Suzuki Offers 25% Rebate to Sell Samurais : Cuts $2,000 Off Dealers’ Price to Lure Customers

Suzuki is trying to right the reputation of its troubled Samurai sport vehicle with one of the most generous incentive plans ever offered to American car dealers.

American Suzuki Motor Corp. last week told dealers it would cut $2,000 off the price they pay for Samurais sold through Sept. 2 and allowed them to decide how to use the money.

Some Suzuki dealers around the country say they’ve already begun to use the money to lure customers back to the lots with deals ranging from price cuts to special insurance policies.

“It’s given us the extra money to wheel and deal,” said LaDale Cox, sales manager of Mark Singleton Suzuki in Marietta, Ga., who said sales rose as customers learned of the deals and came into the showroom.

U.S. sales of the small, jeep-like Samurai plunged 70.6% in June after Consumers Union said the vehicle was dangerously apt to tip over when the driver swerved back and forth to avoid an accident.

‘Smart Thing to Do’

The incentive amounts to 25% of the $7,995 base price of the Samurai. That is one of the largest percentage incentives ever in the auto industry, said Maryann Keller, an analyst for Furman Selz Mager Dietz & Birney.

“It’s a very smart thing to do,” Keller said. She predicted an extremely low price could override some people’s lingering doubts about whether the vehicle is too tippy.

However, she said the Samurai’s future depends on how the news media handle the story. Videotape of the Samurai tipping over in driving tests, frequently repeated on the television news, has had a strong impact on potential buyers, she said.

Dealers are permitted to use the $2,000 per sale any way they want, including keeping all of it for themselves, but most were expected to use the bulk for various deals.

If dealers passed along the entire incentive to customers, the Samurai would be one of the cheapest vehicles on the market.

Huge Inventories

In Ohio, the state’s 10 Suzuki dealers are offering free, $1 million accidental life insurance policies for one year to all Samurai buyers. The policies pay $1 million to beneficiaries if the holder is killed when a Samurai rolls or tips over.

Suzuki dealers don’t pay the manufacturer for vehicles until they sell them. That means American Suzuki is bearing the cost of financing vehicles sitting on dealer lots as well as ones they have not yet delivered to dealers.

Some dealers have such big inventories that it could be a long time before they ask for new shipments from American Suzuki, which is based in Brea, Calif.

Earnhardt Suzuki in Tempe, Ariz., had taken a huge fleet of Samurais right before the June 2 report by Consumers Union and still has 250 in inventory, said Tom Scheurn, the general manager.

Scheurn said it might be two more months before he asks the manufacturer for more. But he said, “I’m desperate and I’m going to take whatever it takes to make a deal.”

John Chezik Suzuki of St. Charles, Mo., sold eight Samurais Thursday and another seven by mid-afternoon Friday, said Mark Muller, the general manager. The numbers could not be independently confirmed.

“This rebate program’s the most incredible thing that’s ever happened,” Muller said.

“It’s, ‘Katie, bar the doors,’ buddy,” he said. “I’m sure I’ll zero my inventory out this month.”