Most Suzuki dealers take buyouts
Photo credit: JAMIE SHORKEY
LOS ANGELES -- All but six U.S. Suzuki dealers have accepted the automaker's buyout offers.
Some who took the offers called them reasonable, but said they regretted that American Suzuki Motor Corp. was leaving the U.S. auto market via a Chapter 11 bankruptcy court filing.
American Suzuki will seek bankruptcy court approval of the settlements at a Dec. 20 hearing.
Suzuki's largest dealers were offered $1 million or more, while the smallest received payments of as little as $25,000, according to bankruptcy court documents.
Jim Shorkey, a Suzuki dealer of nearly 10 years in Irwin, Pa., and Suzuki's fourth-largest dealer, called his $1 million-plus deal "more than fair."
"Suzuki could not be any more gracious or first class as far as how they've handled the scenario," said Shorkey, who also owns a Kia dealership and a Chrysler-Dodge-Jeep-Ram store. "They're making a business decision like a lot of us make. I wish they weren't leaving the country but they are. It is what it is."
Suzuki will pay $42.3 million for the 213 dealer buyouts, court documents show, a modest sum compared with what General Motors paid to cash out Oldsmobile dealerships in the early 2000s. GM said it cost $1 billion to wind down about 2,800 Oldsmobile stores. The Oldsmobile departure, though, was not done in bankruptcy court.
On the other hand, Daewoo provided no buyout money to dealers in its 2002 Chapter 11 filing and departure from the United States.
'I've been through this'
American Suzuki filed for Chapter 11 on Nov. 5. Dealers who agreed to settlements by Nov. 30 were promised 50 percent of their cash settlement within 10 days of signing their deal and were guaranteed to collect the full sum by the end of the bankruptcy case.
The six holdout dealerships can still accept the settlement deal by Dec. 28 and be paid at the case's expected conclusion in March.
Scott Pitman, owner of Suzuki's largest dealership, accepted a $1.7 million offer. Pitman did not respond to a request for comment. He owns Suzuki of Wichita in Wichita, Kan.
Shorkey, a second-generation dealer, knows all about dead brands. He and his father have "had the unique position of being retired AMC, Renault, Eagle, Oldsmobile, Isuzu, Daewoo and, now Suzuki dealers," Shorkey says with a laugh. "You can't get to me. I've been through this."
Shorkey says that his settlement won't cover his investment in his Suzuki store over the past decade.
But, he notes, he made a lot of money over the years with Suzuki, helping him open Kia and Chrysler Group dealerships.
And Suzuki continues to support new-car sales with low-interest financing and customer rebates.
Two sources, who requested anonymity, say that Suzuki is also giving dealers $3,000 per car in dealer cash to help clear inventories.
It was another story, Shorkey said, when Daewoo pulled the plug on its U.S. sales operations in 2002 by filing Chapter 11.
Shorkey said he got no money for his franchise and no incentives to help sell down the 70 to 80 Daewoos on his lot.
"These cars became immediately valueless, in essence. I had to create my own rebates," Shorkey said. "I could stomach losing $30,000 to $40,000 a month to get rid of them. It was all on me," Shorkey said.
Shorkey said he plans to convert his Suzuki showroom into a used-car sales hub for his other two stores. He also plans to continue doing service work for the roughly 7,000 Suzuki owners in his market.
"I have no issues going forward. No regrets," Shorkey said.
No ill will
Peter Spina, owner of Suzuki of Wayne in Wayne, N.J., says he happily accepted his roughly $180,000 buyout, saying Suzuki "really stepped up to the plate."
Spina estimates he has invested about $1 million in his Suzuki dealership over the years in facilities, property costs and other expenses.
"No one will ever be able to pay me back for my investment into my facilities," he said.
Spina says selling Suzukis was "very, very frustrating." The lack of marketing support, leasing, advertising and new product made it difficult to sell cars at reasonable volumes, he said.
"They didn't listen to any suggestions about developing key marketing strategies. It was always, 'No, no no,'" Spina said.
Spina says he stopped ordering new cars two months before Suzuki filed for Chapter 11.
He said he couldn't see how a company could compete in the United States by selling about 2,000 new cars per month, and suspected Suzuki would not be in business for long.
Spina also put his Suzuki dealership up for sale earlier this year but had no bites.
Spina says he holds no ill will toward Suzuki, and now plans to concentrate on his Lincoln dealership. He is a member of Lincoln's dealer marketing subcommittee.
"I'm very happy with the [Suzuki] deal," Spina said. "They really needed to get out of the U.S."
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