On the Road to Recovery


It’s September and car makers across the land, desperate to excite consumer interest after nearly three years of flagging sales, are gearing up an array of advertising campaigns to tout their 1992 models.

But in the concrete office and warehouse complex that houses the corporate headquarters of American Suzuki Motor Corp., the focus doesn’t seem to be on 1992, or even on new cars.

The company, which for the past two years has been slowly gaining back some of the ground it lost in the wake of the Samurai debacle of 1988, hasn’t added any models to its lineup this year.

Suzuki continues pushing the four-door Sidekick sports-utility vehicle it introduced in 1990 and this month will launch a new ad campaign for its Swift line of subcompact passenger cars.


For the upcoming model year, the Japanese small-car specialist has improved the Sidekick’s engine and transmission and made several cosmetic changes to the Swift line, including colored bumpers and a new taillight treatment outside and redesigned dashboards and interiors.

New cars-- which auto analysts say American Suzuki needs if it is ever to grow significantly in the hyper-competitive U.S. market--won’t start coming until the 1993 model year.

But rapid growth, the stuff of which automotive success stories used to be made, is no longer a concern at American Suzuki, which instead seems intent on providing the industry with a textbook example of how to recover from a crisis.

The company’s survival in the United States isn’t an issue, American Suzuki officials and industry analysts say. It has a healthy parent, Suzuki Motor Corp., which ranks seventh of Japan’s eight major auto makers in terms of gross revenue. Although only about an eighth the size of the leader, $60-billion Toyota Motor Corp., Suzuki is still a major international auto manufacturer.


Its gross revenue in fiscal 1990, ended March 31, 1990, was $7.4 billion, up from $6.3 billion a year earlier. The company has not yet published its 1991 annual financial report. Nearly 1.1 million Suzuki cars and trucks were sold in 125 countries last year, the company said.

Despite its Samurai troubles and a tiny share of the U.S. market (only Daihatsu has a smaller share among Japanese carmakers), American Suzuki is one of only a handful of auto companies whose U.S. sales are on the upswing this year. For the the first half of this year, it posted a 3.5% sales gain despite an overall drop of 15% among all manufacturers and importers.

Kenji Shimizu, chairman and president of American Suzuki, said the’s automotive division is profitable, with gross revenue in its fiscal 1991 of $200 million, up from $180 million the year before. In all, American Suzuki projects fiscal 1991 revenue of $500 million, Shimizu said, including $200 million from its motorcycle division and $100 million from its outboard motor and miscellaneous products division, up from $470 million in fiscal 1990.

The goal for 1992 is to enlarge its auto dealership network and improve its name recognition among car buyers.


The dealership program is in overdrive, and Suzuki expects to add a total of 50 new franchises by March, 1992, to bring the total domestic dealership count in the United States to 345. (Hawaii, under a separate distributor, is not part of American Suzuki’s territory and is excluded from U.S. sales figures.)

Overall, dealers seem to be happy with Suzuki. A number quit the franchise during the Samurai crisis--spawned when Consumer Reports magazine said in late 1988 that the Jeep-like vehicle tended to roll over when cornered hard. But Suzuki says the total number of dealers has increased each year since it began in 1985 with 48 franchises in California, Florida and Georgia.

Today, there are Suzuki dealers in every state except Wyoming and Nebraska.

The Suzuki line typically is carried as a second or even third nameplate in a system that enables dealers to use a single showroom and maintenance facility for both their prime franchise and one or more smaller lines that don’t compete with the major franchise.


It is a system that works well, said Robert Chaldekas, general manager of Tuttle-Click’s Tustin Dodge/Subaru/Suzuki.

“We’d be dead if it (Suzuki) was a stand-alone franchise,” he said, “but this way it is a nice addition to my lineup. It enables us to offer customers cars that our other lines don’t have, and the Sidekick is the lowest-priced, four-door sports utility on the market.”

Through July, the Tuttle-Click Suzuki operation had sold 144 new cars and trucks, making it the eighth largest Suzuki dealer in the country.

Chaldekas gives American Suzuki high marks in its efforts to assist dealers and says the company “is getting better as it grows. It is able to do more for us, and it is trying to overcome that old bad publicity, and that is going to help it grow.”


The Suzuki name--and the company’s presence in the domestic auto market--sustained significant damage from the Consumer Reports review. And while the federal Highway Transportation Safety Board later dismissed the study and said the Samurai was no more likely to roll over than any other sports-utility vehicle, the government report never got the same publicity.

American Suzuki, which sold 81,349 Samurais in 1987, saw sales of that model plunge to 5,038 units in 1989. The company is projecting sales of 4,308 Samurais in the United States through Dec. 31.

At the time of the Consumer Reports article, the Samurai was American Suzuki’s only domestic vehicle. The company subsequently introduced the Sidekick, a lower, wider, plusher sports-utility vehicle, and the Swift passenger-car line. Company officials are loathe to discuss the Samurai issue now, saying that they have managed to put it behind them.

Gary Anderson, marketing director for American Suzuki’s automobile division and the car company’s top U.S.-born official, says he had rather discuss successes in building the dealer network and in obtaining favorable coverage of Suzuki vehicles in various specialty and vehicle-enthusiast magazines.


But when pressed, Anderson acknowledges that the company was “hurt badly” by the Consumer Reports review and is still trying to recover the momentum destroyed by the negative report.

“True, our original plan was to grow faster,” admits Shimizu, a longtime managing director of Suzuki Motor Corp. in Japan, who was selected to lead American Suzuki in a post-Samurai executive shake-up in late 1989 that saw the company’s top three U.S.-born executives resign.

Shortly after launching its U.S. automotive line in 1985, American Suzuki--which began marketing Suzuki motorcycles in this country in 1964--predicted that it would be selling 300,000 cars a year by 1990.

But the loss of consumer confidence combined with an auto-buying slump and the current recession to slash Suzuki sales. Current projections call for 22,000 sales this year and a gradual increase to 50,000 a year by 1995.


Actually, there are far more Suzuki-built cars and trucks than those sold in the United States these days, but most are sold as part of General Motors Corp.'s heavily promoted Geo line.

Under a joint manufacturing agreement with General Motors, Suzuki Motor Corp. builds the Geo Metros and Geo Trackers sold by about 4,000 Chevrolet/Geo dealers in this country.

And since that part of the Geo line was launched in 1989, nearly 200,000 Suzuki-built Geos have been sold in America, more than three times the number of cars and trucks sold by Suzuki’s 300 dealers in the same 32-month period.

The average Suzuki dealer sells two to three times as many Suzukis as the average Geo dealer, but the vast difference in the size of the two sales networks would appear to put American Suzuki at a distinct disadvantage.


Company officials say it isn’t so and point to the Suzuki dealers’ higher sales tallies--an average of 44 cars per dealer for the first seven months of this year versus 17 Suzuki-built cars for each Geo dealer.

But some dealers say they could do a lot better if Suzuki Motor Corp. wasn’t making vehicles for GM at the jointly owned Canadian Auto Manufacturing Inc. facility in Ingersoll, Ontario.

“We could sell 100 cars a month it it weren’t for Geo,” proclaims Bert Gross, general manager of Kirill Suzuki Inc. in Jacksonville, Fla.

Kirill is Jacksonville’s only Suzuki auto dealership and is American Suzuki’s top-selling dealer so far this year, with 336 new car and truck sales through mid August--about 45 sales a month.


But Jacksonville, Gross said, also has five Geo dealers, and the sales staff at Kirill has to compete with each of them every day. “It is very frustrating,” Gross said.

In Orange County, two Suzuki dealers compete with 12 Geo dealers. The new University Suzuki in Costa Mesa--one of only 15 Suzuki dealerships nationally that is not teamed with another franchise--is virtually next door to a Geo dealer. The two are separated only by the University Honda franchise--which has several used Suzukis and Geo Trackers on its lot.

On the plus side for Suzuki dealers, they can point to the Geo Metro cars as offering only a 55-horsepower, three-cylinder motor. The basic Swift models come with a zippier 70-horsepower, four-cylinder engine. And Suzuki is exclusive distributor for the four-door Swift sedan.

The two-door Suzuki Sidekick and Geo Tracker soft-top models are identical except for color selection, but only Suzuki offers a four-door model, giving Suzuki dealers entree to the fastest-growing segment of the sports-utility vehicle market.


Geo, on the other hand, has exclusive rights to the Metro convertible, a Suzuki-built ragtop, and four-door Metro hatchback and the two-door hard-top Tracker.

That separation of models is something American Suzuki is counting on to increase its differences with Geo and to establish an entirely separate identity and market niche for its products and dealers, Anderson said.

Suzuki Motor Corp., of which General Motors is a 5% owner, has agreed to provide entirely separate designs and models for American Suzuki and Geo from now on, he said. The split began with the Metro convertible and four-door Sidekick in 1990 and will continue with two new Suzuki vehicles to be introduced in 1993 and 1994.

Suzuki officials would describe the new products only as “a new, fun-niche vehicle,” unique to the U.S. market, and a new passenger car, larger and sportier than the Swift.


But one dealer said that in discussions with Suzuki representatives, he has been told to expect a convertible that is a hybrid crossing of a truck and a car, and a more upscale passenger car about the size of the Ford Escort with far more creature comforts than are provided by the Swift.

The new products will go a long way in helping Suzuki reestablish itself in the United States, industry analysts say.

“Competing against Geo has got to be tough; they need those specific Suzuki products to keep separate from GM,” said Michael Luckey, a New Jersey automotive consultant. “Moving into a slightly larger car will be a real boost for them because it will give customers something more to look for.”

Suzuki officials admit that their growth suffers because the line is limited--a Suzuki buyer typically is a first-time new-car buyer or a buyer looking for economy, and when he or she starts looking to move up a notch or two in price or size, there is nothing on Suzuki lots in America that they can move up to, said Ben Moyer, a Japanese auto company analyst with Merrill Lynch Research in Tokyo.


Lack of visibility also hurts. “About the only way somebody buys a Suzuki now is by accident,” said David Hillburn, a Los Angeles automotive researcher and marketing specialist. “They’re at some dealer looking at an Oldsmobile or something and they trip over the Suzuki and decide they like it.”

Chaldekas, the Tuttle-Click general manager, agrees with that assessment.

“We have to steer a lot of people to them because they don’t know the name,” he said. “The Samurai is a good seller for us, and people come in for that and the four-door Sidekick, but a lot of people don’t know about Suzuki.”

It will take time to cure that problem--American Suzuki’s advertising budget has been slashed in recent years and reportedly is down to about $12 million this year from more than $30 million in 1987.


Company officials won’t divulge information about the advertising budget but do say that it is not nearly enough to purchase prime-time television slots.

“Besides, our primary buyers are low TV viewers,” Anderson said. “We find that they are younger and more active and are more likely to do a lot of homework before buying, so we focus on magazines that are likely to be read by sports-utility buyers. We are not trying to sell 100,000 vehicles, so we don’t need to reach millions of people.”

But Suzuki does “need to get the public aware of our products,” said Yoshinori Fujii, another longtime Suzuki Motor Corp. executive who became American Suzuki’s executive vice president in the 1989 management change.

To that end, Anderson practices what he calls “laser marketing,” defining the “psychographics of our buyers” and aiming specific ads into specific marketplaces, usually in magazines and occasionally on cable television.


One campaign that might be effective among younger, socially aware buyers could be developed around the company’s donation early this year of 10 vehicles to the Santa Monica Mountains Conservancy, the group that is acquiring land for inclusion in state and federal parks in the rugged coastal range west of Santa Monica and north of Malibu.

The Suzukis, several Swifts and two- and four-door Sidekicks, replaced a number of domestic cars and trucks that the conservancy had been using. At American Suzuki’s request, conservancy officials have estimated that use of the Suzukis will save the group $24,000 on gas, insurance and maintenance this year.

A campaign built on that testimony would enable Suzuki to tout its economy and ruggedness while appealing to the ecology-minded.

Suzuki ads also play up the kudos bestowed on Suzuki products by various enthusiast magazines like Road & Track and the four-wheel-drive publication, 4WD Sport Utility Magazine.


“We got more than 400 articles written about Suzuki cars and trucks in various magazines and papers last year,” Anderson said.

While the Sidekick has been the focus of Suzuki marketing in the past year, the company is launching a campaign this month that emphasizes its Swift cars, Anderson said. It will underscore their high mileage, up to 43 miles a gallon on the highway for the Swifts; low prices, the base Samurai is $6,299 and the lowest-priced Swift is $6,899, and the zip and sportiness of the 100-horsepower Swift GT, which Suzuki salesmen routinely refer to as a “pocket rocket” because of its speed and small size.

A second campaign slated to begin in October will be aimed at increasing corporate name awareness, Anderson said. The company also gets high marks from dealers for its cooperative advertising program in which the corporation helps dealers pay for local advertising.

One vehicle that Suzuki doesn’t promote is the Samurai, and several analysts have said they keep expecting the company to drop it from its U.S. lineup.


But Anderson said the Samurai, now in its seventh year, is valuable because it gives Suzuki dealers the lowest-priced sports-utility trucks in the nation.

Hanging on to the vehicle that almost destroyed the entire franchise says a lot about Suzuki and its determination to make it in the United States.

“It shows they are realists and that they are determined,” said Hillburn, the auto researcher. “They are not pretending that they will be a challenge to Honda next year, but they have a toe in the water, and they are learning. . . . Remember, everyone laughed at Toyota when they came over here in 1958.”

Total Suzuki Auto Sales in the U.S.


American Suzuki is laboring to rebuild its sales following a widely publicized 1988 report on the Samurai. Despite a sagging market, the auto maker is one of only a few that saw its U.S. sales increase in the first half of this year. 1986: 47,732 1987: 81,349 1988: 57,851* 1989: 30,187 1990: 20,482 1991: 22,011 (Projected) * Sidekick and Swift introduced late in 1988. Source: American Suzuki Motor Corp.

Higher Sales per Dealer

Average number of Suzuki-built cars sold by Suzuki and Geo dealers in the first seven months of 1991: Geo: 17 Suzuki: 44

Suzuki Vs. Geo: Battling the Big Guys Times are tough these days for most automotive companies, but life can be even tougher when you are one of the smallest players on the field. American Suzuki Motor Corp. is slowly regaining sales ground after tumbling badly in 1988, but its dealers are seriously outnumbered by a second sales network that also offers Suzuki-built products--General Motors’ Geo Division. Nationally, 4,000 Geo dealers outnumber Suzuki’s 325 dealers by a 12-1 ratio. Still, Suzuki dealers typically sell two to three times more Suzuki vehicles than do Geo dealers.


Source: American Suzuki Motor Corp. and General Motors’ Geo Division

Locating the dealers

In Orange County the ratio of Geo to Suzuki dealers is better than the national figure but is still high at 6 to 1.



Name: American Suzuki Motor Corp.

Headquarters: Brea

Business: Imports and distributes Suzuki autos, motorcycles, outboard motors and other motorized equipment

Top Executives: Kenji Shimizu, chairman and president; Yoshinori Fujii, executive vice president; Gary Anderson, director of automotive marketing


Auto Division Established: 1985

Auto Dealers: Began with 48 in California, Florida and Georgia. As of Sept. 1, 1991: 325 dealers in 47 states. (None in Wyoming and Nebraska; Hawaii has separate distributor.)

U.S. Auto Sales (fiscal 1991): $200 million