BREA, Calif. - American Suzuki Motor Co. today announced plans to realign its business, shedding the automotive division in order to focus solely on motorcycles, ATVs and watercraft. The company also said it planned to restructure its operations under Chapter 11 of the U.S. Bankruptcy Code.
Suzuki automotive dealers reportedly will evolve into parts- and service-only locations, or these locations could be phased out altogether, the company noted.
"Following a thorough review of its current position and future opportunities in the U.S. automotive market, ASMC will wind down and discontinue new automobile sales in the continental U.S.," the company stated . The OEM is filing for Chapter 11 protection in the U.S. Bankruptcy Court-Central District of California in Santa Ana.
"The realignment is intended to better position ASMC for long-term success, and is a return to the company's roots in the U.S. market, which began with motorcycles and has grown to include ATV and marine products," the OEM stated. "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 marine products. The OEM said it would continue to support and sponsor Supercross, outdoor Motocross and road racing teams, and will invest in additional advertising and promotional support for its dealer network.
Suzuki Chapter 11, Reorganization FAQ, click HERE
Industry observers initially hailed the move as good news, as it gives Suzuki a way to recover from a debt burden brought on by sagging sales on the automotive side. And it seems that Suzuki agrees.
"In evaluating is position in the highly regulated and competitive U.S. automotive industry, ASMC determined that its Automotive division was facing a number of serious challenges," the OEM stated. Challenges cited by the manufacturer include low auto sales volumes, a limited model lineup, unfavorable exchange rates and the high costs of maintaining U.S. distribution and keeping up with federal and state regulatory requirements.
Suzuki said it would continue to fully honor current warranties, and that automotive parts and service would be provided "without interruption" through ASMC's parts and service dealer network. "ASMC intends to work within its current U.S. automotive dealer network to help structure a smooth transition from new automobile sales to exclusively parts and service operations, or, in some instances, an orderly wind down of dealership operations," the company stated.
Suzuki's proposed Plan of Reorganization and Disclosure Statement, which will be part of its Chapter 11 filing, will specify how the Motorcycle, ATV and Marine divisions will be maintained and enhanced, and how the automobile dealers will be transitioned to parts and service locations.
SMC, Suzuki's parent, reportedly intends to purchase the American subsidiary's powersports operations, as well as the automotive parts and service business, through a new U.S. subsidiary that will retain the ASMC brand name, according to the company. "ASMC will request permission from the Court to borrow additional funds from SMC needed during the restructuring," the announcement said.
Suzuki said it plans to continue operating the powersports business "as usual" and will continue to support all products and honor all warranties from the motorcycle, ATV and marine divisions. The OEM said it is working with GE Capital's Retail Finance and Commercial Distribution Finance businesses to continue providing powersports consumer financing and dealer inventory financing, respectively.
ASMC Letter to Motorcycle, ATV, Marine Consumers, click HERE
"ASMC has filed a series of first-day motions requesting approval to continue paying employee wages and benefits in the ordinary course, offering dealer incentives and payments under customer warranties," the OEM stated. "ASMC also expects to pay vendors in the normal course of business for goods and services delivered on or after its November 5, 2012, filing." Payments for goods received before Nov. 5 will be made in accordance with the Chapter 11 procedure, the company noted.
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