After Samurai rollover allegations, Suzuki never fully recovered in U.S.
LOS ANGELES -- American Suzuki Motor’s automotive run in the U.S. market began in 1985 with its Samurai subcompact SUV. And although the Samurai was a smash hit out of the gate, subsequent bad press and legal snarls derailed the brand permanently.
Suzuki had been selling motorcycles in the U.S. since 1963, riding the crest of consumer sentiment for affordable transportation. That idea continued on the automotive side, when its imitation of the Jeep Wrangler was an instant success. The Samurai replaced the VW Cabriolet as the must-have car for high school girls. The Suzuki brand was red hot -- much to Detroit’s consternation.
With such an auspicious launch, in 1988, Suzuki added the Sidekick compact SUV and Swift subcompact hatchback. Suzuki joined with General Motors at the CAMI plant in Ingersoll, Ontario, to build vehicles in Canada.
However, also in 1988, the Samurai’s handling tendencies fell under scrutiny of Consumers Union, which said the SUV was prone to rolling over in a splashy investigative article published in Consumer Reports magazine. Federal investigators and plaintiffs' attorneys piled on, and Samurai sales swooned.
Suzuki never really recovered. Sales fell from their 1987 peak of 83,334 to 20,504 in 1990, despite a broader product line. Samurai sales fell from about 72,000 a year before the report to about 2,000 after. It didn’t seem to matter that American Suzuki won three of four jury trials in which plaintiffs alleged Samurai rollovers were at fault.
Suzuki also filed a libel suit against Consumers’ Union, which was finally settled out-of-court in 2004. Although Suzuki received no monetary compensation, the settlement required Consumers Union to clarify its original article, more than a decade later.
Meanwhile, Suzuki kept trying, gamely, to make a successful restart in the U.S. In 1995, the lineup expanded with the addition of the Esteem compact sedan and X-90 two-seat roadster.
But in 2004, parent Suzuki Motor’s intertwined relationship with General Motors began backfiring. American Suzuki stopped selling sedans made in Japan, instead rebadging Korean-built Daewoos also made for GM. The trio of Daewoo sedans -- the Reno, Forenza and Verona -- were of shoddy quality and contributed greatly to plummeting J.D. Power scores.
Despite the reduced quality perception, American Suzuki executives brashly predicted 200,000 annual sales in the near future. They never came close. Suzuki did reach 100,000 sales for the first time in 2006, and again in 2007, mostly on consumer-friendly finance deals on the rebadged Daewoos.
But the rising value of the yen, combined with the recession, put the relatively small-time manufacturer on the rocks in the U.S. market. Unable to properly fund product development, Suzuki began compromising on vehicles sold here.
Sales swooned due to the shrunken product lineup, skimpy marketing and an ineffective captive finance company. Production at CAMI ceased.
The final hope for the Suzuki brand was the made-in-Japan Kizashi sedan, which competed against the Camry and Accord on price, even though it was the same size as a VW Jetta.
In an interview at the 2009 Tokyo Motor Show, Suzuki scion Toshihiro Suzuki, the automaker’s chief director of overseas sales, described the Kizashi as “not necessarily our last chance.” But he did acknowledge that poor sales for the sedan would force Suzuki to re-evaluate its position in the United States.
Despite the largest marketing launch in Suzuki history, the Kizashi flopped. From its 2007 high of 101,884 units without Kizashi, American Suzuki sales fell to 23,994 units in 2010, of which just 6,138 were Kizashis. Sales were flat last year. Shutting down American operations likely seemed a fait accompli.
Through October, Suzuki sold 21,188 vehicles in the U.S., a 5 percent drop over the same period last year in a market that has grown by 14 percent.
“ASMC determined that its automotive division was facing a number of serious challenges,” the company said in a statement tonight.
“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.”
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