December 7, 2012
By: John Clark
Last month, American Suzuki Motor Corp. filed for Chapter 11 bankruptcy and announced that it will stop selling cars in the United States, according to a report from The Wall Street Journal.
In its federal bankruptcy filing, which occurred in the U.S. Bankruptcy Court in the Central District of California, the company claimed to have between $100 million and $500 million in both debts and assets, according to sources.
And the company, which is based in Brea, California, may have as many as 5,000 creditors, according to reports, which could complicate its restructuring process.
American Suzuki plans to continue selling Suzuki motorcycles, marine outboard engines, and all-terrain vehicles in the United States, but it is reportedly planning to stop selling Suzuki cars after the bankruptcy process is completed.
While this may be bad news for American consumers, the company has promised that it will "honor all car warranties and buyback arrangements," sources say. Nevertheless, the removal of Suzuki inventory from car dealerships could put a significant dent in the finances of many small dealerships across the country.
Sources say that American Suzuki plans to close many of its corporate-owned dealership, but that it also intends to convert several dealerships into outfits that offer car service and sell Suzuki parts.
American Suzuki also plans to continue operating its other businesses during the bankruptcy process. In addition, the bankruptcy filing of American Suzuki is limited to the U.S. company and does not affect its parent, Suzuki Motor Corp., which is based in Japan.
In fact, the Japanese parent company plans to buy the American dealerships that are eventually converted into car service operations, according to sources. And however the American company is reorganized, sources say that it will retain its same name.
The bankruptcy filing comes as a bit of surprise for a company that had seemingly started to recover from the worst effects of the recession, which took a terrible toll on many American car dealerships, as consumers delayed the purchase of new cars.
This October, for example, American Suzuki’s sales rose by five percent from the same month last year. But since 2011 was a dismal year for the company’s finances, a five percent uptick in sales was not enough to eliminate the need for bankruptcy.