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
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.