American Suzuki to file for bankruptcy, end U.S. auto sales

By Jerry Hirsch

Nov. 5, 2012 12 AM PT

American Suzuki Motor Corp. said Monday that it will file for bankruptcy protection and will stop selling cars in the U.S.

The Brea-based company plans to restructure so that it can continue to sell Suzuki motorcycles, all-terrain vehicles and marine outboard engines.

“The realignment is intended to better position ASMC for long-term success and is a return to the company’s roots in the U.S. market, which began with motorcycles,” the company said in a statement.

The Chapter 11 restructuring petition will be filed in U.S. Bankruptcy Court in Santa Ana.

Suzuki started selling cars in the U.S. back in 1985. It is best known for the Samurai sport-utility and the Swift compact car.

But the company has been almost an afterthought in U.S. auto sales in recent years. Through the first 10 months of this year, the company has sold roughly 21,000 vehicles in the U.S., about 1,000 less than last year.

Its best-selling vehicle this year is the SX4, a small crossover.

Suzuki said that its “automotive division was facing a number of serious challenges,” including the low sales volume, a dearth of models, the unfavorable exchange rate between the U.S. dollar and the Japanese yen, the cost of the maintaining a dealership network and the regulatory environment for the automotive industry in the U.S.

Analysts said the company had trouble competing in the U.S.

“I don’t think it’s a big surprise given their lackluster sales performance of recent years. They have have low margin, low-priced cars with small volume. That’s far from the ideal combination,” said Jessica Caldwell, an analyst with auto information company Edmunds.com.

“Over the long term it’s hard to sustain a brand on such little volume when you don’t have a healthy margin like exotic or specialty brands,” Caldwell said.

Suzuki said it will continue to honor warranties and will provide automobile parts and service through its parts and service dealer network.