American Suzuki says demand for autos rises after bankruptcy
American Suzuki’s November auto sales rose 22 percent to 2,224 units, so its U.S. dealers wanted some extra cars to sell before they shut down.
WILMINGTON, Del. (Bloomberg) -- American Suzuki Motor Corp., the U.S. distributor of Suzuki cars and motorcycles, will import about 2,500 more autos to meet demand that jumped after the company filed for bankruptcy with plans to end U.S. sales.
"When we told dealers, 'We have one last chance,' the dealers said, 'Go get them,'" M. Freddie Reiss, the company’s chief restructuring officer, said Thursday in an interview. "No more cars are being manufactured" for the U.S. market, he said.
American Suzuki’s November auto sales rose 22 percent to 2,224 units, the company said this month. Dealers reported that sales also climbed in December, mainly because of generous incentives and a seven-year warranty program, Reiss said. Even with the spurt in sales, the company still can’t justify staying in the U.S. auto market, he said.
Japan's Suzuki Motor Corp. put the distributor into bankruptcy Nov. 5 to end losses in the U.S. market, avoid the costs of federal regulations and shut down a sales network in which 69 percent of dealers sell fewer than five cars a month.
Through November, Suzuki sold 23,412 vehicles in the United States, down 3 percent from the same 11 months of 2011. The SX4 small crossover has accounted for about half of Suzuki's sales this year with 11,809 units sold.
Suzuki's U.S. sales last topped 100,000 in 2007.
Dealers will sell their remaining cars and continue to provide parts and warranty work and other repairs, the company said. American Suzuki plans to reorganize its motorcycle, boat and all-terrain vehicle business and make sales through separate dealers, according to court papers.
On Thursday, the company was in U.S. Bankruptcy Court in Santa Ana, Calif., where it won permission for three motions designed to help it shut down the auto-dealer network and reorganize the motorcycle and boat business.
U.S. Bankruptcy Judge Scott Clarkson approved the company’s request to borrow $50 million more in order to import the additional cars from Suzuki Motor. Clarkson also approved a settlement with dealers intended to avoid litigation over the shutdown.
Suzuki Motor had asked its car dealers to voluntarily cancel their existing franchise agreements in exchange for half of what they are owed immediately and the rest through the normal bankruptcy process, according to court papers.
American Suzuki owes its parent about $152 million, according to court records. To help guarantee that dealers who settled will be repaid everything owed to them, Suzuki Motor agreed to subordinate that debt, according to court documents.
American Suzuki also won permission to sell its motorcycle, boat and ATV distributorship to an affiliate of Suzuki Motor for $95 million barring a higher bid. Clarkson overruled an objection from the U.S. Trustee, the arm of the U.S. Justice Department that monitors corporate bankruptcies, which argued that Suzuki Motor’s involvement would discourage competing bidders.
Philip Nussel contributed to this report.Contact Automotive News