Suzuki pulls out of U.S. car market
- Article by: HIROKO TABUCHI
- New York Times
- November 6, 2012 - 8:19 PM
TOKYO - For all of Suzuki's tough talk about its "bush-busting" Samurai off-roader, the Japanese automaker never made it big in the U.S. Its cars were too small, its safety record iffy and its branding a bit too comical (Suzuki Sidekick, anyone?).
So it came as little surprise to most analysts when Suzuki announced late Monday that it would stop selling automobiles in the U.S. and put its American unit into Chapter 11 bankruptcy.
Suzuki's decision to pull out of the U.S., whose market is dominated by larger models, is a sensible step to focus on its strengths, said Koji Endo, an auto industry analyst and managing director at Advanced Research, an equity research firm in Tokyo. The strong yen also made it difficult to make a profit by manufacturing cars in Japan and shipping them to the U.S., he said.
"Basically, Suzuki does not need the United States, and the United States didn't need Suzuki," Endo said.
Still, despite Suzuki's retreat in North America, the company has made spectacular inroads into emerging markets over the last decade. The low-cost, compact cars sold by Suzuki's India unit has the top market share in that fast-growing market, and the automaker also has a growing presence in Southeast Asia.
The American Suzuki Motor Corp., the sole distributor of Suzuki vehicles in the U.S., filed for Chapter 11 bankruptcy on Monday with $346 million in debt, the company said. In a statement, Suzuki said that various challenges led to its withdrawal from the U.S. market, including low sales volumes, the limited number of models in its lineup and unfavorable foreign exchange rates.
Suzuki also blamed "the high costs associated with growing and maintaining an automotive distribution system in the continental United States," as well as "the disproportionately high" costs associated with meeting increasingly stringent state and federal regulatory requirements.
The company said it would sell its remaining inventory through its dealer network, honor existing warranties and continue to supply replacement parts for its vehicles. The company also intends to continue selling motorcycles, all-terrain vehicles and marine products in the U.S.
Experts said that Suzuki was likely to concentrate its managerial resources on strengthening its grip on markets like India, where it has been hit by worker strife in recent months.
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