American Suzuki Motor Corp (ASMC) filed for Chapter 11 bankruptcy protection on Monday and declared it would stop selling cars in the US as part of its restructuring plan. The company is based in Brea, California, and is Suzuki Motor Co’s (SMC’s) sole distributor in the continental US.
As per Chapter 11 filings in the US Bankruptcy Court in Santa Ana, California, ASMC had assets of $233 million and debts of $346 million as of September 30, and earned revenues of $1.04 billion for the year ended March 31, 2012. The company has estimated its creditors to number between 1,000-5,000, and its largest creditor is listed as American Suzuki Financial Services, owed a total of $891,000 without collateral. ASMC confirmed it had sufficient cash for operations during the restructuring. It intends to honor all car warranties and all buyback agreements presently in place with financial institutions. Regarding its dealers, the company proposes to shut down some dealerships and to help transition some others to parts-and-service operations.
ASMC said it withdrew from the car business due to low sales, unfavorable forex rates, and high costs imposed by US regulations. Post its exit from bankruptcy protection, it will focus on marine outboard engines, motorcycles, and ATVs. ASMC sold 2,023 vehicles in October 2012, up by 5% from the previous year. It also declared sales of its Grand Vitara SUV had grown by 64% over the previous month, but did not specify the number of units sold. The company last provided a breakup of its monthly sales for May 2012, when it sold 474 Vitaras and 1,101 SX4 small crossovers, the latter being its biggest seller.
The bankruptcy and reorganisation are not connected with SMC of Japan, its parent company. The latter plans to buy ASMC’s remaining businesses and its automotive service operations, and will retain the same name for the reorganised company. Emerging markets, including India, have been a focus area for SMC, and its JV Maruti Suzuki is the largest automaker of India.
