By on November 14, 2012

Being a Suzuki dealer is surely one of America’s least enviable jobs; franchise holders must choose whether to accept a cash settlement and a contract to provide parts and service in exchange for their franchises, or whether they want to fight the matter in court.

Based on Suzuki’s estimate of $50 million in total, the settlements average out to about $227,000 per dealer. Payouts are set to be calculated based on sales volume, rent, how much inventory is held, facility investment and other factors. But by taking the deal, they waive the right to any future claims against Suzuki.

Automotive News highlights the main question on the minds of Suzuki’s former sales force; will a payout be comparable to what dealers would receive in accordance with state franchise laws. The predicament, according to AN, is this

Had Suzuki simply canceled the franchises, outside bankruptcy court, state franchise laws would have compelled the automaker to buy back new-vehicle inventory and parts and to compensate dealers for facilities and other costs.

A National Automobile Dealers Association official last week said Suzuki dealers should receive what they would be entitled to under franchise laws and advised them to consult attorneys. Dealers were receiving the offers late last week and were bound by confidentiality agreements.

Suzuki dealers can choose not to sign the settlement offers and file a claim in the bankruptcy case for what they believe they are owed. But such a move means a dealer’s claim could be worth just pennies on the dollar by the time Suzuki pays off other, higher-priority creditors.

While one attorney says that the dealers will represent the largest unsecured creditors, only a small percentage of Suzuki dealers sell most of the cars. A majority of them sell fewer than 5 new Suzukis per month.



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11 Comments on “Suzuki Death Watch 10: Dealers Deciding Whether To Take The Money Or Fight...”

  • avatar

    I’m sure this wasn’t intentional, but this is the second straight post topped by a photo of a silver compact CUV with black plastic trim photographed at a front 3/4 angle. And I’m not sure the newer, extant Opel Mokka below this post is the better-looking of the two!

  • avatar
    Da Coyote

    I’m hoping that my local dealer stays in. He’s good (although I’ve had to bring my SX-4 6-speed AWD in exactly zero times in the last 20 months since purchase.) The car is fun, I average ~35 mpg, and I’ve received many complements on it. It’s been a great commuter car, and I intend to keep it for as long as the wheels stay on.

  • avatar

    American Suzuki’s largest creditor is Ally:

    Incidentally, the Suzuki entity would have submitted a list of creditors with its bankruptcy filing. It shouldn’t be hard for dealers or other interested parties to figure out who the creditors are, and roughly how much those creditors are owed.

    “A National Automobile Dealers Association official last week said Suzuki dealers should receive what they would be entitled to under franchise laws”

    Federal bankruptcy law trumps state franchise law. Is the NADA rep on crack?

  • avatar

    If I was a dealer, I would take the Cash and run, not having Cars made in the USA are a downer to start with, can you imagine how much the Parts will cost and the time one has to wait for them to come from Japan?

    • 0 avatar

      That may be the rub – they get cash AND a contract to maintain parts and service for the rolling stock already sold. It’s probably both as a package deal, maybe until the last car sold is out of warranty, or longer, if Suzuki wants to keep open the option of coming back. The cash also has to cover the steep discounts needed to move the dealer’s stock.

  • avatar

    This one is better: So do you take the bank offer or go with your case… Deal or no deal?

  • avatar

    I find the use of the term “Suzuki’s former sales force” somewhat amusing and misleading…

    Can you really consider people to be members of a sales force when the top salesperson in the country sells three cars per month???

    There is no way that anyone has earned the equivalent of minimum wage by selling only Suzuki vehicles in the last five years!

    GM diluted the tiny bit of brand equity that Suzuki might have had by filling their lots with rebadged Daewoos (Suzuki Reno, Forenza and Verona) from 2004 to 2008. But those were the only years that Suzuki made a tiny profit from US sales also. The Daewoo crap-mobiles had good profit margins, at the expense of branding Suzuki as a bottom-of-the-barrel cheap brand in the eyes of consumers.

    Then when they got rid of the Daewoos and rolled out several very good models of their own, nobody was buying….and it’s a damn shame that Kizashi has never sold more 6,000 or so units per year here! It should be more like 100,000 per year based on how good the car is!

    But that was another HUGE problem- Suzuki spent less on advertising, marketing and PR than the local produce guy who sells watermelons out of his pickup truck on the side of the road!

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