Suzuki just finished buying out 50 franchise owners in what it calls an effort to strengthen profits for remaining dealers, but some question the true motives.
Since Suzuki enjoyed its best-ever annual sales of 101,884 vehicles in 2007, the brand's annual sales have plummeted, with 2010 on pace for just 23,145 vehicles - roughly a 75 percent decline in three years.
During its peak year of 2007, Suzuki had 486 dealership franchises in the U.S., a number that has steadily declined since, down to 400 in 2009, and now down to about 300 dealers have Suzuki bought out about 50 stores - according to Automotive News. The buyouts have been taking place since offers first went out in February to roughly 150 dealers, of which about one-third accepted the offers.
The buyout offers were intended to give the least profitable dealers a way out, while helping the remaining dealers to enjoy higher profitability due to increased volume from reduced competition from other dealers. Many dealers are currently averaging fewer than five new car sales per month, with the average dealer participating in the buyout program selling just two new cars per month.
The buyout program came in two flavors, with one offering $50,000 plus buy-back of vehicle inventory, unused parts and various signage and Suzuki-specific tools which may have been purchased. The $50,000 offer is only available to stores which participated in the "Suzuki Square" program since 2003, a program that was aimed at updating stores through dealer investments. For the dealers which didn't partake in the program, the buyout offer was just $20,000.
The beginning of the end?
Depending who you ask, American Suzuki's moves with the dealer buyouts are either the start of a pull-out from the U.S. entirely, or, according to the automaker itself, the beginning of an attempt to strengthen its struggling dealer network by attempting to boost profits for each remaining dealer.
The buyout program concluded in July, having reduced the dealer network by roughly 15 percent, and the automaker tells Automotive News that it has no further plans to reduce the size of its dealer network through buyout programs.
Despite Suzuki saying that it intends to stick around, some of the dealer owners saw the buyouts in a different light, suggesting that it might be the start of the end of the Suzuki brand in the U.S. as sales continue to flounder.
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