Suzuki drops U.S. market
Japanese maker Suzuki has made motorcycles, automobiles, and other machines for half a century or more. In the United States, they've been selling cars for 27 years. The company has barely been more than a niche player, however, and after failing for so long, Suzuki America's automotive branch, American Suzuki Motor Corp, has filed Chapter 11 bankruptcy and will be pulling out of the U.S.
Citing continued low sales volumes and unfavorable exchange rates, Suzuki is going to pull its auto sales, but will continue selling its high-volume motorcycles, ATVs, and boats. The bankruptcy and pullout affects only automotive.
Suzuki faced many problems, not the least of which was being the fourth-largest carmaker in Japan, but being the tiniest seller in the United States. Their vehicles were all produced in Japan and shipped here for import, which meant they had to exchange Yen for Dollar as well as pay U.S. auto import fees. These two things meant low profit per vehicle. Add to that a lack of investment in American-centric design for their cars and the overall total is a failure to gain market share.
Suzuki was one of the two car brands I cited in October that should just give up. The other being Mitsubishi, whose overall market share is about double Suzuki's at a whopping half of one percent of the total U.S. market. At last count, Suzuki was selling less than 2,000 vehicles per month.
Total sales in 2012 are only 21,188 and Suzuki has ceased imports as of the bankruptcy filing.
Suzuki's primary competition in the U.S. are Nissan and Kia, mostly through small cars and compact SUVs (thik Kizashi and Grant Vitara). The bankruptcy seeks to cease contracts Suzuki holds with more than 200 dealers nationally who are maintaining franchises - a deal which would mirror the dealer cutoff made when General Motors and Chrysler went through their 2009 bankruptcies. The difference here is that most Suzuki dealers are multi-brand dealers who are also selling other makes and brands. This would mean less financial impact than some suffered under GM and Chrysler closures, so it's unlikely that a Saturn-like scenario over Suzuki's pullout would commence.
While the bankruptcy cites debt of $346 million, the company will self-finance the losses, mainly through a repurchase of the motorcycle, ATV and outboard engine operations in America by the Japanese parent company during restructuring. Suzuki has pledged to continue honoring warranties on vehicles already sold and to be sold.