Suzuki: Out with a Whimper

Today Japan’s Suzuki announced that it will officially stop selling cars in the United States, and that its North American distributor, Brea, Calif.-based American Suzuki Motor Corp., will file for Chapter 11 bankruptcy protection. The firm will instead concentrate on motorcycles, ATVs, and watercraft – sectors where Suzuki has been very strong for decades. The decision will end more than two decades of Suzuki sales in the United States.

Suzuki has been facing pressure in the North American car market for many years. Although the company produces many desirable small cars for other markets, particularly Japan, India, and Europe, few of those cars were ever brought to the United States. Instead, Suzuki parlayed an early success with the small Samurai SUV (still on sale in some other markets as the Jimny) into a successful 1990s run with small SUVs like the Sidekick and, later, the Grand Vitara. 

Modern crossovers from more popular and well-known brands have severely impacted this part of Suzuki’s marketshare over the past seven years, and its SUV products have been fairly stagnant. At present, the company is only selling the 7-year-old Grand Vitara and the Equator pickup, a re-badged version of the Nissan Frontier. Demand for the larger XL7 SUV collapsed in 2008, and it was cancelled in May 2009.

Meanwhile, Suzuki’s long association with General Motors (Suzukis have been sold under the Geo and Chevrolet brands, among others) brought non-SUVs into the North American lineup, unfortunately sourced from South Korea’s Daewoo, which became part of GM in 2002. While North American customers had previously sampled the Suzuki Cultus (called the Swift here, or the Geo Metro), these larger vehicles were something new for Suzuki and left an unfavorable impression due to quality ills and dynamics that lagged far behind the competition.

In an effort to expand appeal and establish a better image, Suzuki launched the SX4, a small car with some of the attributes of a crossover, in late 2006.  The SX4 was complimented by the launch of a very good Civic/Focus sized entry in late 2009, the Kizashi.  These cars were at class parity, but were not heavily advertised — though Suzuki did have a Super Bowl spot this year, the Kizashi has not had very extensive TV ad support, which is a shame because it is arguably the best vehicle Suzuki has ever made in this class or sold in the North American market.

The rise of Hyundai and Kia has also meant tougher competition for Suzuki, which often competed in the same arena as the Korean brands, but which never offered as large a lineup or anywhere near as extensive a dealer network. 

In other markets, particularly in Asia, Suzuki offers a much more extensive lineup of small cars, many of which have historically been deemed too small for U.S. tastes, such as the Wagon R (a tall, sub-1.2 liter supermini, with more than 5 million units built since 1993 over four generations). Suzuki remains a strong automobile player in Asia, particularly in India, where it established a subsidiary in 1981, Maruti Suzuki, which commands a 40%-plus share of the Indian car market. 

The company cites declining sales, exchange-rate difficulties, the cost of maintaining and expanding its dealer network here, and the high cost of meeting U.S. regulatory requirements as reasons for this decision. 

Suzuki will continue to provide parts and service and honor all warranty claims, but sales of new vehicles will end as soon as stocks are depleted.

The company states that while under Chapter 11 protection, it plans to compensate dealers and transition into providing service and parts will be provided, as well as develop an operational plan for combining ongoing ATV, motorcycle, and watercraft sales alongside continued automotive service into a new entity retaining the American Suzuki Motor Corp. brand.

In the meantime, Suzuki has set up a website for current owners regarding the decision:  http://www.asmcrealignment.com/