Winners Never Quit
When I think of Suzuki Motor, I think of that old American saying: "Winners never quit and quitters never win."
Suzuki has been selling vehicles in the United States for 20 years, and it hasn't won anything yet. Over two decades, the Japanese automaker has averaged a miserable 45,000 sales per year in this country.
It may surprise you to learn that Suzuki is a successful company. I can't think of another automaker that can brag that it has been profitable for 56 consecutive years. Suzuki sells more than 2 million vehicles per year, and more than half of those sales are outside of Japan. In its homeland, Suzuki is No. 4 in sales, behind Toyota Motor, Nissan Motor and Honda Motor. In fact, Suzuki sells more than twice as many vehicles in Japan as Mazda Motor, Mitsubishi Motors or Subaru. And in its latest fiscal year, which ended in March of 2004, it earned $415 million.
Suzuki's specialty is in mini-vehicles, which are quite popular in Japan. In fact, Suzuki has been the leading mini-vehicle seller in Japan for more than 30 years. In Europe, Suzuki sold 165,000 vehicles last year, and it's the dominant producer in India. But in the U.S., it sold only 74,000 cars and light trucks last year, and that was Suzuki's best year here since 1987.
A little recent history: Back in 1990, Suzuki was so ambitious that it put up a Canadian assembly plant in a joint venture with General Motors. The factory had a capacity for 205,000 vehicles per year, but production never got close. At the moment, that facility is just building the Chevrolet Equinox sport utility vehicle.
The trouble is that Suzuki is best at making small cars and trucks, and U.S. consumers just don't like them that small. Just about five years ago, Suzuki executives finally came to that realization, admits Koichi Suzuki, president of automotive operations for American Suzuki. Even its XL-7 SUV, which is big for Suzuki, is still small for this market, says Koichi, who is no relation to the founding Suzuki family.
Will Suzuki quit and go home? Not a chance. Koichi Suzuki has a new plan and goal. His plan is to offer lots of new vehicles, and his goal is to generate 200,000 annual sales by 2007.
Nine new models are in Koichi Suzuki's vehicle plan. Four of them are out already, and we know about two others. Already on the U.S. market: the Verona, a compact sedan about the size of a Honda Accord; the smaller Forenza sedan and station wagon; and the new Reno subcompact.
Two new sport utility vehicles are in the works. This fall, the X2 arrives from Japan. This vehicle is a small SUV that will be available with four- and six-cylinder engines. Sometime in 2006, Suzuki will introduce a larger SUV, which will be built in Canada in the factory that makes the popular Chevy Equinox, and will be based off that Chevy's architecture. This is expected to be a strong seller, maybe 40,000 to 50,000 per year.
Suzuki sales were up 26.5% last year, and Suzuki has a few factors working in its favor.
The Verona and Forenza cars are built by what used to be Daewoo of Korea, which is now controlled by General Motors. Suzuki owns a bit of the Korean manufacturer, too, and GM owns 20% of Suzuki. But GM doesn't control Suzuki. Thanks to that Korean operation, Suzuki was able to quickly get a line of bigger cars into the market.
Higher gasoline prices make little vehicles more attractive--at least that's the theory. Suzuki currently offers a 100,000-mile warranty, one of the best in the business. The company now has 540 U.S. dealers, with 60% having distinct Suzuki showrooms. Suzuki, which is pushing a new showroom design, aims to expand to 600 dealers. And the company is working on three other new models.
Suzuki is also targeting the tuner market, in which drivers modify cars to look hot and go fast. This is an important demographic group that's mostly male and young. Since Suzuki cars are low-priced to start, there's a chance of success in this market. Of course, the competition is tough. Toyota's Scion may be the new Mr. Big on Tuner Boulevard.
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