After seeing sales fall more than 70 percent in three years, Suzuki is trying to mount a comeback.
The brand is beginning to appoint new dealers to replace the scores of poor-performing retailers cut from its roster. Suzuki's product lineup now offers only Japanese-made products after years of selling rebadged Daewoo vehicles. To help boost dealer profitability, the brand no longer sells to fleets.
But significant challenges remain. Suzuki's product pipeline is dry because its alliance with Volkswagen put new model launches on hold. The yen-dollar exchange rate also is wreaking havoc.
Staff Reporter Ryan Beene spoke with James Morrell, a Suzuki dealer from Albany, N.Y., and newly elected chairman of the Suzuki Dealer Advisory Board, about what's in store for the brand.
Q: How was 2010 for Suzuki dealers?
A: 2010 was a mixed bag for Suzuki dealers. There was a 40 percent reduction in dealer count during the course of the year. On a positive note, in the eastern region we outsold our 2009 numbers for nine straight months and nationally we outsold 2009 for the last three months.
Suzuki had a program where it sought to buy out its worst-performing dealers in the first half of 2010. After that, additional dealers closed. Do you expect more dealer attrition in 2011?
I think you'll see probably an increasing dealer count in 2011 or at least a stabilizing dealer count. While there were a number of dealers that opted out of the brand, there were also new dealers that came in. I think Suzuki is comfortable with where the dealer count is and the main focus is to have dealers that do volume, are profitable and represent the brand properly and enthusiastically. There's nothing more frustrating for a consumer than to go to a store and only have three cars to choose from.
Do many Suzuki dealers operate that way?
I would say, at the start of 2010, there were probably 250-plus Suzuki dealers that would stock fewer than five cars. So you couldn't even represent the entire model lineup that way. Those are the dealers that Suzuki really sent the letters to and targeted.
With 250 dealers like that at the start of 2010, it sounds like Suzuki might still have some work to do.
Right now, they do have a business improvement team that's going around to help dealers that do want to expand their volume and they're doing a pretty good job of sharing best practices.
That being said, Suzuki's dealer body looks a lot better than it did at the beginning of 2010. The average throughput per dealer has increased dramatically.
What are going to be the big issues for Suzuki this year?
One of the challenges for Suzuki -- as really the last, nonluxury Japanese automaker that makes all of its cars in Japan -- the yen exchange rate is going to continue to be a challenge.
Increasing volume and throughput through the remaining dealer body to increase sales and continue momentum from last quarter, I think those will be the biggest challenges.
What does the factory say about new product?
The lineup will remain essentially the same with the exception of the new Kizashi Sport trim level.
Because of the Volkswagen tie-up, it delayed Suzuki's product plan by a year or two. They've literally spent a year or two trying to figure out how to best integrate platforms or share platforms or if that will have any impact on the United States.
So I think we're probably looking at the next generation of the Swift and the concentration in Suzuki's strength, which has traditionally been small cars, all-wheel-drive and small SUVs. I think the Swift fits well into Suzuki's game plan going forward with a small car and SUV concentration and the importance of awd. But that will probably be a year or two out, because we have to wait for the global redesign.
Are Suzuki dealers satisfied with the brand?
Yes, I think there is a satisfaction with the manufacturer. The one thing I think is truly good about the manufacturer is they're very accessible.
That being said, I think dealers would like a freshened product plan going forward, which I think we're going to get. I think the Volkswagen tie-up is going to be very positive for Suzuki dealers. The downside, though, is they re-evaluated their entire product plan based on that tie-up, and it delayed all model introductions by anywhere from 18 to 24 months.
Has Suzuki talked about pulling out of the United States?
Suzuki has never mentioned anything to the dealer advisory board about pulling out of the country and if you look at its history in the country, their current volume is comparable to the volume that Suzuki had for 15 or 20 years, and they continued to bring in cars and make money with their U.S. auto operations.
The thing you have to remember with Suzuki is that their infrastructure is not just tied to automotive, but also to their motorcycle, ATV and marine engine businesses. It's a completely different perspective from some of the other manufacturers that have pulled out of the country.
Suzuki's businesses are so intricately tied together that I don't see where they realize any actual savings by leaving the country. That's what I take comfort in.