Suzuki Trims Network; Stays The Course

Automaker Suzuki, by far the smallest of the manufacturers from Japan, is planning to stay put in the United States despite seeing sales tumble by more than 60 percent in recent years.

American Suzuki Motor Corp. told Automotive News that it has bought out 50 dealers, reducing its American dealer network to 304 retail outlets from the 354 it had in March. In its peak sales year (2007) Suzuki had 486 dealers who sold 101,884 cars. Last year, Suzuki sold 38,669 vehicles, but this year sales may drop below 25,000 units at the pace 2010 sales are going. Suzuki is the only car company not experiencing a rebound from 2009′s awful sales.

Poor Planning

Suzuki’s problems over the past few years can be attributed to stiff competition, but there are two larger factors at play: marketing and product. Recently, I sat through what had to be the worst car commercial I’ve seen in many years, this one from Planet Suzuki in Raleigh, NC. Turns out that the ad is part of a national advertising campaign, picked up or modified for select markets across the country and touting the price of the Suzuki Kizashi, the company’s midsize sedan.

The Kizashi is a good model, but the ad is terrible. Actors feigning surprise at the sticker price just doesn’t cut it. The spokeswoman is fine, but the people who are expressing amazement are acting ridiculous.

Product Line

Suzuki’s product mix isn’t much to speak about either. Beyond the Kizashi, there isn’t one model that stands out. That’s too bad because in years past the Swift and various compact SUVs filled an important void. Today, I imagine a lot of Suzuki shoppers have probably fled to Subaru, Kia and Hyundai, car brands who managed to sell more cars in 2009 than 2008, the only three companies to do so.

Notwithstanding Suzuki’s insistence that they will remain around, the company has a lot of work cut out for itself if it plans to survive.

Stiff Competition

General Motors, Ford and Chrysler are in a much strong position than a year ago, Hyundai and Kia continue to gain ground, and Suzuki’s Japanese rivals remain formidable. Volkswagen is expanding its operation too.

In a market where 16-17 million cars are sold, Suzuki might stand a chance. But, the market pie has shrunk and Suzuki’s competitors simply have the Japanese automaker out gunned. Look for Suzuki to make a gallant effort to stay in America, but expect customers to not be moved.

December Glitter Offers Automakers Hope

Surveying 2009 automobile sales figures and you can understand if some manufacturers are feeling anxiety over how their respective brands have performed of late. At the same time, December’s U.S. car sales rose by 15.1 percent over December 2008, the first month in a long time that a double digit jump was recorded without government incentives.

A number of manufacturers had break through months including Ford (+32.8%); Toyota (+32.3%); Hyundai (+40.6%); Kia (+43.7%); and Subaru (+33.5%). Of these five companies, the last three managed to post year over year sales gains while Ford, Toyota, Honda, GM, Chrysler, and Nissan posted losses of 15% or more.

Mitsubishi had a terrible year, seeing its sales fall by 44.5% topped only by Suzuki who dropped off by 54.4%. But for December, Mitsubishi was off by only 4.7% which led to the company making the following comment:

“The improvement in December sales validates our renewed strategies and tactics,” said Shinichi Kurihara, president and CEO of Mitsubishi Motors North America. “The input provided by our dealers’ National Advisory Board has been instrumental in guiding our revised sales plans and actions, and will continue to do so as we collaborate to extend this sales momentum.”

That means that Mitsubishi has figured that its approach was broken and that the automaker was implementing steps necessary to help it move forward.

Chrysler, like General Motors was rocked by bankruptcy this past summer but unlike GM the company has few products to boast of in a bid to attract buyers. That fact hasn’t been lost on customers who have been fleeing the brand in recent years sending sales down to a level not seen in almost sixty years: below one million units.

Still, Chrysler managed to find something good to report for the month of December, even if that comparison was with November, not the previous December:

“As we kick off the new year, Chrysler Group continues to build momentum with some of the best products in the marketplace, and we are enthusiastic about the new products coming this year,” said Fred Diaz, President and Chief Executive Officer-Ram Brand and Lead Executive for the Sales Organization, Chrysler Group LLC. “Our great Chrysler, Jeep, Dodge and Ram products are being recognized by opinion leaders in the industry, and consumers are responding in a positive way. In 2010 the company will continue to earn the trust of consumers with exciting, high-quality vehicles that are priced right.”

Well, your customers aren’t seeing it that way with many people wondering and worrying if Fiat’s takeover will produce the new models that people want or whether the death knell for America’s third largest automaker has sounded.

But not every manufacturer was eager to share news with the public, at least not yet. As of this moment, American Suzuki hadn’t issued the customary news release reflecting on December and 2009 sales. As mentioned earlier, Suzuki posted the worst drop of any full line manufacturer in America for the year, a precipitous downturn that may eventually force the company to pull up its American stakes.

But with the midsize Kizashi now in Suzuki showrooms (pictured), the brand gains a much needed model to help stoke sales. It will need the car too because for the entire year, only 38,695 Suzukis were sold, about the same number of cars that ailing GM sells in one week.

Photo Credit: American Suzuki

December 2009 Sales Increase Likely

When the December selling period for US car sales comes to a close on January 4, 2010, there should be some good news to report. In fact, if J.D. Power and Associates projections are correct, a 7 percent month over month gain is possible. The company is a global marketing information services business whose services include market research, customer satisfaction, and forecasting.

Cash For Clunkers

Keep in mind that December 2008 was one of the worst months for car sales over the past few years. Sales cratered as the full brunt of the recession was being felt with consumers clamping their wallets and pocketbooks shut. For most of 2009 sales were truly abysmal, but they began to pick up again following the summer’s CARS or cash for clunkers program.

“The market is continuing to improve, with the relative strength of December sales supporting a year-end rally,” said Gary Dilts, senior vice president of global automotive operations at J.D. Power and Associates. “The December selling rate is tracking at 11.2 million units-up nearly 1 million units from one year ago-which sets up 2010 for further recovery.”

If these prediction ring true then December could be the turning point that automakers have been seeking. Sales began to dip in late 2007 and continued to drop off in 2008, before collapsing following the financial crisis of September 2008. Most analysts believe that the low point was reached in March 2009, with a gradual recovery beginning soon thereafter.

A Brighter 2010

Total sales should hit 10.4 million units for the year, with 8.7 million units being retail sales. The difference, of course, is fleet sales. For 2011, J.D. Power and Associates believes automakers will sell 11.5 million units, a far cry from the 17 million units sold earlier this decade, but a market improvement over 2008 and 2009.

Importantly, automakers are learning how to turn a profit with fewer vehicles sold by reducing incentives and upping content. That can help sustain automakers in the years ahead as consumers carefully weigh jumping back into the market.

Source: J.D. Power and Associates

Photo Credit: Chrysler Group, LLC