Officials from Suzuki’s top-selling U.S. dealership said Tuesday their business will prevail even when they no longer have any new Suzukis to sell.
Scott Pitman and Brandon Steven said they expect their dealership, Suzuki of Wichita, at 11610 E. Kellogg, to continue selling the Japanese automaker’s new cars and trucks for the next few months.
American Suzuki Motor Corp., the U.S. arm of Japan-based Suzuki Motor Corp., announced late Monday that it would file Chapter 11 reorganization bankruptcy. As part of its restructuring, the company will no longer sell its automobiles in the U.S.
Suzuki gave no time frame on when sales in the U.S. would end in a news release on Monday. American Suzuki said in the release that its warranties will be honored and service and parts for its cars will continue to be provided through a dealer network in the U.S.
The company will continue selling its ATVs, motorcycles and boat motors in the U.S. after the bankruptcy, it said.
Japan-based Suzuki Motor Corp., intends to buy the American subsidiary’s remaining businesses and automotive service operation. The reorganized company will retain the American Suzuki Motor name, the company said.
Pitman, operating partner and president of Suzuki of Wichita, and Steven, a partner in the dealership, said in an interview Tuesday that their operation will continue as a dealership, be it used cars or with another new car franchise. Pitman said for every one new Suzuki his dealership sells, it sells two used cars. It would be able to stand on its own just selling used cars, he added.
“We’ve used Suzuki as a tool to sell cars, but still people buy from us,” Pitman said. “None of that changes. We’ll switch that over to used cars and … down the road we’ll be looking for opportunities. We have the desire and drive to successfully represent a new car manufacturer. We will exist. We just have to reinvent ourselves.”
He and Steven said their dealership will continue to provide warranty service and parts for customers.
For three years running, the dealership has had the most sales of any Suzuki auto dealer in the country. Last year, it sold 928 Suzuki cars and trucks.
The dealership employs about 80 people, Steven said.
Steven said he and Pitman learned of Suzuki’s plans late Monday.
“We’re going to go to L.A. next week to meet with (American Suzuki officials),” Steven said. American Suzuki is based in Brea, Calif.
American Suzuki said it was exiting the U.S. car business for a number of reasons.
“These challenges include low sales volumes, a limited number of models … unfavorable foreign exchange rates, the high costs associated with growing and maintaining an automotive distribution system in the continental U.S.,” the company said in its release.
Suzuki also cited high and increasing regulatory costs in the U.S.
Jessica Caldwell, a senior analyst with auto industry information provider Edmunds.com, said Suzuki’s action was not surprising.
“I don’t think it really comes as a shock,” Caldwell said. “It was more a matter of when than if.”
American Suzuki sold 2,023 vehicles in October, which was up 5 percent from the same month last year. Its Grand Vitara sport utility vehicle posted a 64 percent jump in sales last month, although American Suzuki did not say how many of them were sold. In May, the last month it provided a breakdown of its sales, it moved 474 Grand Vitaras, while its biggest seller was its SX4 small crossover, of which 1,101 were sold.
Caldwell said she thinks Suzuki had a tough time breaking into the U.S. market because of larger and more established competitors, such as General Motors, Ford, Toyota and Honda. The financial crisis of 2008 and the recession made it even harder for Suzuki to gain ground, she said.
According to research from Edmunds, Suzuki had less than 1 percent market share in 47 states and the District of Columbia. Only in Kansas, West Virginia and Vermont did it have slightly more than 1 percent share of the market, based on retail registrations from January to August of this year.
She said smaller car brands are getting squeezed by larger brands in the U.S. because they don’t have large distribution systems, they lack economies of scale, and they may have a limited selection of models to offer consumers.
Pitman and Steven said to expect Suzuki to offer big discounts on its existing inventory of new cars and trucks.
“They’re going to incentivize an already great car even more,” Steven said. Pitman said he had about 235 new Suzukis on his lot on Tuesday morning.
Whether steeper discounts and incentives will be enough to sell all of Suzuki’s U.S. inventory remains to be seen, said Edmunds’ Caldwell.
“People have gone to those brands (that are discontinued) because they knew they would get a deal,” she said. And there will be those buyers who won’t buy because of Suzuki’s U.S. exit, Caldwell said..
Contributing: Associated Press