December 4, 2012

News & Features

Dealers not surprised by Suzuki's demise

The Virginian-Pilot


A 2013 Ozark 250 quad is among the products that Suzuki dealers will continue to sell in the U.S. (Suzuki)

To Thomas Joynt Sr., who opened his first used-car dealership in Virginia Beach, Va., in 1972, launching Pembroke Suzuki at the same location in May 2008 seemed fortuitous.

Consumers were getting pinched at the pump and clamoring for small cars, a Suzuki specialty. To Joynt, it seemed like perfect timing. Like many Suzuki dealers, he remodeled his showroom to the standard Suzuki look, and hopes were high. It was a step up from the world of used cars into the top tier as a franchised auto dealer.

"This is an opportunity for us to take the business that my father built and take it to the next level," his son said at the time.

But late last year, Joynt sensed that something was wrong. The automaker had stopped national advertising and wasn't updating its products. "This is our 40th year in the car business, and I really felt that Suzuki was having difficulties, so we started switching gears," he recalls.

His intuition was correct.

In early November, American Suzuki Motor Corp. filed for Chapter 11 bankruptcy protection and asked its 220 U.S. auto dealers to surrender their franchises. Its ATV and motorcycle dealers remain unaffected.

Joynt was fortunate. Having cleared out his 2012 models, he didn't order any 2013 models. "How can I carry the brand if they're not going to advertise and update their product?"

Ninety days ago, he took down the Suzuki sign.

Mike Duman, who owns Mike Duman Suzuki in Suffolk, Va., offers similar criticism. "I don't think they invested to merchandise the product properly," Duman says. "It's the manufacturer's responsibility to establish brand awareness, and it's the dealers' responsibility to take that brand awareness to sell the vehicle."

As evidence, Duman cited Honda's recent $1,500 incentives on the Accord, which Suzuki countered with a mere $1,000 on the Kazashi.

Even Suzuki admits that money was one of the factors in its decision to leave the American market.

In its statement explaining the closing of its American arm, the company blamed "unfavorable foreign exchange rates, the high costs associated with growing and maintaining an automotive distribution system in the continental U.S., and the disproportionately high and increasing costs associated with stringent state and federal regulatory requirements unique to the U.S. market."

Suzuki will be offering dealers a cash settlement and agreements to run a Suzuki parts and service business.

Joynt isn't sure he will take it, while Duman intends to. "I have full intention of signing the parts and service agreement," he says.

"They have full intentions of standing behind the vehicles they have sold," Duman says. "They haven't stopped making cars; they're just pulling out of the North American market."
Jeff Bartlett, Consumer Reports' deputy online editor for autos, agrees.

"The good news for owners is that they're only declaring bankruptcy for the U.S. arm," he says. "They're still going to be built and sold in Canada."

This means that parts may be available through the Internet. Still, Bartlett says, over the long haul, parts availability may be more of an issue than getting the vehicle fixed under warranty — with one exception: "For the Suzuki Equator, it's not much of a concern since it's really a Nissan Frontier."

And while you might swing a deal on the leftovers in dealer inventory, such as one of the 14 Suzuki models that Duman has, Bartlett advises that customers should expect diminished trade-in value and, as the years progress, more difficulty in finding unique parts.

In the end, Suzuki's failure in the United States, dealers say, is all about money and the company's unwillingness to spend it to compete effectively.

"To me, it hasn't been a problem with product as it has been their marketing philosophy," Duman says.


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