Suzuki buys out 50 dealers
Suzuki buys out 50 dealers
About 50 Suzuki dealers have accepted buyout offers from the company in the past five months as part of a plan to cut the brand’s worst-performing stores.
Struggling American Suzuki Motor Corp. launched the voluntary program in March to encourage low-volume dealerships to close. The brand now has about 300 dealerships, says Gene Brown, the marketing vice president. That’s down from 354 in March.
Suzuki says it aimed to trim the number of retail outlets to give survivors a better shot at profits through increased per-store sales. U.S. sales topped 100,000 in 2006 and 2007 but fell to 38,689 in 2009 and are off 48 percent so far this year.
Dealers have been hurting. John Voss, who took the buyout, calls his Suzuki store near Dayton, Ohio, “a nonentity.”
Voss says he invested about $250,000 for improvements in his stand-alone store after acquiring the franchise in 2007. But for the past year, he says, he has been selling only four or five new Suzukis a month.
American Suzuki offered poor-performing stores a cash payment and pledged to buy back inventory, parts, special tools and signs from dealerships targeted by the program. Dealerships that participated in the “Suzuki Square” showroom renovation program launched in 2003 were offered $50,000. Stores that did not participate were offered $20,000, Suzuki spokesman Jeff Holland says.
150 got offers
The buyout offers were made to about 150 dealers. The program ended July 31, and Brown says Suzuki has no plans to trim its sales channel further.
“The dealers who have taken the offer were selling on average about two cars per month,” Brown says. “The changes have left us in a better position. Dealer profitability is better, and the profitability of the company is better than last year.”
Per-store sales, not regional coverage, dictated which dealers were selected, he says. In regions where all of Suzuki’s dealerships performed poorly, all dealers were offered buyouts.
That was the case in the southwestern Ohio, where the brand had only three stores servicing Cincinnati and Dayton. Both Voss Suzuki and Dave Arbogast Suzuki in Troy, near Dayton, accepted the Suzuki offer. Arbogast remains a service-only point.
John Voss’ Voss Auto Network includes Chevrolet, Honda, Toyota, BMW, Land Rover, Hyundai and other stores. He says his Suzuki store would be better used as a certified-used-vehicle dealership.
“It’s a shame to let a building of that size sit there and do nothing,” he says. “It was basically doing nothing.”
Sticking with the brand
The region’s third — and now last remaining — Suzuki dealership, Busam Suzuki, is about 35 miles south of Dayton, near Cincinnati.
Owner John Busam declined the buyout offer. Like Voss, Busam says he invested thousands in a new stand-alone Suzuki store. The $50,000 cash, inventory buybacks and other sweeteners were not worth losing the franchise, he says.
“I’ve probably got $50,000 invested just in signs,” Busam says.
Even as Suzuki struggles, Busam, a fourth-generation car dealer, is sticking with the brand.
“Franchises get hot and cold,” he says. “The stuff nobody wants today, everybody wants tomorrow.”
Busam says Suzuki’s problems stem from a lack of marketing, plus tough competition in the United States.
“They just need to find their niche and the right advertising,” he says.
Suzuki’s products are not the problem, says Dave Arbogast: “It’s just a lack of awareness.”
Suzuki launched an ad campaign last month. The 15-second spots, at the beginning and end of TV commercial breaks, feature the new Kizashi sedan and Suzuki’s 100,000-mile/7-year powertrain limited warranty. The ads are running through August in about two dozen markets.
Still, Suzuki’s buyout plan and the brand’s plummeting sales make some dealers wonder whether the brand will stay in the United States.
“My impression was they were setting up to leave the country,” Voss says.
Not so, Brown says. “It’s part of our plan to get stronger, not weaker,” he says of the dealership-buyout program. “It was a voluntary program on purpose. If we wanted to exit, we would be much more aggressive.”
SUZUKI IN THE U.S.
2007
Sales: 101,884 (peak year)
Dealerships: 486
2009
Sales: 38,689
Dealerships: 400
Today
Sales: 13,501 (7 mos., 2010)
Dealerships: About 300
Source: Automotive News Data Center, Suzuki
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