Chairman blames exchange-rate losses, lineup
TOKYO -- Suzuki Motor Corp. Chairman Osamu Suzuki defended his decision to end U.S. auto sales saying his small-car lineup was a bad match for the market and ravaged by exchange rate losses.
Speaking to reporters Friday at his company's quarterly earnings announcement, he said executives had been grappling with what to do in North America since the 2008 financial crisis.
Not only did demand collapse, he said, but the yen began its rapid rise against the dollar, pinching margins on exports.
"We have kept generating deficits," Suzuki said. "Mid- to small-size makers like us lack the r&d capability for a full lineup. We tried to make our business mainly by manufacturing small models, but that didn't necessarily enable us to make our products in accordance with demand in America."
On Nov. 5, Suzuki said it was pulling out of the U.S. auto market and putting its American distributor into Chapter 11 bankruptcy, after years of sliding sales and regional losses.
Osamu Suzuki said the Japanese carmaker was still weighing how to handle operations in Hawaii and Canada. Those businesses were not affected by the Nov. 5 filing. But he ruled out returning to the United States.
"Taking into account the issue of the exchange rates and the fact that we have no future outlook for making large vehicles, I think re-entry would be extremely hopeless," he said.
He likened filing for Chapter 11 bankruptcy to the quick-rinse bankruptcy process that General Motors and Chrysler went through in 2009. Filing that way may help Suzuki offload dealers more quickly.
"In the U.S., it is a fairly orthodox way of handling this kind of problem," said the 82-year-old patriarch.
"We wanted two things: One is to pull out of the vehicle business; the other is to continue the ATV and outboard engine businesses," Suzuki said. "To realize these two things simultaneously and minimize loss and trouble for the American people, we filed for Chapter 11."
Suzuki declined to say how much the company had set aside to compensate U.S. dealers, or what kind of financial impact the U.S. bankruptcy would have on overall earnings.
Suzuki's comments came as his company reported a 10 percent increase in global net income to ¥41.9 billion, or about $537.9 million, in the April-September fiscal first half, compared with a year earlier. Worldwide sales, led by Asia, climbed 6 percent to 1.275 million vehicles in the six-month period.
Operating profit increased 1 percent to $848.5 million, while revenue advanced 0.6 percent to $15.8 billion.
In North America -- Suzuki's smallest market by far -- sales slid 6 percent to 15,000 vehicles in the fiscal first half.
But the region swung to a regional operating profit of $9.3 million, from an operating loss of $3.9 million the year before.
You can reach Hans Greimel at firstname.lastname@example.org. -- Follow Hans on