Winding Down: The Last Days of American Suzuki

Jim Motavalli

Jim Motavalli | Dec 03, 2012

What happens when an auto brand winds down? That's a topic about which I have a bit of experience-- as an onlooker, anyway. I was an on-duty journalist covering the bankruptcies of Chrysler and General Motors, and applauded the Obama administration’s bailout. Opposing that bailout may have cost Mitt Romney the state of Ohio, and maybe even the election. I also watched the slow and agonizing demise of Saab—a tale fraught with international intrigue, last-minute brinksmanship, fevered bidding and ultimately the death of one of Sweden’s two car companies. We may see Saab live again as an electric car, but it’s a long-shot to say the least.


Want a Suzuki Kizashi? There are bargains to be had. (American Suzuki photo)
Want a Suzuki Kizashi? There are bargains to be had. (American Suzuki photo)

The American Suzuki Motor Corporation story, unfolding now, is completely different. The brand isn’t dying—the motorcycles, ATVs and marine products are still selling well. But the company’s car business is toast.  If you’re not aware of the company’s 2013 lineup, well, that’s part of the problem. The performance-oriented mid-sized Kizashi, the entry-level and nondescript SX4, the Grand Vitara SUV and, of course, the Equator. What, never heard of the Equator? I had to look it up. And, to be frank, when a auto journalist has to look up a model, you're seriously in the ditch. Turns out, it’s a truck. Some of Suzuki's problems here are inherent to all Japanese carmakers, by the way--the strong yen makes it very difficult to be profitable. On high volumes--think Honda and Toyota--it's certainly possible, but Suzuki didn't have those kinds of sales. Sorry, guys.
Suzuki's November sales actually increased 22 percent compared to the same month last year, bringing its' year-to-date numbers to 23,412. And the trend is up—over the Thanksgiving weekend, sales were up 34 percent compared to an average non-holiday weekend. I suspect that buyers smell blood in the water and think they can score amazing deals from the company’s remaining 216 dealers.  It helps that, unlike Saab, Suzuki is a going concern and is honoring its full warranty protection and a big attraction—zero percent financing deals. The last customers who bought new Saabs took the cars as-is.

As it happens, last summer I spent some seat time in a Kizashi Sport and liked the way it handled. The 2.4-liter, 185-horsepower four mated nicely to a six-speed transmission and all-wheel drive. I flung it around. At the same time, it wasn't hugely distinctive, especially in terms of interior styling. To really make it in the market, the company needed a game changer. Oh well, woulda coulda shoulda.  
Overseeing American Suzuki now is not some dyed-in-the-wool car guy, but Chief Restructuring Officer Freddie Reis, a senior managing director at FTI Consulting, which specializes in rescues of underperforming or bankrupt companies. Hey, isn’t that kind of like Bain Capital, in a way? Reis’ counterpart during the Chrysler and GM bailout was car czar Steve Rattner, a straight talker I’ve enjoyed talking to several times. Reis kindly put his duties aside to talk to me about what it really means to wind down Suzuki’s operations in the U.S.

Here's the Suzuki Equator. Turns out, it's a truck. (American Suzuki photo)
Here's the Suzuki Equator. Turns out, it's a truck. (American Suzuki photo)

“We have 5,500 cars and trucks at American dealers, some of which are exclusive and some multi-brand,” the upbeat Reis told me. “And there’s another 1,700 waiting on the docks at American ports—they’re owned by American Suzuki, but haven’t yet been allocated to dealers. There’s a huge clamor for these cars.”
OK, that last part is probably hyperbole, but there are some people selling Suzukis right now. Reis tells me that the company’s number one dealer sold 163 cars in the first two weeks of November and wants 250 more from the docks. I talked to Tim Bedard, the general manager of Burlington Mitsubishi Suzuki in Vermont, and he has 40 Suzukis on the lot and wants more. “We’re expecting a call on how many we can get,” he said. “I’ll take as many as I can get.” His big seller is the all-wheel-drive SX4, which he describes as “the perfect all-season car for New England.”


There goes the Suzuki SX4. They're still selling, but heading off beyond our shores. (American Suzuki photo)
There goes the Suzuki SX4. They're still selling, but heading off beyond our shores. (American Suzuki photo)

Bedard confirms that some dealers are offering great deals on Suzukis right now, including $23,000 AWD Kizashis for less than $20,000 (including available rebates). The $19,000 SX4 has been going for $16,000. “And this is not distressed merchandise,” he said. No, these cars didn’t get submerged by Hurricane Sandy.
By the end of March, Reis says he hopes all the auto inventory will have been moved and the company will be out of bankruptcy. “Old American Suzuki” won’t have any assets at that point, and the other businesses will be grouped into a new entity. Suzuki sells 47 types of cycles, including off-roaders and scooters. It’s interesting to note that there was never much synergy between Suzuki’s cars and its two-wheelers—only two stores in the U.S. sold both.
This isn’t the first Asian automaker to give up on the American market. Japanese brands, or Korean ones for that matter, aren't invulnerable. Remember Daewoo, Daihatsu and Isuzu? Reis worked on Daewoo, too, and he remembers it as a dark time. “There wasn’t any capital for anything,” he said. At least American Suzuki (with $45 million allocated for the task) is going down in a gentlemanly fashion, like those honor-bound officers on the Titanic.

Here's a video news report on Suzuki's exit. The reporter doesn't seem all that broken up, though he admits that the Kizashi had some soul:

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