LOS ANGELES -- In the last five years, only three auto brands have posted a single-year sales increase of 70 percent or more in the U.S. market. Suzuki wants to join that exclusive club.
Hyundai did it in 1999 after adopting a 10-year warranty. Daewoo sales soared in 2000, as its dealer network spread across the United States. And Hummer has seen two such gains, in 2002 and 2003, after adding a higher-volume model, the H2, to its one-truck H1 lineup.
American Suzuki Motor Corp., with three new nameplates, hopes to boosts U.S. sales to 100,000 this year, up from last year's 58,438. Never in its 19-year U.S. history has Suzuki sold that many vehicles, and several analysts think it's just too big a stretch.
"They need history-making magic, and that magic would have to be perfect,'' says Lincoln Merrihew, managing director for the automotive division of Compete Inc., a Boston marketing firm. "The biggest challenge in the industry is getting attention, and it will be a bigger challenge for them than anyone else."
Suzuki stakes its ambitions on a blend of renewed focus on the U.S. market and benefits from its ties to General Motors. Key to its hopes are two new sedans, the Forenza, which starts at $12,999, and the Verona, which starts at $16,999. Each has come to Suzuki via GM's investment in bankrupt Daewoo Motor Corp.
GM owns 20 percent of Suzuki Motor Corp., and Suzuki owns 14.9 percent of Korean automaker GM Daewoo Auto & Technology Co., builder of the Forenza and Verona.
Another key element of the plan is the new boss of the U.S. operation, 40-year-old Koichi Suzuki.
He acknowledges that the Suzuki brand isn't where it should be and says it's time to take Suzuki to the next level.
|Suzuki hopes to increase U.S. sales 70% this year. In the last 5 years, brands sold in the United States have increased their sales by that much in a single year only 4 times. Here is who did it and how.|
|Hummer||2002||2,449.60||Introduced a 2nd vehicle, the H2|
|Daewoo||2000||117.3||Added dealers in 2nd year of U.S. sales|
|Hyundai||1999||82||Introduced 10-year, 100,000-mile warranty|
|Hummer||2003||80.1||First full year of H2 sales|
|Source: Automotive News Data Center|
Americans might know Suzuki motorcycles, but Koichi Suzuki knows that can't be said of Suzuki's cars and light trucks. "We need to create credibility for Suzuki in the United States,'' he says.
To get there, the American sales arm is investing in more dealers, new retail stores and more advertising. In April, the company plans to launch a captive finance company.
And it is making some moves to show that it's serious about change.
On Jan. 1, Ron Sobrero became vice president of a new dealer development division. Sobrero, 66, retired Dec. 31 as head of GM's dealer development program.
Suzuki says Sobrero is an independent consultant on contract with the company despite his full-time title. Sobrero will live in Southern California and commute to Suzuki's headquarters in Brea. His charge is to recruit qualified dealers and bring Suzuki's total to 600 dealers in two years, up from 470 now.
"It's good that they're bringing on high-quality people like Sobrero," says Jerry Goldstein, chairman of the Suzuki Dealer Advisory Board. "We need highly focused dealers. We have gotten rid of some dealers that have not been a loss. With experienced factory people, good product and good dealers, we can hit our goal of 100,000 this year."
Under the reorganization, effective Jan. 1, American Suzuki separated its motorcycle and automotive units.
Previously, the automotive and motorcycle units were operated jointly and headed by one person, President Rick Suzuki, 56, grandson of the founder of Suzuki Motor Corp.
Rick Suzuki remains president of American Suzuki and also has been named president of corporate operations. But he has handed over day-to-day automotive operations to Koichi Suzuki.
Koichi Suzuki is not related to Rick Suzuki but has worked as Rick Suzuki's right-hand man since soon after Rick Suzuki took the helm of the company in December 1998.
Before that, Koichi Suzuki worked 10 years with Suzuki Motor Corp. in Japan, primarily in marketing and planning overseas activities, including in North America.
Colleagues and dealers say Koichi Suzuki was instrumental in fighting for new vehicles for the U.S. market and for rolling out a dealership renovation plan.
"He's quiet, but he's always thinking - a very smart and extremely hard worker," says Tim Bush, who just ended a three-year stint on the Suzuki Dealer Advisory Board.
Bush, who owns Richland Suzuki in Richland, Wash., says Koichi Suzuki listened closely to the dealer board in devising the growth plan.
Products play a central role. The mid-sized Verona sedan was introduced in September, and the compact Forenza sedan was introduced in December.
This fall, dealers will get the Reno five-door hatchback - another product of the GM-Daewoo partnership. Also coming in the fall is a wagon version of the Forenza.
Koichi Suzuki says he thinks the Forenza will be the volume seller and account for 45,000 U.S. sales this year. Last year's sales leader, the XL-7 SUV, contributed just 22,560 sales. He is also counting on 25,000 Veronas and 10,000 Renos a year.
A $20 million advertising push for the Forenza began Jan. 20. The company also has allocated $20 million for the Verona and $100 million overall for the Suzuki brand this year. That's almost double what it spent on ads last year.
"Value is what we'll promote in the ads," Koichi Suzuki says.
As part of the Jan. 1 restructuring, the company has added seven new positions in each of its four regions. One key new position is the regional general manager, who will coordinate all regional and district activities and report directly to Koichi Suzuki.
Suzuki's best sales year was 1987 - its second full year on the U.S. market - when sales jumped 74.6 percent to 83,334. But three years later, sales had sunk to 20,504, after the Samurai SUV became the focus of rollover allegations. Last year's sales of 58,438 vehicles were down 13.9 percent from 2002.
Koichi Suzuki calls 2003 "a transitional period." The company says much of the sales decline resulted from lower fleet sales. In the second half of 2003, 8 percent of total sales were fleet sales, down from 20 percent in the first half of the year. The company plans to maintain that trend this year.
The sales decline contributed to Suzuki's North American operating loss of $31.1 million in the six-month period that ended Sept. 30, 2003.
In the same period, Suzuki Motor Corp. in Japan more than doubled its net income, to $225.1 million. The corporation's operating profit rose 26.7 percent to $431.2 million, while revenue rose 5.2 percent to $9.8 billion.
3 more nameplates
The Verona, Forenza and Reno will join the Aerio car and the XL-7 and Vitara/Grand Vitara SUVs in Suzuki's lineup. Whether the combination will deliver Suzuki's goal of 100,000 U.S. sales is another question.
"That 71 percent gain is unrealistic,'' says Wes Brown, a partner in Iceology, a consumer research firm in Los Angeles. "They are starting to have the right product in place, but they don't have a strong enough brand image.''
Brown adds that it won't be easy for Suzuki to pull sales from other brands. "They're up against Kia and Hyundai in price points. Forenza is in a crowded part of the market, and the styling is not remarkable."
Even dealer Bush, who likes Suzuki's product line, thinks the company needs a halo vehicle to get people talking about the brand. He's hoping for the Concept 2, a concept Suzuki vehicle that resembles BMW's Mini.
"The Forenza is awesome," Bush says, "but we're not Toyota or Honda yet. What will drive traffic is the Concept 2. And then people can take a look at our other cars."
A halo vehicle doesn't figure into Koichi Suzuki's strategy for 2004. But achieving his sales goal this year would provide a halo in itself.
After all, the 100,000 target is only the start of Koichi Suzuki's dream. Reaching that would provide some credibility for his next vision: 200,000 sales in 2007.