Citing difficult market conditions due to the economic downturn and the high value of the Japanese yen, automaker Suzuki is giving a final bow to U.S. operations. As part of the pullout, the American division of the Japanese company will begin Chapter 11 bankruptcy proceedings to deal with their $346 million debt.
Company officials say their inability to compete profitably in the compact auto and SUV markets in the U.S., particularly in light of increased safety and fuel regulations, make it unfeasible for them to continue with the American Suzuki Motor Corporation, which began sales in 1963 and was headquartered in Brea, California. The company began their stint in the U.S. with motorcycle sales and slowly widened their scope to cars, trucks and SUVs, using joint ventures with Isuzu and General Motors to give the company a widely recognized brand name.
Suzuki biggest success in the U.S. came in 1986 with the Suzuki Samurai, which was one of the first vehicles to break into the burgeoning SUV market. The sporty, versatile Samurai was popular, gaining impressive numbers in sales and becoming the company’s primary success story. But success was soon tempered with trouble when a Consumer Union study revealed that the sporty Samurai was prone to rollover accidents. Suzuki sued the Consumer Union (the umbrella organization to Consumer Reports publications) and an eight year legal fight ensued. Finally, the two entities settled their dispute, but by then the Samurai’s image was tarnished and the damage had been done. The automaker never fully recovered, despite attempts to revive their sales with a variety of auto models.
Despite exiting the U.S. market, Suzuki is assuring vehicle owners that warranties will remain in effect and will be upheld by the company. However, Suzuki owners might find that resale value of their cars will decrease due to the difficulty of obtaining parts.
Suzuki’s North American subsidiaries in Canada and Mexico will remain open.
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