Suzuki Seeks Better Traction in the U.S.

At home, even mighty Toyota bows in deference to Suzuki Motor Corp., which has dominated Japan’s mini-car market for decades.

Suzuki’s tiniest models -- built for Japan’s narrow roads -- aren’t marketed in the U.S., and its conventional cars and sport utility vehicles are rarely more than afterthoughts for Americans. Last year, the company’s Brea-based U.S. operating arm, American Suzuki Motor Corp., sold 14% fewer vehicles than it did in 2002. It captured less than half of 1% of the U.S. market. Among Japanese automakers, only Isuzu Motors America Inc. did worse.

But Suzuki is aiming to make a U-turn in the U.S. Long handicapped by its limited lineup here, it plans to introduce nine new or redesigned models by 2007, many of them from a joint venture in South Korea with General Motors Corp., which owns 20% of Suzuki. The goal: to triple U.S. sales to 200,000 cars and trucks by 2007.

There are signs of improvement already. Suzuki’s U.S. sales jumped 24% in the first quarter, with two new models from the South Korea plant accounting for the growth.

The American market is “the world’s most dynamic and competitive” and is the missing piece in the company’s global network, said Koichi Suzuki, president of American Suzuki Motor Corp.

He isn’t related to the Suzuki family that began the company in 1909 in Hamamatsu, Japan, as a knitting loom manufacturer. Suzuki made its first vehicle in 1948, a primitive motor scooter, and entered the U.S. car market in 1985.

Today, the company wants to convince consumers that its cars and SUVs “offer more value for less money,” marketing director Tom Carney said.

To spread the word, Suzuki will spend $100 million on marketing in the U.S. this year, up from $56 million in 2003. It will be the first time in more than a decade that Suzuki has had an ad budget big enough to make an impression, said Eric Noble, president of CarLab, an auto industry research firm in Orange.

Although Suzuki’s motorcycles and watercraft are popular, when it comes to cars and trucks the brand just doesn’t register on many shoppers’ radar screens. The company’s only hit product in the U.S. was the Samurai SUV, marketed as an inexpensive, fun alternative to the Jeep. Suzuki sales hit a peak of 83,334 in 1987, thanks to the Samurai.

But the SUV was trashed in a 1988 Consumer Reports review as a dangerous vehicle prone to tipping over, and sales nose dived. The troubled Samurai “still is the overriding image many people have of Suzuki,” Noble said, “if they have an image at all.”

Suzuki discontinued the Samurai in the United States in 1995, but it still is embroiled in a lawsuit against Consumer Reports over the Samurai review. A trial is scheduled to begin in October in federal court in Santa Ana. Each time there is a new ruling in the case -- watched by the media because of its possible chilling effect on product reviews -- the entire Samurai debacle is replayed in print and on national television.

The company “needs to build trust in its products,” said Dan Gorrell, vice president of Strategic Vision, an auto industry research firm based in San Diego.

Maybe it has: Sales have been picking up since it introduced the new models last year. They are built in South Korea and branded as Chevrolets and Suzukis but were designed by Daewoo Motor Co., whose assets Suzuki and GM acquired.

The first new Suzuki was the Verona, a mid-size, 6-cylinder sedan. Priced at $17,350 to $21,500, the car competes with the Honda Accord, Nissan Altima and Hyundai Sonata. Next came the Forenza, a compact sedan priced at $13,350 to $17,000 and competing against the Honda Civic, Toyota Corolla and Ford Focus.

The Verona and Forenza “are relatively competent, well equipped and well appointed for cars in that price range,” said Charlie Vogelheim, executive editor of Kelley Blue Book.

Like other industry watchers, he believes Suzuki will increase sales but doubts the company will hit its goal of 200,000 a year by 2007.

“You’ve got to wonder where all those new buyers will come from,” Vogelheim said.

Carney, hired from Daewoo in 2001, sees plenty of room for growth.

Suzuki is targeting the Latino market, often ignored by smaller carmakers, and is drawing some new customers who looked at Hondas and Toyotas only to discover that the best they could afford were bare-bones, entry-level models.

The base model Verona sedan costs about $2,750 less than a similarly equipped Honda Accord.

Suzuki also offers a seven-year, 100,000-mile warranty, versus Honda’s three-year or 36,000-mile coverage. “We think a lot of customers will see that they can get extra features and Japanese quality for less price with Suzuki,” Carney said.

Ultimately, car sales depend on quality, not just low prices. So Suzuki plans to spend several billion dollars developing new vehicles for the U.S. market.

Coming this year is the Reno, a compact, sporty hatchback from South Korea, to be followed in the fall by a station wagon version of the Forenza, and then a face-lift for the Aerio compact sedan and wagon. On tap for next year is a redesign of the Grand Vitara sport utility, to be followed in ’06 by a new version of the seven-seat XL7 sport utility. The final models on the schedule are a new compact sedan and wagon in 2007.

To push the new sheet metal, Suzuki is recruiting new dealers, holding up the profit potential from increasing sales as bait.

Carney said the company had 500 dealers, up from 440 a year ago, and wanted 600 by the end of next year.

Suzuki also has begun a remodeling program for its long-neglected dealerships. One of the first of the new facilities will be at Quality Suzuki in Huntington Beach.

General manager K.C. Connell said Quality Car Co. had spent nearly $1 million building a new Suzuki showroom that featured a lot of glass to provide wide-open views of the facility.

Quality landed its Suzuki franchise eight months ago, Connell said, just before the Verona was launched.

After the new sedan arrived, “we saw showroom traffic pick up right away. Everything Suzuki is doing seems to be right,” Connell said.

“We wouldn’t have invested that kind of money on a new showroom if we weren’t sold on the product.”

There’s still a long way to go, analyst Noble said. “But what’s exceptional is that this time, instead of just talking about it, Suzuki finally is taking a lot of actions to make it happen.”