives know when they were filming the shot in mid-January that within a few weeks, the Yugoslavian carmaker’s U.S. importer would veer perilously close to its own financial tomb.

Once vaunted as the next foreign assault on the American auto industry, unsold Yugos are sitting on dealer lots nationwide, hurt by what is generally regarded as a cheap tin-box look and a questionable reputation for quality.

On Jan. 30, Yugo America Inc. and its parent company, Global Motors Inc., filed for protection from creditors under federal bankruptcy laws.

Like other small imports, the Volkswagen Beetle for instance, the Yugo has gotten its share of pointed fingers and scoffs since it hit the U.S. shore in 1985. The ″Moonlighting″ scene was just the latest.

″We were not trying to pick on Yugo,″ said a member of the ″Moonlighting″ production team, contacted by The Associated Press for comment on why a Yugo was represented disparagingly. ″We wanted to get as far away from a sports car as we could.″

The staffer, who spoke on condition she not be identified, emphasized the car carried no nameplate or hood emblem on the romantic comedy show about detective Maddie Hayes and mischievous companion David Addison.

The story line was that Maddie wanted to give David a car as a gift. He thought he needed something racy. She thought he needed something practical.

David tried to get it stolen, parking outside a Los Angeles gang’s headquarters with the keys in the ignition. There were no takers. But when a suspect in a case he and Maddie were investigating heisted the car in a cemetery and tumbled it into a grave, David cheered.

Yugo sales dropped 35 percent to 102 cars a day last year from a daily average of 159 cars in 1987, industry figures show. The number of Yugo dealers has dwindled to about 260 from a high of about 340 a year ago.

Important stockholders in Yugo America, including automotive entrepreneur and Global Motors founder Malcolm Bricklin, have bailed out. Executives have quit, the latest being Ronald Hoffman, senior vice president for operations.

It’s been less than the best atmosphere for conducting business.

Yet dealers are sticking by the car. Company officials confidently say the Yugo will resurrect itself, filling a segment of the market that has been emptied by Japanese and Western European cars moving upscale because of a weakening U.S. dollar against foreign currencies.

Mood among the remaining Yugo dealers is surprisingly good, said Marcel Kole, Yugo America’s acting chief executive officer.

″I think they are upbeat that the company has a potentially profitable niche,″ he said in a telephone interview from company headquarters in Upper Saddle River, N.J.

Among the things bound to be welcomed by dealers are reimbursement checks that began going out earlier this month to dealers who have performed warranty work on Yugos. In an unsuccessful effort to boost sales, Yugo had offered a complete warranty, including windshield wiper blades.

″They probably owe me, with rebates and everything, $35,000 to $40,000,″ said Yugo dealer Bill Seidle of Bill Seidle’s World of Cars in Miami. But Seidle, who also has Mitsubishi, Chevrolet, Oldsmobile, Nissan and Suzuki franchises, said he wants to continue as a Yugo dealer.

″It wasn’t the car that went wrong, it was the importer that went wrong,″ said Dick Loehr, owner of Crystal Chrysler-Plymouth-Yugo in Kalamazoo, Mich., one of Yugo’s original U.S. dealers and chairman of the Yugo dealer council.

Loehr said he was asking $2,995 to drive a Yugo off his lot, and was losing money on each deal but getting some return on his original investment. His faith in the car continues.

″The car is a good little car,″ he said. ″It’s a commuter car that does a decent job at what it’s supposed to do.″

Sue Brown of Holland, Mich., says she loves her two Yugos, both of which have been damaged in accidents while her daughter was at the wheel.

″It’s a good-running car and it’s very cheap,′ she said. ″The parts are very inexpensive. The labor is going to cost as much as the parts will.

″I would buy another one without a doubt,″ she added.

But the Yugo ownership experience hasn’t been as rosy for Grace Rahming of Levittown, Pa. She and her husband bought one about three months ago. Its heater hasn’t worked since.

Kole said the immediate concern of the company is to satisfy Yugo customers.

″The first and most important thing is to resolve any problems they may have whether or not they stem from a dealer who does not want to do a warranty,″ he said. ″We assure them any reimbursement of expenses (from private garage work) will be forthcoming as well.″

Meantime, the jokes continue. One making the rounds lately goes like this:

″How do you double the value of a Yugo?″

″Fill the tank with gas.″ End Advance for weekend editions Feb. 25-26