Suzuki to end car sales in U.S., focus on motorcycles

TOKYO Mon Nov 5, 2012 11:05pm EST

A man is seen through a compartment board with the logo of Suzuki Motor seen on it at the company's showroom in Tokyo August 2, 2012. REUTERS/Issei Kato

A man is seen through a compartment board with the logo of Suzuki Motor seen on it at the company's showroom in Tokyo August 2, 2012.

Credit: Reuters/Issei Kato

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TOKYO (Reuters) - Japan's Suzuki Motor Corp (7269.T) will pull the plug on its unprofitable automobile sales business in the United States after nearly three decades, hurt by a strong yen and a limited choice of vehicles that failed to excite consumers.

Suzuki said on Tuesday it would use a Chapter 11 bankruptcy filing by its U.S. subsidiary in federal court in California to shut down the auto business and to focus instead on sales of motorcycles, All-Terrain Vehicles (ATV) and boats.

The departure of Suzuki ends a 27-year effort to gain traction in the world's second-largest auto market and should most benefit Kia Motor (000270.KS) and Nissan Motor (7201.T), the two brands that car shoppers most compared to Suzuki, according to car shopping website Edmunds.com.

The bankruptcy could allow Japan's No.4 automaker to step away from its contractual responsibilities to the more than 200 dealers who maintain franchises, much as General Motors (GM.N) and Chrysler were able to drop dealerships in their 2009 bankruptcies.

Suzuki models did not catch on in the United States, and the company suffered from a lack of investment in new vehicles. It also struggled from the strong yen that makes it more expensive to export products from Japan.

It sold 21,188 vehicles in the United States through October this year, a 5 percent drop from the previous year at a time when the overall market was up by 14 percent. That made the brand the second worst-selling mainstream brand, behind the Smart micro-car.

Suzuki, which had marketed the Kizashi sedan and the Grand Vitara SUV in the United States, said it would continue to honor warranties during the bankruptcy and did not see the need for outside financing during the restructuring.

American Suzuki Motor Corp, the sole distributor of Suzuki vehicles in the continental United States, will file for bankruptcy with $346 million in debt, of which $173 million is owed to Suzuki group companies, the company said.

The Japanese parent company plans to buy the motorcycle, ATV and outboard engine operations out of bankruptcy and shift its auto business to service existing vehicles on the road. The new U.S. operating unit plans to keep the American Suzuki name, it said.

Suzuki's failed tie-up with Volkswagen (VOWG_p.DE) on vehicle development had raised questions about its commitment to the U.S. market and whether it would be able to invest in a revamped product line-up months before Tuesday's announcement.

Shares of Suzuki sunk in early morning trade but were up 0.38 percent at 1842 yen as of 11:01 a.m., slightly outperforming the Nikkei index .N225 that was down 0.3 percent.

(Reporting by Mayumi Negishi, Kevin Krolicki and Yoko Kubota in Tokyo, Sharanya Hrishikesh in Bangalore; Editing by Steve Orlofsky and Ken Wills)

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Comments (6)
TAFTHORN wrote:
Sad to hear as our ’96 X-90 4wd was one of the most fun cars we have owned over the past 60 years. I sold it to my buddy at 175,000 miles and it is still going strong. However, I realize that their car lineup has not kept up with the crowd lately and if you don’t have high mpg vehicles, you cannot survive any longer in the USA market. Quality and Engineering are not at the top of our buyers must have; witness the fact that Chrylser is selling lots in spite of their annually poor quality record. I own a 2004 Suzuki Intruder 1500 LC and I know of no other motorcycle that is better in the cruiser category, so maybe their decision to concentrate on two wheelers is the smart move.

Nov 05, 2012 8:32pm EST  --  Report as abuse
jscott418 wrote:
Suzuki was always the Yugo of auto makers in the US. You really have to sell a lot of small cars to make a go of it. I never thought their dealer network or model lineup was strong enough to be a single player in the US auto market. Maybe they should have built cars for a bigger player? The real question is who will honor the warranty for the Suzuki vehicles sold? If I just bought one I would be wondering that very thing.

Nov 05, 2012 8:47pm EST  --  Report as abuse
Numb3rTech wrote:
Suzuki automobiles will be missed. I am glad they are keeping the motorcycle division in the United States.

Nov 06, 2012 12:31am EST  --  Report as abuse
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