American Suzuki heads for the exit

Suzuki Kizashi

Suzuki’s Kizashi was its last significant initiative in North America.

With its announcement of plans to “realign its business to focus on the long-term growth of its Motorcycles/ATV and Marine divisions” American Suzuki writes what would appear to be the last chapter of its automotive division in the U.S. For hundreds of employees and thousands of customers that last chapter, regrettably, is Chapter 11. And while the observation is tangential to the core element in the news, there are probably few better measures of bankruptcy abuse than when the North American division of a flush multinational claims to have more liabilities than assets in U.S. bankruptcy court.

Like so many business histories written since 2008, the downward spiral of American Suzuki followed a seemingly long and winding road. The seeds of its downturn, however, didn’t begin with the Great Recession. Rather, they began with an ill-advised strategy of rebranding Korean Daewoos (whose production was controlled by Suzuki stakeholder General Motors) and selling the subpar product through a marginal dealer network via subprime financing. Initial results were glowing, with Suzuki reaching 100,000 sales in both 2007 and 2008. However, with the subsequent economic downturn and virtual elimination of subprime credit things became decidedly less rosy for both American Suzuki and its cobbled-together dealer network. A distributor which had bulked up to handle some 10,000 sales a month saw that number reduced by roughly 60% over the next two years. And the ugly just got uglier.

Of course, Suzuki isn’t the first import car company to have faced headwinds. With the abandonment of its Beetle coupled with an historic devaluation of the dollar, Volkswagen saw its sales plummet in the ‘70s and ‘80s. And Subaru, whose monthly sales have typically set new records throughout the downturn, was barely an automotive asterisk during those same decades. Our own area was ‘blessed’ with a Volkswagen/Subaru dual during this period, one the owner divested himself of as quickly as he could. (Notably, that same dealer elected to cast his automotive fate with a Mitsubishi franchise; cue Doris Day’s Que Sera Sera…)

Had American Suzuki’s parent, Suzuki Motor Corporation, been fully committed to the U.S. market the missteps might have been corrected. The core Suzuki products, beginning with a redesigned Grand Vitara for 2006, an all-new compact – the SX4 – in 2007 and the Suzuki Kizashi in 2010, were quality competitors in their respective segments. To be sure, they weren’t swinging (given their distinctive specification) for the volume fences, but all were great choices for those wanting something other than the far-more-mainstream RAV4, Corolla or Accord. Regrettably, even with the discontinuation of the Korean products (Reno and Forenza) the damage had been done, the verdict essentially rendered.

Reliable indicators of that verdict included the elimination of a public relations department (of which this writer was a one-time member), and no designated replacements – of personnel or product – as its product planning team headed for the exits. Today a couple of hundred capable, talented people at the company’s headquarters in Brea, California are hanging their heads, while those enthusiasts appreciative of something different in the American marketplace should be shaking theirs.