Suzuki‘s US distribution arm has filed for bankruptcy and said it will exit the US auto market.
The firm will, however, continue to sell motorcycles and all-terrain vehicles in the US.
Analysts point to the firm’s low level of car sales in the US market as well as low margins on the cars it sells.
Edmunds.com senior analyst Jessica Caldwell said that she was not surprised by the development.
“No one should be surprised by this announcement, given Suzuki’s lackluster sales performance in recent years,” she said. “The company has had low margins, low-priced cars, and small volume – which is far from the ideal combination. And 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.”
Suzuki in the US said all warranties will continue to be fully honoured and automobile parts and service will be provided to consumers.
The company will continue to sell motorcycles all-terrain vehicles and marine products in the US. The company said it remains “firmly committed” to those product lines. “These divisions are competitively positioned in their respective markets, allowing for long-term growth as economic conditions improve,” the company said.
Suzuki acknowledged that in the US it was “facing a number of serious challenges”. These challenges include low sales volumes, a limited number of models in its line-up, the high yen and high distribution infrastructure costs.
So far, year to date, Suzuki has sold just over 21,000 new cars in the US, making it the third worst performing non-luxury brand (behind Saab and smart).
Edmunds noted that with Suzuki exiting the US car market, the race will be on for automakers to appeal to Suzuki loyalists. According to Edmunds.com’s cross-shopping metrics, KIA and Nissan are the two brands most shopped against Suzuki vehicles on its site.