News Column

Suzuki Quits US; Will Mitsubishi Be Next?

Nov. 7, 2012

Brent Snavely

Suzuki's decision to stop selling cars in the U.S. comes as little surprise to automotive industry experts and raises questions about the ability of other automakers with small volume, such as Mitsubishi, to compete.

Suzuki sold just 21,188 cars and crossovers over the first 10 months of this year. Toyota sells about that many Corollas every month.

"Suzuki has been on a downward slope for the last several years," said Aaron Bragman, automotive analyst for IHS Automotive. "They were hitting about 100,000 units annually in 2006 and 2007 but the products they have introduced lately really didn't resonate with anybody."

The Japanese automaker, which imports all of its vehicles, also was hurt by unfavorable currency exchange rates between the dollar and the yen.

Suzuki said Monday that Brea, Calif.-based American Suzuki Motor Corp. will file for Chapter 11 bankruptcy. The company will continue selling motorcycles, ATVs, and marine parts and accessories in the U.S.

The automaker said it realized that it would not be able to make a profit on its cars in the foreseeable future because of its low sales volume and currency exchange rates and wanted to shift its full attention to its other products.

"Unlike with exotic or luxury brands, it's nearly impossible over the long term to sustain a brand on such little volume when you don't have a healthy margin," said Jessica Caldwell, an industry analyst for Edmunds.com.

Suzuki has at least three dealers in Michigan, including LaFontaine Suzuki in Dearborn. LaFontaine could not be reached for comment.

Suzuki's demise also shows how competitive the U.S. auto industry has become as automakers such as Hyundai, Kia and Volkswagen have improved the quality and design of their models.

Bragman said Suzuki's exit will cause industry watchers to wonder whether Mitsubishi is next, even though it has some advantages that Suzuki lacked.

Through October, Mitsubishi's sales have declined 28.7% to 50,103.

Mitsubishi at least has a manufacturing plant in Normal, Illinois where it builds the Outlander Sport, Galant and Endeavor. That plant can help Mitsubishi survive as long as the automaker can sell a high enough volume to keep the plant operating profitably.



Source: (c)2012 the Detroit Free Press. Distributed by MCT Information Services.