Suzuki says 213 U.S. dealers accept cash offers to phase out new-car sales
Suzuki dealers who accepted wind-down offers by Nov. 30 were promised half of the cash settlement within 10 days of taking the deal, and were guaranteed to collect the full sum by the end of the company's bankruptcy case.
Photo credit: REUTERS
LOS ANGELES -- American Suzuki Motor Corp. said 213 of its 219 U.S. auto dealers have agreed to wind down new-vehicle sales operations in exchange for cash and maintenance-only contracts.
American Suzuki filed for Chapter 11 bankruptcy protection on Nov. 5, saying it would halt U.S. auto sales and concentrate on selling motorcycles and boat engines.
The company has asked dealers to surrender their franchise agreements in exchange for a cash settlement and new contracts to run Suzuki parts and service outlets.
Freddie Reiss, American Suzuki's chief restructuring officer, said the agreements with 213 dealers cover more than 98 percent of the brand's new-car sales volume, and include Suzuki's 50 highest-volume dealerships.
Dealers who took the deal can continue to provide service and parts, including warranty work.
"We greatly value our relationship with our customers, and it is very important to us that they continue to receive the necessary support from ASMC during and after our restructuring," Reiss said in a statement. "As these agreements demonstrate, we are working within our current U.S. automotive dealer network to help structure a smooth transition from new automobile sales to exclusively parts and service operations."
Dealers who accepted the offers by Nov. 30 were promised half of the cash settlement within 10 days of taking the deal, and were guaranteed to collect the full sum by the end of the bankruptcy case.
Suzuki dealers are selling the remaining inventory in stock.
Last month in the United States, Suzuki sold 2,224 vehicles, up 22 percent from November 2011 and its second-largest monthly gain of 2012. Through 11 months, Suzuki's U.S. sales totaled 23,412 vehicles, down 3 percent from last year.
Incentives, including zero percent financing for as long as 72 months or consumer rebates of $500 to $2,000 for new Suzukis, helped the brand's results last month. Those incentives will continue in December, Suzuki said today. American Suzuki and Ally Financial received bankruptcy court approval last month to continue consumer incentive and dealer floorplan programs.
Suzuki had an estimated 5,000 new vehicles in inventory at U.S. dealerships, plus another 1,500 to 1,700 headed to dealerships, when it filed for bankruptcy. The company plans to continue honoring vehicle warranties through its dealer network, many of which will become Suzuki service and parts-only outlets.
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