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Suzuki's exit from U.S. means shift for local NH dealers

New Hampshire Union Leader

November 11. 2012 7:16PM
Suzuki car dealership signs are reflected on the surface of Suzuki vehicles for sale at a car lot in National City, Calif. on Nov. 6. Japan's Suzuki Motor Corp will pull the plug on its unprofitable automobile sales business in the United States after nearly three decades, hurt by a strong yen and a limited choice of vehicles that failed to excite consumers. (REUTERS/Mike Blake)

The decision by Suzuki Motor Corp. to discontinue sales of new cars in the U.S., announced last week, will actually be a boon to Suzuki of Manchester, according to Jeff Klein, director of operations for the Schiltkamp Auto Group, parent company of the Manchester dealership at 766 Gold St.

"We are alive and well, and we believe that this is going to be an enhancement to our business, not a detriment," he said. Klein said new Susuki vehicles accounted for only about one-fifth of the dealership's sales, and that the end of the Susuki franchise will enable the company to focus more effectively on its core business - used car sales and service.

"With the subtraction of the new-car franchise, from now on we will enhance our marketing and inventory of pre-owned vehicles," he said. "In fact we just signed an agreement with a new bank for a credit approval program. We think we're actually going to be bigger than when we were handling Susuki."

Klein said Schiltkamp, which also owns Claremont Ford, plans to develop the Gold Street Auto Center, near the intersection of Route 293 and South Willow Street, into what he called "a major used car mega-store."

The Suzuki of Manchester portion of the dealership will eventually disappear, but it may be replaced by another brand. "There are negotiations under way for a possible new car product, but they're preliminary at this point," Klein said.

Like many dealerships with Suzuki franchise agreements, the Manchester operation will continue to honor all Suzuki warranties and service the vehicles. "We will be a Suzuki service hub," Klein said. "We will honor all warranties at least into 2021. So while Suzuki is pulling out of the sales end of the business, they are going to provide service and parts for quite some time."

Tim Machunsky, general manager at Autex Suzuki on Key Road in Keene, said he wasn't surprised by the Nov. 6 announcement that American Suzuki Motor Corp. would declare Chapter 11 bankruptcy and negotiate for the termination of all U.S. dealership agreements. The Japanese parent company plans to buy the motorcycle, ATV and outboard engine operations out of bankruptcy and call the new operating unit American Suzuki.

Machunsky said the fact that Suzuki intends to stay active in the U.S. with its other brands bodes well for ongoing service and parts supply for cars. "Since they are staying heavily involved in motorcycles and power sports, they will want to make sure they have a good presence and branding," he said.

Autex, which also sells new Mazdas, will retain service and support for Suzuki vehicles. "We're like every other Suzuki dealer, in that it accounts for a very small percentage of our retail sales," Machunsky said. "But the folks that have the cars tend to be very loyal. They like the cars and they do service them, so we'll be keeping our warranty-approved certified technicians here at the dealership to take care of warranty work."

Like Autex, other Suzuki dealerships in the state have franchise agreements with different automakers. Port City Suzuki in Portsmouth is part of the same group that owns Port City Nissan. The Tompson Auto Group off Daniel Webster Highway in Nashua has Cadillac, Chevrolet, Hyundai and Mitsubishi franchises.

The loss of Suzuki, which accounted for only 1.5 percent of new auto sales nationally, is not likely to have much impact on diversified dealerships, according to auto industry analysts.

"I don't think it's a big surprise, given their lackluster sales performance of recent years. They have low margin and low-priced cars and small volume. That's far from the ideal combination," said Jessica Caldwell, an analyst with auto information company "Over the long term, it's hard to sustain a brand on such little volume when you don't have a healthy margin like exotic or specialty brands."

Suzuki sold only 21,188 new cars in the U.S. through October of this year. Honda sold the same number of Civics in the month of October alone, according to the Wall Street Journal. The only mainstream brand selling fewer cars in the U.S. was the Smart micro-car, manufactured by Daimler-Benz.

Material from MCT News Service was used in this report.

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