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So Long, Suzuki

Japanese maker abandoning US market.

by on Nov.06, 2012

The failure of the Kizashi sedan seemed to seal American Suzuki's fate.

In the face of steadily falling sales, American Suzuki Motor Corporation of Brea, Calif. is going to stop selling cars in the United States.

The American subsidiary of Japan’s Suzuki Motor Co. has filed for bankruptcy in the U.S. District Court for the Central District of California as a prelude to withdrawing from the U.S. automobile market. Suzuki’s withdrawal continues the reduction in the number of brands sold in the U.S. that began in 2009 when Isuzu left. Saab collapsed last year and now Suzuki joins the list.

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By winding down its U.S. automobile marketing business, Suzuki plans to concentrate on its motorcycle, ATV and marine products businesses. As a result, SMC’s distribution of its automobiles in the continental United States will be discontinued. The company sold only 2,000 passenger cars to American consumers in October and said it had lost more than $95 million during the past two fiscal years, according to the bankruptcy filing.

“When considering its long-term business plan, ASMC recognized that it will be unable to maintain profitability with respect to its automobile marketing business, taking into account various factors such as economic conditions including the currency exchange rate, market trends, the models of Suzuki automobiles sold in the U.S. which are primarily small cars, ASMC’s projected sales volume and the stringent U.S. environmental and safety regulations,” Suzuki said in a statement.

“However, ASMC also recognized a possibility that its motorcycle, ATV, marine products businesses could remain profitable and experience increases in sales. Thus, ASMC decided to wind down its unprofitable automobile marketing business and redirect all of its operating resources to its motorcycle, ATV and marine products businesses, to expand these businesses and improve profitability efficiently in all sectors where the prospects for profit are good,” the company said.

The bankruptcy filing will smooth the transition of the current U.S. automobile dealer sales network into a network of authorized service and parts dealers to allow the company to fully honor all warranties and make service and parts available to customers nationwide after winding down its automobile marketing business, the maker said.

Prior to the bankruptcy filing, American Suzuki had about 400 dealerships across the U.S., primarily in urban areas.

In its bankruptcy filing Suzuki said it owed $346 million U.S. dollars, including $173 million to its parent, Suzuki Motor Corp.

Speculation Suzuki was preparing to leave the U.S. began last year after Suzuki’s top management basically nixed plans to add to its U.S. product line-up in and reduced the passenger car business to an adjunct of its motorcycle line.

The maker began its final decline when the oddly named Kizashi, a well-reviewed midsize sedan, failed to gain traction in the marketplace several years ago.

Suzuki’s top management believed the company holds a much stronger position in Asia where it could count on sales from its substantial operations in India and Southeast Asia. However, it has been locked in a legal battle with Volkswagen over an aborted joint venture aimed at growing their joint stake in the Indian market.

The departure of American Suzuki continues a slow downsizing trend among Japanese importers. The question many analysts continue to ask is whether Mitsubishi can maintain its presence in the States.  The maker suffered serious losses over the last decade after a series of flawed marketing efforts and the launch of some lackluster products. But Mitsubishi officials insist they can make a comeback and have underscored their commitment to the U.S. market with the naming of a new U.S. chairman – the American subsidiary’s first since 2007.

 

 

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