American Suzuki bankruptcy plan approved by U.S. court
Company exiting U.S. auto market after 30 years
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In December, 213 of Suzuki's remaining U.S. dealers agreed to wind-down their sales operations in exchange for cash and fixed operations-only contracts. |
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LOS ANGELES -- American Suzuki received bankruptcy court approval of its Chapter 11 reorganization plan to wind down its U.S. auto sales operation and continue selling motorcycles, ATVs and boat engines.
A U.S. Bankruptcy Court in Santa Ana, Calif., approved the plan Thursday, leaving the company poised to complete its bankruptcy restructuring by March 31, according to a company statement.
American Suzuki filed for Chapter 11 bankruptcy protection on Nov. 5.
The plan calls for American Suzuki's motorcycle, ATV and marine engine businesses to exit bankruptcy as Suzuki Motor of America, a new, wholly-owned subsidiary of Suzuki Motor Corp., the corporate parent of American Suzuki.
Suzuki's U.S. auto operations will cease after dealers sell remaining vehicle inventory.
Suzuki dealers sold 1,764 vehicles last month. A Suzuki spokesman contacted Friday did not immediately know how many vehicles remain in stock.
"Today's confirmation is a significant milestone and is one of the last remaining steps in our realignment and restructuring process," Freddie Reiss, American Suzuki's chief restructuring officer, said in a statement Friday.
Suzuki will continue to honor vehicle warranties and most of its 219 auto dealerships will continue to provide parts and service work for customers.
In December, 213 of Suzuki's remaining U.S. dealers agreed to wind down sales operations in exchange for cash and fixed operations-only contracts. Those 213 buyouts were valued at more than $40 million, with Suzuki's largest dealers receiving more than $1 million while its smallest stores accepting as little as $25,000.
A long time coming
With every SX4 subcompact and Kizashi sport sedan it sells, Suzuki inches closer to ending its 30-year sales history in the United States.
Suzuki sold more than 100,000 light vehicles in the United States as recently as 2007. Last year, the Japanese automaker's sales totaled 25,357 vehicles.
Suzuki's U.S. auto sales plummeted following the 2008 financial crisis. The credit squeeze sharply curtailed subprime lending that fueled much of Suzuki's U.S. auto sales over the last decade.
The number of models in Suzuki's U.S. vehicle lineup also shrank as the automaker turned its attention to growing markets outside North America, such as India, where the brand enjoys a larger market presence and its products were better suited.
Suzuki's U.S. dealer body declined from more than 500 dealers prior to the 2008 financial meltdown to about 220 when it sought Chapter 11 bankruptcy.
Pressure peaked in 2011 and 2012 as unfavorable exchange rates between the yen and the U.S. dollar stifled what little profit Suzuki's U.S operation could generate when repatriating earnings back to Japan. Last year, Suzuki slashed marketing and product development outlays, eliminated jobs and reduced employee wages and benefits to cut costs.
"We have kept generating deficits," Osamu Suzuki, the octogenarian chairman of Suzuki Motor Corp., told reporters just days after the U.S. unit filed for Chapter 11 in November. "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."
In his November remarks, made during a quarterly earnings announcement, Suzuki ruled out a return of Suzuki automobiles sales in the U.S. market.
"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."
Hans Greimel contributed to this report.
PRESS RELEASE: Court Approves American Suzuki Motor Corporation's Chapter 11 Plan
BREA, Calif.--(BUSINESS WIRE)--American Suzuki Motor Corporation (the "Company") today announced that the Honorable Scott C. Clarkson of the U.S. Bankruptcy Court for the Central District of California in Santa Ana approved the confirmation of the Company's Chapter 11 Plan, which creditors overwhelmingly accepted. Confirmation of the Plan clears the way for the Company to complete its restructuring process, which is expected to occur on March 31, 2013.
"Today's confirmation is a significant milestone and is one of the last remaining steps in our realignment and restructuring process"
As previously announced, the Plan approved the Company's sale of its Motorcycles/ATV and Marine divisions and Automotive parts and service operation to a newly organized, wholly-owned subsidiary of Suzuki Motor Corporation. The subsidiary will operate in the continental U.S. as Suzuki Motor of America, Inc. and will use the Suzuki products brand name
"Today's confirmation is a significant milestone and is one of the last remaining steps in our realignment and restructuring process," said M. Freddie Reiss, the Company's Chief Restructuring Officer. "During the next few weeks, we will take final steps to implement the Plan, which will allow the Company to sell its Motorcycles/ATV, Marine, Automotive parts and service divisions. This will promote the long-term growth of the Motorcycles/ATV and Marine divisions, as well as providing automotive parts and service through the dealer network."
A copy of the Plan is available at www.omnimgt.com. Additional information regarding Company's business realignment can be found at the following website, www.suzuki.com, or via an information hotline at 1-877-465-4819.
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