Suzuki has been forced to pull the plug on its U.S. operations and file for Chapter 11 bankruptcy protection after racking up US$346-million in debt.
American Suzuki Motor Corporation (ASMC), the sole distributor of Suzuki products in the U.S., said a number of issues had led to the company’s demise.
“These challenges include low sales volumes, a limited number of models in its line-up, unfavorable foreign exchange rates, the high costs associated with growing and maintaining an automotive distribution system in the continental U.S. and the disproportionally high and increasing costs associated with stringent state and federal regulatory requirements unique to the U.S. market,” ASMC said in a statement.
Suzuki sold 21 188 vehicles between January and October this year, a 5 percent decrease over the same period in 2011, despite the fact that the U.S. market grew 14 percent overall.
Suzuki says that while it’s automotive operations will be halted, it “remains firmly committed to Motorcycles/ATV and Marine products” in the States. The company will work with its current dealerships to transition from new car sales to exclusively parts and service organisations. The reality, however, is that this is likely to be the end of the road for some.
As for current Suzuki vehicle owners, the Japanese manufacturer said, “consumers will be protected and all warranties will continue to be fully honored”. Suzuki has also said that it will honour all warranties and buyback agreements that are currently in place with financial groups.
The situation in the U.S. is unlikely to affect any of Suzuki’s operations in other world markets, including South Africa, where there is a demand for Suzuki’s small car model range. In fact, Suzuki has recently commissioned new factories in Thailand and is expanding production in India, where the company has around 45 percent market share and has seen sales jump by up to 85 percent in recent months.
Megan MacDonald, Assistant Marketing and PR Manager for Suzuki Auto South Africa, says “…, business as usual in SA. We remain committed to this market and have the backing of SMC (Suzuki Motor Corporation) in Japan.”