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Suzuki bankruptcy and what it means to you

Consumer Reports News: November 08, 2012 01:08 PM

Suzuki has announced that its American automotive arm will go through Chapter 11 bankruptcy proceedings, making it the latest automaker to withdraw from this market. Impact on current car owners is promised to be minimal, but it does raise concerns for prospective shoppers.

American Suzuki Motor Corporation (ASMC) will wind down auto sales and transition dealerships to provide parts and service. (Wards Auto reports that there were about 5,500 Suzuki models in inventory at the beginning of the month.) Suzuki remains committed to its motorcycle/ATV and marine divisions, and those are not included in this action.

In explaining its decision, Suzuki released a statement that includes:

In evaluating its position in the highly regulated and competitive U.S. automotive industry, ASMC determined that its Automotive division was facing a number of serious challenges. These challenges include low sales volumes, a limited number of models in its line-up, unfavorable foreign exchange rates, the high costs associated with growing and maintaining an automotive distribution system in the continental U.S., and the disproportionally high and increasing costs associated with stringent state and federal regulatory requirements unique to the U.S. market.

The automaker has stated that it will honor all existing warranties. And parts availability should be aided by the fact that sales and production will continue for other markets, including Canada.

It is anticipated that the official support network will inevitably contract, making official service harder to find—an issue noted with other discontinued brands. But you don't have to take your car to a dealership for regular servicing. A good independent shop should be able to handle routine maintenance and many repairs. Moreover, independent repair shops are often less expensive than dealerships and, according to our Annual Auto Survey, generally provide a higher level of satisfaction. (See our repair shop advice and Ratings.)

If you are considering buying a Suzuki, rest assured deep discounts will be offered. However, you must weigh the initial, upfront savings against the inevitably accelerated depreciation and potential long-term service challenges.

Their current model line-up is a bit limited, consisting of just the Grand Vitara (small SUV), Kizashi (sedan), SX4 (small hatchback and sedan), and Equator (Nissan-sourced pickup truck). In our tests, both the Kizashi and SX4 did well. The Nissan Frontier, essentially a mirror image for the Equator, performed adequately. The Grand Vitara did not score high enough for us to recommend.

As always, we strongly suggest that you thoroughly research the performance, reliability, safety, owner cost, and owner satisfaction of any model you're considering. Subscribers to ConsumerReports.org have access to our Ratings in all of those areas.

For more information on the changes at Suzuki, visit their reorganization website or call 877-465-4819.

Jeff Bartlett

   

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