The Japanese manufacturer Suzuki Motor Corp stated that it will discontinue its automobile sales in the US since it is becoming unprofitable. It will just be focusing on its ATV, motorcycle, and marine boats.
The sole distributor of Suzuki Motor Corp vehicles in the United States, American Suzuki Motor Corp will file for Chapter 11 bankruptcy protection with $346 million in debt. $173 million of it is owned to Suzuki group companies. Suzuki Motor Corp said that it would not be able to maintain profitability in the US, provided that its automobile lineup and currency rate is primarily made of small cars.
A number of 2,023 vehicles was sold last month in the United States by American Suzuki and it plans to compensate car dealers as it will be focusing on ATVs, marine boats, and motorcycles and will phase out automobiles. Its shares were down to 1.7 percent at 1, 802 yen in early morning trade.
In 2011, Suzuki sold about 26, 000 vehicles in the United States. This is a fraction of Japanese automakers like Toyota, Nissan, as well as Honda. According to the American Suzuki Motor Corp, “recognized it will be unable to maintain profitability with respect to its automobile marketing business”.
According to the Suzuki division which employs about 365 people, it has faced difficulties from the value of the Japanese currency and weak demand for its compacts in the US market. The yen has hit records high against dollar in 2011 and has remained strong was has dented Japanese manufacturers. They did so by making their products less competitive in the overseas, at the same time eroding the value of repatriated foreign income.
The Suzuki’s United States unit expressed that it would “redirect” its resources to the sale of motorcycles, ATVs and marine products “where the prospects for profit are good”. It also added that warranties on vehicles already sold in the US market would be honored despite the filing.
Maruti Suzuki joint venture is the nation’s biggest automaker which has become profitable. The Japanese firm focuses much its attention on emerging markets such as India.