(The following is an open letter from contributor Seth Parks, who, like many of us, holds a special fondness for the rugged little Suzuki Jimny – a vehicle available almost everywhere … except North America. We’ve added photos for your viewing pleasure.)
Dear Mr. Takuya Sato,
As EVP of Suzuki Motor of America, you are responsible for driving revenue and profitability growth. One arrow in your quiver of growth strategies is undoubtedly new products. And you are certainly aware of one of the newest and most exciting products in the Suzuki portfolio, the all new fourth-generation Jimny. Like many others, I suggest you bring the Jimny to America (most Americans know it as the Samurai).
However, unlike many others, I understand the challenges and am writing to offer a solution, albeit one based on a grossly oversimplified analysis.
Your two primary blockers to entering the U.S. market are distribution and regulatory compliance. We will tackle FMVSS first, as without regulatory compliance, distribution is moot. Satisfying safety and emissions standards are not small matters. The previous generation Jimny was a non-starter for import. However, the all new Jimny is a modern vehicle built for the global automotive market, including highly regulated Japan and Europe. Hopefully it is up to the challenge of America’s stringent rollover standards.
And if the engine cannot easily be brought into compliance, Suzuki may need to integrate motivation from one of its other 18 nameplates worldwide. Assuming these challenges can be overcome with moderate effort, the cost of regulatory compliance is estimated at $200 million.
Fortunately, you retain significant operations in the U.S., reducing the cost of your other pre-launch investments such as marketing, sales, and service, for which an estimated $75 million will be required. The total estimated cost of bringing Jimny to the United States is $275 million.
As with all vehicle programs, the development and market entry cost must be amortized across sales. Here are some key assumptions:
- Average Transaction Price (Retail) $28,000
- Average Retail Margin 7.5% ($2,100)
- Average OEM Margin 22.5% ($5,828)
- Total Market Entry Cost $275 million
- Market Entry Cost Amortization Period 24 Months
Based on the assumptions above, Suzuki will need to sell 23,860 units per year to pay off the project in two years. But who will buy Jimny?
Unfortunately, sales benchmarking is challenging as there are no direct competitors in North America. The most instructive product is the mighty Wrangler, which sold 240,000 units in the US last year. The Jeep brand and Wrangler nameplate are undeniably stronger than Suzuki Jimny/Samurai in the United States. Nonetheless, Wrangler demonstrates there is demand for a simple, fun, relatively unrefined, open-top, genuinely off-road capable utility vehicle. And the little Suzuki’s value proposition is similar to the Wrangler’s, though Jimny will compete down market in the vast compact and subcompact crossover segments. It would sell against Chevrolet Trax, Nissan Juke,
Ford Escape, Toyota RAV4 and 50 other nameplates that tallied a massive 5.6 million in sales in 2018.
The most significant obstacle to pulling customers out of small crossovers is Jimny’s two door form factor, which has fallen out of favor with North America customers. Nonetheless, Jimny would need to conquest fewer than one-half of one percent of compact and subcompact crossover customers to find 24,000 buyers. And if Suzuki can expand its range to include a pickup it will unlock a whole new set of potential customers. Moreover, if the wheelbase can be extended a few inches to make room for a four-door, exceeding 24,000 units would be straight forward, if not a vast understatement of the Jimny’s potential.
Assuming the inevitable consumer research that precedes any major OEM investment supports the argument made here, a distribution channel must be found. There are five potential approaches to Jimny distribution:
- The traditional franchise model where 99 percent of new vehicles are sold in America would limit Suzuki’s infrastructure investments and removes the need for it to carry inventory. But dealers are a powerful bunch that will extract concessions and seek to insulate themselves against another Fiat-like experience before investing in inventory, new showrooms, and service infrastructure. Not only that, but consumers despise the traditional auto purchase experience.
- A direct sales model with a brick-and-mortar presence, as exemplified by Tesla, brings total control over the customer experience. It also brings tremendous cost. Establishing a 100-store nationwide sales and service network would cost a minimum of $3 million per location, plus inventory and operating costs.
- A direct sales strategy with an emphasis on online purchasing supported by external service partners may be viable. However, introducing a new mass-market product that is difficult to touch, feel, and experience prior to purchase introduces a material impediment to shepherding consumers through the acquisition funnel.
- Suzuki’s existing network of powersports dealers understand the enthusiast customer and some even maintain an automotive-friendly service infrastructure. However, powersports dealers are not organized to focus on a single brand or product. They juggle a dozen brands against highly seasonal sales trends. The Jimny would risk blending in among the go fast side-by-sides, chrome-laden cruisers, and crotch rockets.
There is another way: A small number of potential channel partners exist with symbiotic customers and an existing retail network capable of supporting Jimny sales and service. Among them, one stands out.
4Wheel Parts is a nationwide retailer and installer of truck, Jeep, and UTV parts. It has 94 stores in 30 states served through six distribution centers that cater to customers in every region of the US. Their stores are not configured as auto dealers, but they are organized for retail performance truck and SUV parts sales as well as vehicle service and upfitting. 4Wheel Parts knows the off-road enthusiast and their clean, professional stores would provide a unique, well informed customer experience. Working through 4Wheel Parts would also allow Suzuki to circumvent limitations on direct sales in key states, such as Texas, Colorado, and Washington, avoid carrying inventory, execute a no-haggle pricing strategy, and elude the challenges of working with traditional franchise auto dealers intent on replicating the sales process from their existing stores.
4Wheel Parts would benefit from the new revenue and profitability opportunity, with the additional excitement that would inevitably be brought by a marquis product. The company is probably not, however, interested in a strategic pivot to becoming a car dealer. Toward that end, the addition of Jimny sales would need to be relatively easy to incorporate and manage. Fortunately, third party vendors exist to process registration and licensing requirements nationwide. And 4Wheel parts already maintains a network of third party delivery providers that help it reach its 2,000 existing new car dealer clients. That said, the number of units Suzuki ships could not be allowed to overwhelm 4Wheel Parts.
Suzuki would need each store to move 21 units per month to achieve 24,000 units per year. As a dealer volume benchmark, the average Mitsubishi dealer sold 26 new vehicles per month in 2018, and a similar number of used vehicles. The Jimny throughput requirement is thus around 40 percent of a traditional low-volume new car dealer. Twenty-one units per month equates to $593,000 in revenue and $44,000 in gross profit per month, per store. That should be both a palatable volume of sales to process as well as a sufficient return to justify the addition of a dedicated Jimny sales rep, technician training, diagnostic tools, signage, moderate changes to each store, and inventory flooring expense. Not only that, but many of these Jimnys would leave the store modified.
Logistics and inventory are an additional challenge. A typical car dealer will hold a minimum 60-day inventory, which would imply 42 vehicles per store. 4Wheel parts stores are not organized to hold vehicles, nor are they easily reconfigurable to do so. However, the burden of establishing a middle mile delivery solution capable of managing 4,000 vehicles can be mitigated through a solution consistent with the Jimny ethos: Simplicity.
Most cars can be ordered in thousands of permutations, often tens of thousands. The F-Series once famously exceeded one billion possible combinations. The Jimny should be as simple in operation as it is in configuration and optioning. If Jimny is offered in three configurations (2-door, 4-door, and pickup), a manual or automatic transmission, hard or soft top, and seven colors (covers 80 percent of truck and SUV volume), it can be limited to a grand total of 84 possible permutations. If the range is further bifurcated into Base and Touring trims and two interior colors, the combinations remain manageable. But, if no interior trim options or colors are offered from the factory, as Elio planned to do, Jimny could offer a menu of dealer-installed options. The Jimny should be simple and can take advantage of that simplicity to minimize the number of units in transit and inventory at any given time.
4Wheel Parts is owned by Polaris, a Suzuki competitor in some power sports segments, yet neither company should discount this profitable $600 million revenue opportunity. Please open a dialog. You can work together to drive revenue and profitability growth, while bringing this exciting product to American consumers!
Regards
Seth Parks
[Images: Suzuki]
Keep the Jimny.
The market would prefer a nameplate with more cache. Plead with Toyota to bring over the Land Cruiser 70 series if you want a rugged, bare bones, off-roader that can be daily driven. Not a Jeep Renegade competitor which is exactly what the Jimny would fall into the category of. They even come in SWB form if you want something similar to a Jimny. At least with the Land Cruiser you have heritage, a Wrangler competitor, a pre-established fanbase and an enormous worldwide presence/backing from one of the largest auto makers in the world. Additionally, the 70 comes in multiple forms (Single cab, dual cab, SUV, two door SWB, cargo-Troopy). The main hinderance is finding a powerplant that can pass muster with the regs. Toss in the 5.7L 3UR from the Tundra/Sequoia/Land Cruiser 200 series or whatever 3.5L turbo mill that’s probably replacing it. Done and done, take my money.
“The market would prefer a nameplate with more cachet.”
There, corrected it for you.
Ugh. Grammar Nazis, man.
The front seats are too close to the windscreen. In other markets, the crash testing is done with the dummies belted in. This will never be sold in USA.
Interesting idea, especially the distribution channel.
However, Suzuki left the US market after three straight years of sales in the mid-20k per year range, and that was spread across several nameplates that were all slow sellers. Now we’re talking about a single name plate that we’d hope would sell only as well as Suzuki was doing when it left this market.
IMO, you’d need 3x as many sales to make Suzuki viable in the US market, and it cannot be based upon just one nameplate. You also have the burden of ongoing support, which I thought was required to be 10 years after the last sale.
I think, the only reason why they left was that instead of beating their niche, they started to bloat their cars like everyone else. Mitsu did same thing and both companies struggled. Mitsu used to sell 97K Galants. But as soon as they bloated it, it just went down real fast
I appreciate the chutzpah, but it seems like it’d be easier to just make a deal with an existing brand that would like to compete in this segment.
Interestingly, if one wanted to resurrect Hummer, this would be an interesting way to go about getting things started.
Yep, I’ve been saying this RE: making deal with existing brand. Nissan is the most sensible partner, and they can sell it as the X-Trail or whatever, some name where they already have a trademark. Establishing dealers to service ONE model doesn’t work, and Suzuki doesn’t offer much else Americans are going to buy in any volume.
This is a niche offering for a specific customer. Don’t put too much money in it, but rather use the US for volume.
Let’s see how Ford does with the new Bronco and it’s Baby Brother. If that sells well Suzuki might find someone like Nissan or GM knocking on its door.
I fix.
https://twitter.com/CoreyLewis86/status/1093584543393689600
Intriguing, but at an average trans of 28k that’s … the same price as a Wrangler, roughly, no? A lot less compelling, I think.
Sell it at, oh, $20-22k, and it might get some traction?
Make it a hair under/over $25K loaded and you’d get some interest in the vehicle.
Yea, at 28 or even 25, it is not that interesting
For being a glorified side-by-side, it really needs to be in the $17K range.
Agreed, $28k is insane. Nicely equipped for $22K and base of $18k might sell enough to make it viable.
Jack did an analysis on this a while back. His argument was that the Wrangler and other more capable alternatives would have a lower total ownership cost in North America. In some other markets, there are taxes on vehicle and engine size that favour the Jimny, but which don’t apply in North America.
I think he’s right. While I can certainly see the appeal of a vehicle like this, I can’t see paying a premium to own a Jimny rather than a Wrangler.
https://www.roadandtrack.com/car-culture/a25378079/suzuki-jimny-american-buyers/
Partner up with Subaru or Honda or Nissan. Light re badge and off you go. I d love to have a simple, sturdy, rock hard 4×4.
I ve owned Suzuki Outboards, Snowmobile and Motorcycles. I m now considering a V Strom 1000. Top marks on their products.
I’ve owned 2 Suzuki motorcycles, a ’77 GS1000 with 44k miles and later a ’99 Bandit 1200S. Both fantastic and rock solid mile eaters.
I’d be confident in buying a Suzuki even if they didn’t have dealerships – they’ve been awesome in making parts available for our Grand Vitara and getting a recall handled with ease.
Awesome?
I have a better idea, Jeep can just redesign the quasi-nerdish Renegade to look like this. I know there’s a shortage of Renegades so Jeep won’t do it, but at some point it will need a refresh
The appeal of the Jimny (for me anyways) are very real offroad chops. The Renegade is better than most CUVs, but falls well short of a classic BOF+solid axles platform with a traditional low-range and mechanical transfer case, both in terms of stock performance, as well as potential once you lop the swaybars off the Jimny and give it a bit of lift.
This seems more of a Misubishi product, like the Dodge Raider. I can’t remember the Mitsu. version name.
Montero.
thanks
Mitsubishi Pajero (1982-1991)
This seems more of a Mitsubishi product, like the Dodge Raider. I can’t remember the Mitsu. version name.However, I think it’s pretty cool. Make it a little more than a loaded Polaris type vehicle and there’s a market. I’m sure most people would rather drive to the trail then trailer it.
…Costco…
Uh, if anybody is still awake at Fiat: PANDA DUH!!!
Go the Farm Vehicle, off-road only Roxor route to initially unleash the Kracken.
Then extrapolate from that demand to see if federalization is worth it.
The demonstrated sales would also help negotiations with potential distribution partners (maybe Mazda would bite, the off-road Miata)
https://www.thetruthaboutcars.com/2018/07/ace-of-base-2018-mahindra-roxor-classic/
https://jalopnik.com/the-mahindra-roxor-is-a-reincarnated-willys-jeep-and-yo-1824020754
In one of those strange badge engineering arrangements for the Japanese market, Mazda for many years sold a version of the previous-model Jimny, called the Mazda AZ-Offroad. Not sure if this arrangement will continue with the new model.
I say Mazda sell a rebadged variant here. I know it doesn’t fit with their “premium” aspirations, but I think it would give their dealers an alternative to their CUVs for customers who might otherwise buy a Jeep or pickup for better off-road ability.
I know it is small but combine ~100hp with the super boxy shape & all-terrain tires, and this would likely be the slowest new vehicle you could buy in the US. I’m also guessing the gearing will be very highway unfriendly.
I just don’t think there are enough people living on the side of a mountain to expect annual 24k volume @ $28k is possible. This thing in the US would be super niche (like Smart car niche).
“Moreover, if the wheelbase can be extended a few inches to make room for a four-door, exceeding 24,000 units would be straight forward, if not a vast understatement of the Jimny’s potential.”
JFC, FFS why? Why does every GD thing have to have four doors? Surely if a niche product like this were to actually be imported in some way, than perhaps part of it’s charm/uniqueness and value might possibly be the mere fact that it has only two doors, and thus might actually help it stand out in a marketplace that over the last 20 years has been completely and utterly pussified into a dork-mobile-four-door-family-truckster love fest? Spare the crybaby crap about fitting a car seat into the back…. go buy one of the other 673 four door options instead. Yes, we are a minority, but there are enough of us Gen-X aged folk that are old enough to remember when four door vehicles were considered crappy looking, second class citizen, mom-mobiles and would gladly buy something that isn’t available in four doors, largely for the fact that it isn’t available in four doors and isn’t a Joe Dirt trailer park Mustang/Camaro/Challenger, a baby boomer’s wet dream of their youth Corvette, or an impractical AF Miata.
I absolutely agree. Stop fourdooring every GD vehicle made and stop telling me what I want in a vehicle too. I know what I want, a simple no electronic garbage added TWO door 4×4. With the way the auto market is headed it looks as tho I’ll be driving my ’94 Geo Tracker and ’87 Samurai for another ten years. They just will not stop going.
“…there are no direct competitors in North America. The most instructive product is the mighty Wrangler…”
Wrangler is probably way out there for it. But in you don’t consider body construction, Renegade would be as direct as it comes.
Yes- This is more inline with the renegade.
Plus, like 1% of the wrangler buyers buy it for its capability. The other 99% buy it because they want to be like the 1% who buys it for its capability.
Our last decent snowfall, I got to see a brand new JLU Wrangler disabled in traffic, it was running but immobilized (no power to wheels). Now I suppose it may very well have been a failed component, but what are the chances that this was some yuppie who bought one and had been driving it on pavement in 2wd all year and never even considered how to shift the transfer case?
Make friends with GM. You were friends before, you can renew your friendship.
GMC Jimmy sounds just fine to me.
Had a Suzuki Grand Vitara in costa rica. they don’t really pave a lot of roads there, or even grade the dirt ones. Delivery trucks and buses all have massive suspension to compensate. The Zook went literally everywhere, even up some roads in a National Park that we thought were wrong until they emerged on a trail head and parking lot. One Tough Truck…I was quite impressed. I wouldn’t want to cross Montana in it, but in a very nasty low speed market it was bombproof.
Yep there are a ton of Suzukis and other small 4wds in Costa Rica, I had a similar experience in a Diahatsu Terios that we bounced up and down the jungle hillside in on our honeymoon. And like you said, in those low speed environs these plucky mini 4wds are in their element. Would I want one in the US for long trips or even my daily commute? Maybe not.
As a second vehicle, I would be very interested in this Suzuki. As long as we are talking about <23k.
Do this!
Prevent kidney stones.
It looks like a lifted version of my wife’s old Scion xB. Rebadge them as a GM or Nissan, put the price down about $20k and they’ll sell.
Put the price down around $20k, and they’ll go out of business. That’s the problem.
This is a wonderful explanation of specifically why the Jimny will NOT come to america. No way it can command that kind of price or volume, as everyone and their mother has already said.
know how they can? By competing with Mahindra. Hear me out… the markets ripe for something different- a premium Side by Side.
Bring this over as an offroad only competitor to the mahindra Roxor and Suzuki Razr. Cut out all the crash test costs and whatnot, and all of a sudden your profitable at 5-8k units annually. Leverage the powersports networks as opposed to the car dealerships, with all their complex rules and challenges.
Now you can have a premium side-by-side. Top end offering with a strong aftermarket presence, and even air conditioning…
The Roxor costs about 15,5 to 18,9… so this should easily be able to compete in the 18-22k mark as a premium alternative, which could be huge margins.
Great thesis, but 28k is not the price people will pay for this. Either have it sold as a rebadge, or as a fleet only bare bones model with a huge aftermarket parts catalog available.Remove the rear seats etc, and use chicken tax /whatever they do with fleet vans as go around. I drove the last gen on a vacation trip in aruba and it would make a great fleet delivery trucklet for say the US postal service, NYPD smart car replacements, or something to use around a farm.
It would have greater presence in the used market than new. So if it was a fleet only with intent to dump them post leases into used car lots than it would work like chevy captivas. That’s the only way I could see it work. It’s not really a 4 person suv anyways, but a good fleet truck.
Too late for Suzuki now that they’ve let their US auto network die.
But Mitsubishi should totally bring something in like the Jimny. Heck, license the thing from Suzuki if they have to. If Mits brought a Jimny like vehicle in, I think it might work. Nobody else is in that space. Mits still has a dealer network, etc. Too much rebuilding for Suzuki to do it, has been too long since their auto arm went away.
Cost extra $200 million to make it U.S. compliant? Awful lot of $$$$$$$$$ just for one car that already built and running!
NO! The North American market does not want such a cramped cabin and a top speed under 80mph.