Industry News: Suzuki Vehicles Bid Adieu, Files Chapter 11

[William Maley]

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William Maley

Staff Writer - CheersandGears.com

November 5, 2012

We knew the day was coming, just when was the question. Now, that day has arrived. Earlier tonight, American Suzuki Motor Corporation has announced they would be filling for Chapter 11 bankruptcy and close up their automotive division.

"In evaluating its position in the highly regulated and competitive U.S. automotive industry, ASMC determined that its Automotive division was facing a number of serious challenges. These challenges include low sales volumes, a limited number of models in its line-up, unfavorable foreign exchange rates, the high costs associated with growing and maintaining an automotive distribution system in the continental U.S. and the disproportionally high and increasing costs associated with stringent state and federal regulatory requirements unique to the U.S. market. While the decision to discontinue new automobile sales in the U.S. was difficult to make, today’s actions were inevitable under these circumstances. ASMC is dedicated to honoring its commitments to Automotive customers through and after the wind down of new automobile sales in the continental U.S.," said ASMC in a statement tonight.

ASMC says they'll honor warranties, as well as supply parts and service cars through its dealer network. As for dealers, ASMC says they'll help dealers transition from selling vehicles to parts and service operations, and in certain cases, wind-down dealer operations.

Suzuki won't fully disappear from the U.S. market. The company will still be selling motorcycles, all-terrain vehicles, and marine products.

Source: American Suzuki Motor Corporation

William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster.

Press Release is on Page 2

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American Suzuki Motor Corporation (“ASMC”) Announces Restructuring and Realignment to Focus on Motorcycles/ATV and Marine Divisions

ASMC to wind down and discontinue new automobile sales in continental U.S.

Consumers will be protected and all warranties will continue to be fully honored

BREA, Calif.--(BUSINESS WIRE)--American Suzuki Motor Corporation (“ASMC” or “the Company”), the sole distributor in the continental United States of Suzuki Motor Corporation (“SMC”) automobiles, motorcycles, all-terrain vehicles and marine outboard engines, today announced that it plans to realign its business to focus on the long-term growth of its Motorcycles/ATV and Marine divisions. Following a thorough review of its current position and future opportunities in the U.S. automotive market, ASMC will wind down and discontinue new automobile sales in the continental U.S. The Company has determined the best path to achieve this realignment in an efficient and orderly manner is to restructure its operations under chapter 11. The case will be filed in the United States Bankruptcy Court, Central District of California in Santa Ana.

Consistent with ASMC’s long history of standing by its products, owners of Suzuki automobiles will be protected. All warranties will continue to be fully honored and automobile parts and service will be provided to consumers without interruption through ASMC’s parts and service dealer network.

ASMC remains firmly committed to Motorcycles/ATV and Marine products, and these divisions are competitively positioned in their respective markets, allowing for long-term growth as economic conditions improve. 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 and has grown to include ATV and marine products. ASMC remains very proud of its high quality, high performance motorcycle, ATV and Marine products. The Company will continue to bring ASMC products to market, including its full lineup of sportbike, cruiser, touring, scooter, dualsport, motocross, off-road motorcycles and KingQuad ATV line, as well as its flagship DF300AP, state-of-the-art DF20A, and DF15A, among other models. Additionally, ASMC is working to further build its market share through continued investment in additional support for dealers through marketing and advertising activities and sales promotion. Suzuki will continue to have a strong presence as a sponsor of teams in supercross, outdoor motocross and road racing.

In evaluating its position in the highly regulated and competitive U.S. automotive industry, ASMC determined that its Automotive division was facing a number of serious challenges. These challenges include low sales volumes, a limited number of models in its line-up, unfavorable foreign exchange rates, the high costs associated with growing and maintaining an automotive distribution system in the continental U.S. and the disproportionally high and increasing costs associated with stringent state and federal regulatory requirements unique to the U.S. market. While the decision to discontinue new automobile sales in the U.S. was difficult to make, today’s actions were inevitable under these circumstances. ASMC is dedicated to honoring its commitments to Automotive customers through and after the wind down of new automobile sales in the continental U.S.

An Orderly Process to Serve Consumers

ASMC intends to work within its current U.S. Automotive dealer network to help structure a smooth transition from new automobile sales to exclusively parts and service operations, or, in some instances, an orderly wind down of dealership operations. ASMC intends to market and sell its remaining U.S. automobile inventory through its Automotive dealer network. Through and after the restructuring, all warranties will be fully honored and automobile parts and services will be provided to consumers through the dealer network. ASMC intends to honor any automobile buyback agreements that are currently in place with financial institutions.

As part of its chapter 11 filings, ASMC will submit a proposed Plan of Reorganization and Disclosure Statement that specifies how the Motorcycle, ATV and Marine divisions will be maintained and enhanced, and how its relationship with Automotive dealers will be largely transitioned to support consumers and dealers through continued parts and service operations. SMC or its nominee intends to purchase ASMC’s Motorcycle, ATV and Marine businesses, as well as the Automotive service operation responsible for parts and warranties, through a new U.S. subsidiary that will retain the ASMC brand name.

ASMC believes it has sufficient cash on hand to operate its businesses during the restructuring. If necessary, ASMC will request permission from the Court to borrow additional funds from SMC needed during the restructuring.

Honoring Commitments

ASMC intends to operate its Motorcycles/ATV and Marine businesses as usual and is dedicated to completing the realignment process as smoothly and efficiently as possible. ASMC will continue to fully stand behind all of its products and honor all warranties from these divisions. ASMC is working with GE Capital’s Retail Finance and Commercial Distribution Finance businesses to continue providing motorcycles and ATV consumer financing programs and motorcycle, ATV and marine dealer inventory financing respectively. The Company expects existing agreements with other dealer and consumer financing providers to continue as well.

ASMC has filed a series of first day motions requesting approval to continue paying employee wages and benefits in the ordinary course, offering dealer incentives and payments under customer warranties. ASMC also expects to pay vendors in the normal course of business for goods and services delivered on or after its November 5, 2012 filing. Payments for goods received before ASMC’s November 5, 2012 filing will be made in accordance with the chapter 11 procedure.

SMC, the 100 percent interest holder in ASMC, is not a debtor in the chapter 11 filing.

ASMC’s legal advisor on the restructuring is Pachulski Stang Ziehl & Jones LLP, and its financial advisor is FTI Consulting, Inc. Nelson Mullins Riley & Scarborough LLP is serving as special counsel on automobile dealer and industry issues. Further, ASMC has proposed the appointment of M. Freddie Reiss, Senior Managing Director at FTI Consulting, as Chief Restructuring Officer, and has also added two independent Board members to assist it through this period.

Additional information regarding ASMC’s business realignment can be found at the Company’s website, www.suzuki.com, or via an information hotline at 1-877-465-4819.

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[bobo]

Sad, but it's too hard for the little guys to compete here. They've their hits and misses. You have to feel a little bad for anyone who's bought one recently and the instant drop in resale value.

[Robert Hall]

I bet Mitsubishi will be next to leave. I hope Mazda can hang on, though..they seem to actually have cars that are fun to drive...

[smk4565]

I also think Mitsubishi is next, I don't know how they are still alive. The industry is just too competitive and Suzuki and Mitsubishi don't build cars that can compete. I don't think they will be missed.

[FAPTurbo]

LOL!

http://www.sadtrombone.com/?play=true

[Intrepidation]

I guess Reg didn't sell enough Kizashis.

Would have though Mitsubishi would have beat them to the punch though.

[regfootball]

ouch! out in time I guess!

really is too bad, though, some decent iron came outta there.

and the new crossover was to arrive next summer. there were far too many issues to list that were impediments..........

there is so much involved on the marketing and finance end there determines who gets the car sales these days......

edit, this does not say 'permanently cease automotive sales'........

two years from now after cooking the books maybe they come back for some reason or another.........

i wonder just how badly the VW mess killed them.....

[daves87rs]

I bet Mitsubishi will be next to leave. I hope Mazda can hang on, though..they seem to actually have cars that are fun to drive...

Mitsu will be next....even selling 5k cars a month is pretty sad....and if the economy keeps moving slow, slow might mazda-though I've seen quite a few new ones on the road lately....

[riviera74]

Mitsu will be next....even selling 5k cars a month is pretty sad....and if the economy keeps moving slow, slow might mazda-though I've seen quite a few new ones on the road lately....

Selling 5000 cars in a month can work . . . . if you are Bentley or Rolls-Royce. Goodbye Suzuki. Please take Mitsubishi with you.

[G. David Felt]

daves87rs, on 05 November 2012 - 10:12 PM, said:

Mitsu will be next....even selling 5k cars a month is pretty sad....and if the economy keeps moving slow, slow might mazda-though I've seen quite a few new ones on the road lately....

Selling 5000 cars in a month can work . . . . if you are Bentley or Rolls-Royce. Goodbye Suzuki. Please take Mitsubishi with you.

A shame the pride of the japanease keeps them from realizing that a bunch of little companies no longer works in todays global economy.

Mistubishi will be next followed by Mazda I believe.

In retrospect, they should have realized over the great 2nd Depression of the US from 2007 till now that the best way to survive was to merge.

Mistubishi, Suzuki, and Mazda. Great portfoloio of product that would of been a more complete selling option.

Think of the Name

MistSuDa or MSM

Could have been the Joint new name.

How about buying a MistSuDa 5 or a MistSuDa Kizashi.

RIP to these guys whos ego was as big as the world but in reality smaller than a tick.

[Cory Wolfe]

Suzuki will be missed. The Kizashi is evidence that they are clearly capable of making an excellent car. Unfortunately, it was too little, too late after their disastrous flirt with Daewoo.

[G. David Felt]

Suzuki will be missed. The Kizashi is evidence that they are clearly capable of making an excellent car. Unfortunately, it was too little, too late after their disastrous flirt with Daewoo.

WOW, just think if Suzuki and Daewoo merged into one car.

Can you say Daeuki?

I knew you could.

[regfootball]

anyone who tied up with GMDAT and then VW would die on the vine....