Suzuki aims for 25 percent growth in 2000
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January 24, 2000 12:00 AM

Suzuki aims for 25 percent growth in 2000

MARK RECHTIN
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    LOS ANGELES - Fresh off a 33 percent sales spike in 1999, American Suzuki Motors Inc. is projecting another 25 percent increase this year, to about 62,000 units. Even more growth is forecast in 2001, when a new six-passenger sport-utility arrives.

    Gunning for a major sales increase in a market expected to slump by 5 percent or so would be an enormous challenge for anyone. But for Suzuki, one of the smallest players in the U.S. market, the odds seem insurmountable.

    Given the virtual invisibility of the brand, save for some lingering negative perceptions from the 1980s Samurai rollover controversy, Suzuki has its work cut out for it.

    But Gary Anderson, American Suzuki senior vice president, is confident.

    Suzuki dealers have done well with the new Vitara and Grand Vitara mini-sport-utilities that replaced the Sidekick and Sidekick Sport last year. Vitara and Grand Vitara sales rose 299 percent in 1999 over the old model.

    What particularly pleases Anderson is that 80 percent of Grand Vitara buyers had never considered buying a Suzuki before.

    From those gains, Suzuki will take its biggest product test early next year with the launch of its largest vehicle to date: a compact sport-utility that finally will put Suzuki in the same league as the Nissan Xterra, Mazda Tribute and Isuzu Rodeo.

    Anderson said the price jump to the new sport-utility, code-named XL6, will not be that much from Grand Vitara's. He expects the XL6 will become the best-selling vehicle in Suzuki's lineup, largely because its three rows of bucket seats will be a differentiating factor.

    'We're not standing still from a product development standpoint. Suzuki is very good at adapting to change in demand for vehicles,' Anderson said.

    'Affordability is still a factor, and the strong yen hasn't made it any easier. But I think Suzuki knows there always is a market for a product with versatility and uniqueness.'

    While Suzuki is venturing further into the truck segment, it is not completely abandoning small cars. Although the future of the Swift subcompact may be in doubt when the platform moves to Mexico, Su-zuki wants to stick by the Esteem compact sedan and wagon. Last year, the success of the Grand Vitara meant cars accounted for 29 percent of Suzuki sales, but Anderson remains committed to them.

    At the same time, Suzuki is gearing up its market representation.

    Although most of America remains a target for Suzuki market development, Anderson points out that Florida, California, Texas, the Midwest and Southeast are regions where the automaker wants to focus. From 286 dealers in August 1998, Suzuki has grown to 340 dealers - though only a handful are exclusives. Eventually, Suzuki hopes to top out at 500.

    'We want to enter new markets and fill in in markets where we've been underrepresented,' Anderson said.

    BEEFING UP SUPPORT

    While product is key, 'There are other initiatives that we need to take care of as well,' Anderson said. He noted that Suzuki wants to improve its human resources, infrastructure and business systems departments. On the field front, Suzuki is beefing up product and sales training groups to give dealers more support.

    Anderson also frets about Suzuki's distribution network, which he blames for not catching quality glitches that have buried the automaker in the J.D. Power surveys. He said 'little details,' such as a wheel vibration problem and a fault in the remote door lock system, have hurt the company's image, even though Suzuki has 'never had an engine or powertrain problem.'

    As a result, Suzuki is placing a quality assurance department at its port facilities to better monitor the vehicles as they leave for dealerships.

    'You can have good product, marketing and advertising, but it doesn't matter if you don't have good distribution,' Anderson said.

    Robert Sherwood, sales manager for multiline dealer Wendle Motors in Spokane, Wash., says Suzuki is treating its dealers properly. Potentially contentious areas, such as co-op advertising, inventories, sales incentives and product training, all have been handled well by the company, he says.

    'The training packages they put together have helped us be aware of the changes to the vehicles and to their increased quality,' Sherwood said. 'The Grand Vitara has really opened our demographics. Suzuki is not just for the person looking to get into a cheap 4x4.'

    STABLE GROWTH

    In terms of the U.S. market, Suzuki is still a small fish in a big pond.

    The success of the Grand Vitara is threatened by the prospects of the Chevrolet Tracker, its assembly line twin, also getting a V-6 engine, now a Suzuki exclusive. Chevy could dwarf Suzuki's annual budget with a throwaway ad campaign for Tracker.

    In addition, the echoes from the Consumer Reports rollover accusations of more than a decade ago continue to haunt the franchise.

    Even Suzuki's own near-term goal of hitting 100,000 units - and then 1 percent market share - has been turned into a more conservative longer-term goal.

    'Having 0.3 percent market share is not indicative of our capabilities,' said American Suzuki President Rick Suzuki. 'But we want to have solid sustainable growth. Reaching 100,000 units may take a few years.'

    Anderson adds: 'There's some contingent liability being seen in the industry, and we don't want to hang ourselves over the edge. We want to build strong awareness in the brand, not do it with smoke and mirrors. We want to show Suzuki is a serious player and a franchise you can make money with.'

    Suzuki has never been a big spender in marketing. In fact, 1999 was the first time Suzuki had a national TV ad. But it has gotten the ball moving, so to speak, by sponsoring the Heisman Trophy presentation as well as the off-the-wall San Diego Rock 'n' Roll Marathon.

    Anderson said Suzuki's marketing will continue to be grass roots. It also will increase corporate marketing that links Suzuki's motorcycle and marine groups, Rick Suzuki said.

    'We don't need to reach everyone in the country, but we do need to reach the people where our dealers are,' Anderson said. 'We're going to see more local support, with our budgets increasing substantially over the next few years.'

    Doug Scott, president of West Coast operations for industry consultant Allison-Fisher Inc. in Gardena, Calif., thinks Suzuki is on the right track.

    'To make Suzuki break out of being perceived as a small Japanese company, they need to expand their product lineup. They have some modest momentum, but they have to support it with marketing dollars,' Scott said.

    However, Scott thinks Suzuki is lacking focus by also selling econoboxes. Following Subaru's lead in finding a specific niche would be a better recipe for success, Scott believes.

    'The worst case is for Suzuki to expand its product line and not support it, or to expand on the dealer side and not have the requisite brand-building needed to get people to move into Suzuki,' Scott said.

    'Otherwise, they're fighting Honda and Toyota, and that is a huge mountain to climb. Suzuki can't be just another sport-utility.'

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