AMERICAN SUZUKI FILES FOR BANKRUPTCY; SHUTS DOWN U.S. AUTO SALES

November 6, 2012
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There is an obvious question about Team Suzuki in 2013, but for now Suzuki’s motorcycle division plans to keep racing.

According to the L.A. Times: American Suzuki Motor Corp. said Monday that it will file for Chapter 11 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.


2013 Suzuki SX4.

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.

To see the story go to www.latimes.com/business/autos/la-fi-mo-autos-suzuki-bankruptcy-20121105,0,488732.story

OTHER NOTES ON THE SUZUKI BANKRUPTCY

(1) The bankruptcy does not involve the company’s parent, Suzuki Motor of Japan.

(2) In documents filed with the Federal Bankruptcy Court for the Central District of California in Santa Ana, the company estimated that its debts and liabilities ranged from at least $100 million to $500 million. It also said it had 1000 to 5000 creditors. A company can use “chapter 11″   to protect itself from creditors while it reorganizes its business model to recover from financial problems

(3) American Suzuki had assets of $233 million and debt of $346 million as of Sept. 30, according to Chapter 11 documents filed today in U.S. Bankruptcy Court in Santa Ana, California. Revenue for fiscal year ending March 31, 2012, was about $1.04 billion, according to court papers.

(4) The Brea, California-based company said it plans to sell all its assets to NounCo. Inc., a unit of Suzuki Motor Corp. The purchased assets will not include American Suzuki’s auto sales business.

(5) American Suzuki said it had enough cash to operate during the reorganization and intended to honor all car warranties and buyback agreements. It will work with its car dealerships to help them make the transition to parts-and-service operations. In some cases, the dealerships will be closed, it said.

(6) American Suzuki Financial Services is owed $891,000 and is listed as the largest creditor without collateral backing its claim.

(7) The case is In re American Suzuki Motor Corp., 12-22808, U.S. Bankruptcy Court, Central District of California (Santa Ana).

(8) The reorganized company will retain the American Suzuki Motor name, the company said.

(9) American Suzuki will pay its vendors for goods and services delivered on or after the November 5, 2012 bankruptcy filing. Bills from before November 5, 2012, will be subject to the payment schedule of the court.

(10) Suzuki Motor Corporation Chairman Takashi Iwatsuki stated that Suzuki will continue to sponsor Supercross, motocross and road race teams. Without the burden of the auto division, Suzuki’s motorcycle could get a breath of ne wlife.

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