Court OKs Am. Suzuki's Ch. 11 plan
LOS ANGELES -- With every new-car sale, American Suzuki Motor Corp. inches closer to ending its nearly 30-year history of selling automobiles in the United States.
On Feb. 28, a U.S. Bankruptcy Court in Santa Ana, Calif., approved American Suzuki's Chapter 11 reorganization plan. Suzuki's U.S. auto sales business will end when dealers sell their remaining vehicles.
The company filed for Chapter 11 bankruptcy protection on Nov. 5 to wind down its auto sales business. It will continue selling motorcycles, all-terrain vehicles and boat engines. Suzuki will honor vehicle warranties, and most of its 219 U.S. auto dealerships will provide parts and service work.
Suzuki now says its motorcycle and other businesses are poised to exit bankruptcy by March 31 as Suzuki Motor of America, a new, wholly owned subsidiary of Suzuki Motor Corp., the corporate parent of American Suzuki.
In December, the owners of 213 of Suzuki's remaining U.S. dealerships 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 dealerships receiving more than $1 million and its smallest stores accepting as little as $25,000.
In the bankruptcy case, Siltanen & Partners Advertising of El Segundo, Calif., Suzuki's ad agency since 2008, filed a claim seeking about $2.6 million. It accepted a settlement worth $1.5 million.
Suzuki sold more than 100,000 light vehicles in the United States as recently as 2007. Last year, the Japanese automaker's U.S. sales totaled 25,357 vehicles.
Suzuki's U.S. auto sales plummeted after the 2008 financial crisis. The credit squeeze sharply curtailed subprime lending, which had fueled much of Suzuki's U.S. auto sales over the preceding 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.
Suzuki's U.S. dealership roster declined from more than 500 before 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.
In his November remarks, made during a quarterly earnings announcement, Osamu Suzuki, the chairman of Suzuki Motor Corp., ruled out a return of Suzuki auto 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
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