Suzuki Dealers Agree to Provide Parts, Service for Bankrupt Manufacturer

Dec. 11, 2012

Dec. 11, 2012—As of Nov. 30, 213 out of 219 automotive dealers for American Suzuki Motor Corp. (ASMC) have agreed to terms of the company’s Dealer Settlement Agreements as part of its restructuring and realignment.

In November, ASMC, the U.S. distributor of Suzuki automobiles, motorcycles, all-terrain vehicles (ATV) and marine outboard engines, filed for chapter 11 bankruptcy and will discontinue sales of new automobiles in the continental U.S.

As part of the plan, ASMC said it would continue to fully honor all vehicle warranties and financial buyback agreements. Automobile parts and service will be provided without interruption through the company’s parts and service dealer network, which will transition from new automobile sales to exclusively parts and service operations.

ASMC said its Dealer Settlement Agreements are intended to compensate dealers and enable them to smoothly transition from automobile sales to warranty and service repair work, as well as parts supply for Suzuki automobiles. According to Freddie Reiss, chief restructuring officer for ASMC, agreements have been reached with all of the company’s top 50 automotive dealers, and 98 percent of ASMC dealers in the continental U.S.

The final return deadline for ASMC’s Dealer Settlement Agreements, all of which are subject to Bankruptcy Court approval, is Dec. 28.

“We greatly value our relationship with our customers, and it is very important to us that they continue to receive the necessary support from ASMC during and after our restructuring,” Reiss said. “As these agreements demonstrate, we are working within our current U.S. automotive dealer network to help structure a smooth transition from new automobile sales to exclusively parts and service operations. Based on dealer acceptances, we continue to believe our restructuring and realignment will be completed in a timely manner.”

ASMC said it reviewed its current position and future opportunities in the U.S. automotive market, and decided to realign the business in order to focus on the long-term growth of its motorcycle, ATV and marine divisions. The company said the best strategy to efficiently realign the business was to restructure operations under chapter 11.

The case was filed in the United States Bankruptcy Court, Central District of California in Santa Ana.

After evaluating its position in the U.S. automotive industry, ASMC said its automotive division faced several serious challenges. Those challenges included low sales volume, a limited number of vehicle models, poor foreign exchange rates, high costs of maintaining a U.S. automotive distribution system, and increasing costs associated with state and federal regulatory requirements that are unique to the U.S. market.

“While the decision to discontinue new automobile sales in the U.S. was difficult to make, today’s actions were inevitable under these circumstances,” ASMC said in a press release_notes.

ASMC said it will remain committed to the U.S. sale of motorcycles, ATV and marine products as those divisions of the company are competitively positioned in their respective markets. The business realignment is intended to position ASMC for long-term success by returning to the company’s roots in the U.S. market, which began with motorcycles.

“ASMC remains very proud of its high quality, high performance motorcycle, ATV and marine products. The company will continue to bring ASMC products to market, including its full lineup of sportbike, cruiser, touring, scooter, dualsport, motocross, off-road motorcycles and KingQuad ATV line, as well as its flagship DF300AP, state-of-the-art DF20A, and DF15A, among other models,” the company said. “Additionally, ASMC is working to further build its market share through continued investment in additional support for dealers through marketing and advertising activities and sales promotion. Suzuki will continue to have a strong presence as a sponsor of teams in supercross, outdoor motocross and road racing.”

Suzuki Motor Corp. (SMC) will purchase ASMC’s motorcycle, ATV and marine businesses, as well as the automotive service operation responsible for parts and warranties, through a new U.S. subsidiary that will retain the ASMC brand name, the company said.