By on November 6, 2012
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When the news came out last night of American Suzuki Motor Corporation (ASMC) filing for Chapter 11 bankruptcy, I was glad to be validated in my suspicions, but sad that a potentially great opportunity had been wasted due to mismanagement and short-sightedness on behalf of its Japanese management.

In other regions, Suzuki does an excellent job catering to the needs of each domestic market. In India, through their long time partnership with Maruti (which has since turned into full ownership of the once state-owned automaker), Suzuki enjoys double digit market share that is the envy of every other automaker in the country. Maruti Suzuki has control over product, they understand the needs of Indians looking for new cars, and they have enough financial input into SMC’s bottom line that the executives in Japan have no choice but to listen.

In North America, things haven’t been as pleasant for the plucky automaker. After dealing with a toxic review from Consumer Reports in the late 80s, saddled with a narrow range of vehicles and General Motors input throughout the 90s, and burdened with selling Korean shitboxes in the 2000s after a joint venture purchase of Daewoo with GM and SAIC, the car maker didn’t have a chance. Or did it?

Suzuki is, unfortunately, broken at the top and ASMC’s Chapter 11 filing is not necessarily the fault of those working in Brea, California. During my conversations with a number of current and former ASMC employees over the last few months, there was definitely a sense that those in charge in Japan either planned for the automotive division to fail, resulting in the Chapter 11 filing, or were complicit in listening to Chairman Osamu Suzuki’s incompetence and didn’t want to piss off the boss. Or both.

During one particular conversation with a former ranking ASMC employee, Osamu was described as “a senile old man that has absolutely no idea what he is doing.” That same former employee also stated the reason for the end of the Volkswagen-Suzuki tie-up wasn’t due to Volkswagen attempting to poach Suzuki for all it was worth or the rank and file engineers not getting along. Instead, Osamu merely “changed his mind”, invented a story to fit his modus operandi, and blasted it to the media as much as he possibly could. No wonder then, when the end of the partnership came to light in the press, Volkswagen’s reply was “we have absolutely no idea what is going on.”

With a company head like Osamu calling the shots, doing what he can to keep Suzuki under his absolute control, it is no wonder ASMC failed in the US. His judgement has been highly impaired for years and there is nobody in a position to kick him off the throne.

And that absolute control is what brings us to the other reason Suzuki has failed to make a massive presence in North America over the last 15 years: who has the power? For every Japanese brand that decides to bring their vehicles to the North American market, their local American headquarters are the nerve center for much of the product planning. Toyota Japan doesn’t plan the next Tundra. Even Nissan’s reincarnation of the Z car, the 350, was mainly worked in the United Stated because that is where they knew they would realize most of their sales. But, ASMC had absolutely no control over what they sold, save for the Equator and some packaging on other vehicles. ASMC didn’t request certain models be built for the American market. ASMC was told what they would sell, whether they liked it or not.

ASMC’s target over the last couple of years has been to make a profit without haven’t to invest in its portfolio in order to pull it off (or at least that is what everyone has been told). There is no such thing as a legitimate business that requires no input. That’s a Ponzi scheme. Unfortunately for employees, dealers, and brand loyalists, the people running this scheme are not the ones who are going to have to pay for it in the end.

Suzuki Canada, with its lackluster range of vehicles, has been in the same boat, selling even less selection than that of its sister to the south. So, even though Suzuki Canada says everything is good in the Great White North, just remember the same people are at the helm in Japan, and there is no geopolitical border for incompetence.

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34 Comments on “Suzuki Death Watch 8: A Eulogy Due To Incompetence...”


  • avatar
    rnc

    Sounds like two of the three last Fords that ran FMC.

  • avatar
    MarkP

    Suzuki needed a long-term plan for the US that recognized and accepted that they would have to be a small, niche player for a while. That would be absolutely necessary until they could build brand recognition and market acceptance. Then they could have moved into slightly different territory, building on their strengths. It could have been done. Of course they needed to know their niche and build the right vehicles to fill it. And let someone know they existed.

    I get the feeling the Suzuki blamed Americans for not wanting what they offered. And by that I mean Americans both inside the US organization and within the US market.

    • 0 avatar
      L'avventura

      That’s kinda the thing, Suzuki can’t expect to cram what they sell in other parts of the world down US market throats just like you can’t expect Japanese to buy Camrys and pickups. You need to build for the market.

      To Suzuki’s credit they did try to make a US market vehicle in the Kizashi. But without US production they had no chance as the yen strengthened.

      While this entire article is crammed with unverified vitriol, particularly on the VW-Suzuki deal, the point is that Suzuki quite simply didn’t have the capital or wherewithal to push further into the US market.

      If Suzuki was serious about the North American market they would have built production plants here. Simple as that. Regardless of what great product they had they simply could not have survived the US market with Japanese production. The Kizashi could be the best compact on the market, but nobody is willing to pay 30% more than the competitors.

      Staying a niche player is also not an option. Its just not that type of market anymore. Its about scale these days.

  • avatar
    Chocolatedeath

    “I was glad to be validated in my suspicions” Did you not like them? No diss intended but who of us didnt think they were going out of biz.

  • avatar
    BigMeats

    I’m pretty sure that in the last 2 days I’ve seen more TTAC articles about Suzuki than I’ve seen cars made by Suzuki in the last 10 years.

  • avatar
    ott

    So who will service any existing customers’ warranty claims if Suzuki is pulling the plug in America?

    • 0 avatar
      Mark Stevenson

      Certain dealers will be turned into service centers for parts and warranty work. The others will be wound down, turned into Suzuki powersports dealers, or end up taking out ads in the used car pages of your local daily classified section.

      • 0 avatar
        chicagoland

        I’m fairly sure that nearly all dealers will just close shop. Will say ‘sayonnara, you’re SOL’.

        If part of dealer group, maybe you can get parts, but they will say “we got new cars from a brand that’s in business, wanna trade in?”

    • 0 avatar
      28-Cars-Later

      Warranty holders will be getting this note in the mail:

      Dear Sir/Madam,

      Thanks for being our customer and helping prolong our company’s inevitable march toward insolvency… now bugger off you’re screwed.

      Sincerely,
      Suzuki Warranty Services

      • 0 avatar
        racer-esq.

        If the warranties are not shed during bankruptcy, which does not appear to be the strategy American Suzuki Motor Corporation is taking, then it will be liable for them post bankruptcy. I think that Suzuki would rather keep its powersports presence than void some warranties.

        Finding a service center to perform the warranty work on the other hand. . .

        Still, if I was in the market for a car I would be tempted to look at the base Grand Vitara, but at no more than $15 – 16K at this point. Everything else Suzuki sells in the US is done better by someone else, but nobody sells a compact suv/wagon with rear wheel drive and stick.

  • avatar
    MarkP

    ott, a question I’m sure many Suzuki purchasers are asking themselves. But not one that should have occurred suddenly. I briefly considered a new Suzuki last year, but one look at the local dealership lot convinced me otherwise. It looked like a seedy used-car lot one legal notice shy of shutting the doors and running like hell for the state line.

    • 0 avatar
      ExPatBrit

      One of our local Chevy dealers was culled by GM in 2009 then took on a Suzuki franchise. Didn’t work out to well.

      My co-worker bought one of the Equators from them about 6 weeks ago, she is not too happy today and worried about her extended warranty.

      Still it’s mostly a Nissan, so repairs other than bodywork should be OK. Resale definitely took a nose dive, but if she keeps it a few years maybe not so bad.

  • avatar

    Same here in Europe. Almost nil marketing efforts, nil attempts to compete. Maybe, the European outlets are the next target for silly “restructuring”.

  • avatar
    jz78817

    “Suzuki is, unfortunately, broken at the top and ASMC’s Chapter 11 filing is not necessarily the fault of those working in Brea, California. During my conversations with a number of current and former ASMC employees over the last few months, there was definitely a sense that those in charge in Japan either planned for the automotive division to fail, resulting in the Chapter 11 filing, or were complicit in listening to Chairman Osamu Suzuki’s incompetence and didn’t want to piss off the boss. Or both.”

    Both, but I would wager it’s more the latter. In (especially older) Japanese companies, there is fairly strict respect paid towards the hierarchy, and one does not speak out of turn or publicly countermand the direction of someone higher up.

  • avatar
    HerrKaLeun

    i get the feeling the management problem is portrayed as a Japanese cultural problem. I don’t think this is correct.

    1. this is a patriarch problem without supervision. an old senile man loses it and no one can control him before he dies (not sure, is Suzuki a public company at all?). Even public companies have some of these problems, but are generally more successful to cover it up:
    a) example 1: VW Paheton, W-12 motor – everybody knew thsi is a bad idea, but who told Piech not to do it?
    b) example 2: Mercedes buying Chrysler, creating Maybach
    2. Middle management not speaking up and upper management being arrogant really sounds like GM management

    I’m not saying there aren’t cultural problems as well, but Suzuki’s issues are classical general management problems that can (and do) happen in 100% Western companies.

    Toyota and Honda don’t seem to suffer, and they even produce in the US.

    • 0 avatar
      ranwhenparked

      This is sounding more and more like a Howard Hughes situation than a true cultural clash. I think when his heirs were done unraveling all of his shoddily managed businesses, they only recovered ~$150 million out of the $1.5 billion he was worth at his peak. He was clearly losing his mind for years, but his staff just indulged his every whim and fancy and let him run everything into the ground.

      That said, Summa was a private company, Suzuki is publicly traded on the Tokyo Stock Exchange – does anyone know how much of it Osamu himself or the Suzuki family in general actually control? If things really are this badly managed at the top, it seems like some activist shareholders would band together to force a change. At least pressure him to either drop the CEO title, or bring in a strong President/COO.

      • 0 avatar
        JohnTheDriver

        Not to pick at nits but your info on Hughs is way wrong … http://en.wikipedia.org/wiki/Howard_Hughes#Estate

        His aircraft business alone was worth billions at the time of his death. His purchases of Las Vegas real estate towards the end (although undoubtedly the product of a drug addled mind) turned billions in profits ultimately. His heirs (no direct descendants) ended up with billions.

      • 0 avatar
        ranwhenparked

        @JohnTheDriver

        His entire aircraft business was the property of the Howard Hughes Medical Institute, his heirs didn’t see a penny of that. HH was so pathalogically obessesed with avoiding taxes at any cost that he essentially gave away his biggest asset to charity. Of course, that charity was operated in a less than legitimate manner during his lifetime, but the point stands.

        His Nevada mining operations were a collection of worthless, unproductive claims, and his casinos had been starved of investment and were becoming increasingly outclassed by newer properties by the mid 1970s. The airline – Hughes AirWest – was loosing money and had one of the worst track records in the industry.

        It took decades for his heirs to recover that amount by gradually turning around then selling off assets one by one. His entire business was a total mess in 1976. It was the business acumen of his cousin, William Rice Lummis, that wound up salvaging the family fortune by ditching everything Howard acquired and turning the company’s focus to real estate.

  • avatar
    el scotto

    I live in Virginia. A quick check of Suzuki’s website shows seven dealers in VA; two of them are service only. Three of them are shown in the Norfolk area. I wonder if those three do the the: Bad Credit, No Credit, Bankrupt, Divorced, or in the Military? We can finance you deals? You can’t buy what you can’t see.

    • 0 avatar
      kvndoom

      One of those is Bowditch Suzuki, about 6 miles from where I live. I went there a couple years ago to look at a Kizashi, and you would’ve thought it was a used car lot. I think it also serve as their oil change/tire center. I somehow doubt anyone from Bowditch will lose his job when Suzuki goes away.

  • avatar
    megazythr

    Dealers and sellers are already reducing prices on these cars.

  • avatar
    devilsadvocate

    I feel vindicated that I traded in my Kizashi based largely on the rumors of Suzuki’s demise, but I do miss it…for the money, it was by far the best car I’ve owned. By the way, I traded it for a Mazda3 Skyactiv, which, except for mpg’s, is proving to be inferior in just about every way to my Kizashi.

  • avatar
    Maymar

    I’d wager that Suzuki USA’s bankruptcy is a death warrant for Suzuki Canada. They may have managed themselves well enough to keep solvent, but if new product isn’t being federalized for the US, Suzuki Canada doesn’t have the kind of volume to justify federalizing anything new just for us. And without that, they’ll quickly (very quickly given the age of the SX4 and Vitara) become even more uncompetitive than they already are.

    The sad part is, they’re just different and interesting enough to miss.

  • avatar

    That would explain why Nissan’s 370Z isn’t nearly as reliable as its other offerings…

  • avatar
    mjz

    Suzuki screwed up by not bringing the Swift here and naming their critical compact entry “Kizashi”, which sounds too much like “kamikaze”. Dumb name for a great product.

  • avatar
    JohnTheDriver

    Why does TTAC keep “reporting” that Suzuki is dead? Their virtually non-existant American distribution company is dead. Suzuki? Doing just fine last I checked.

  • avatar
    boho

    Good morning,

    Can anybody tell me what will be a reasonable discount to ask for Kizashi due to bankruptcy. Do you think it is possible to get them around 16-18 K.

    Thanks


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