Suzuki’s state of affairs
By Dave Halliday
When the United States government bailed out General Motors a few years ago, you can add Suzuki to the long list of those that ended up feeling the pain.
Terms of the bailout forced GM to end manufacturing arrangements with other automakers such as Suzuki and Toyota. For Suzuki, that meant the loss of the Swift+ subcompact, the XL7 sport utility and a V6 engine.
Suzuki car and SUV sales in Canada have dropped precipitously ever since.
Bill Porter, Suzuki’s senior V-P for sales and marketing in Canada, said sales fell to 5,600 in 2011 a year from 13,400 in 2008.
That large a drop caused some dealers to desert the brand and forced others to downsize their operations to meet the realities of reduced sales. Suzuki dealers now need a solid contribution from used-car sales and other departments to stay profitable.
Ontario and Quebec dealers suffered more from declining sales, while those in Atlantic and Western Canada have fared better. But with national annual sales at less than half of what they were four years ago, many dealerships are fighting back and doing whatever they can to promote the brand and attract customers.
Dealers such as Freshwater Suzuki in St. John’s, Nfld., and Ultimate Suzuki in London, Ont., provide two examples of what dealers can do.
Freshwater became a sponsor of the Salmon Festival in Grand Falls-Windsor, a music festival in July headlined this year by iconic rock group Aerosmith, while Ultimate Suzuki put on the Ultimate Driving Event featuring the Suzuki Kizashi at the Grand Bend, Ont., race track.
Dealers want a wider variety of vehicles to sell and better promotion so that potential customers will know what Suzuki has to offer. They believe they have a good product, but a lack of sustained national advertising means it’s a secret for most consumers.
The automaker will be introducing refreshed versions of the compact SX4 sedan and hatchback and Grand Vitara sport ute soon for the 2013 model year. While the vehicles will have a new look, they’re not new from the ground up.
Randy Collins of Ultimate Suzuki said he hopes the refreshed product will give the brand a shot in the arm. Staff at his store, a former Saturn dealership, will be working hard to let potential customers know about the refreshed versions of the SX4 and Grand Vitara.
Porter, brought in previously as a troubleshooter for the Canadian branches of Nissan, Hyundai and Kia, admits that some Suzuki dealers are not happy with what has happened. But he said that Suzuki Canada would work with dealers to confront the problems they face.
Dealers “may have to adjust their business model,” Porter said. “There’s no business that has not had to adjust its business model in the last four years.”
That four-year period started when the recession began in 2008. He said the company is prepared to sit down with dealers and review the business plan on a line-by-line basis to make sure it will work. Changes, including laying off staff, may be necessary.
For his part, Porter keeps a close watch on what and how much are selling. That’s important when ordering vehicles from Suzuki’s factories in Japan.
In the Grand Vitara lineup, a fully loaded unit with leather selling in the $32,000 range was popular. Now, a cloth interior version selling for $25,000 has moved to the forefront.
“That tells me the market has changed,” Porter said. “Everyone is spending less.”
He said it’s important to have “the right product at the right time.”
The Suzuki lineup in Canada consists of three core vehicles – the SX4 compact, Grand Vitara SUV and Kizashi mid-size sedan. Those models compete in three market segments that make up nearly half of the vehicle sales in Canada.
He believes sales will rebound and points out that June, when Suzuki sales jumped more than 10 per cent, was the best month in three months. July appeared to be maintaining that momentum.
But it won’t be easy.
“It’s a very tight market right now,” Porter said. “Consumers are more cautious with their money.”
Despite the sales jump in June to 507 units, Suzuki’s year-to-date totals to the end of June sat at around 300 units behind the same period last year. Suzuki’s monthly sales last surpassed 1,000 in August of 2010. The company’s best-ever year in Canada was 1989 when sales topped 15,000 units, followed by two years of more than 14,000.
While Suzuki holds a tiny portion of the Canadian vehicle market – just under one per cent – it is a significantly larger player on the world stage where it is the ninth largest manufacturer. Besides building Suzuki products, it also manufactures vehicles for other companies such as Nissan and Kia.
Suzuki is also a profitable company. he pointed out that the car operation has not lost money in 58 years.
In some markets, Suzuki sells a far wider selection of vehicles than it does in Canada, offering more than three times as many models. However, many of those vehicles are minicars and mini-trucks powered by tiny engines. These compact vehicles would not be suitable for Canadian conditions, he said, noting most would not meet Canada’s emission and safety standards.
But Canadian dealers have their eye on the new version of the Swift, a stylish new model they believe would help sales. One dealer mentioned it as a vehicle that could compete with the MINI Cooper.
So far, there are no plans to bring the car to Canada. Although the Swift is sold in Japan and Europe, it would have to be upgraded to meet Canadian emission and crash standards.
Porter said Canadian crash standards are the toughest in the world.
The manufacturer has to decide whether it’s worth the cost of crash testing and upgrades to bring a vehicle into Canada.
“To bring a car into this country costs a lot,” he said. The price of the Swift would be similar to the SX4, Porter said, but the SX4 has more interior room.
“The SX4 works better for the Canadian market.”
Ron Kraishnik, partner in Suzuki of Kitchener-Waterloo (Ont.) with his brother, Ray, said the Swift is “modern looking and stacks up better against competitors” such as the Mazda2 and Ford Fiesta.
While Suzuki sales have held up well in western Canada, dealers would like to see better promotion of the brand. The two Suzuki dealerships in Edmonton have both had years when they were the top Suzuki stores in Canada.
Tony Palazzo bought Westend Suzuki a year ago and said that sales are pretty well on target, but he would like to build on that performance. Palazzo, who previously had Daewoo and Saab franchises, also has a strong used car business that he has operated since 1974.
“Suzuki is very good value for the money,” he said. “It’s a good product, but nobody knows about it.”
At Millwoods Suzuki, dealer principal Jessy Prihar saw his sales fall from 500 to 400. But they’ve held steady at that number.
“We’re trying to sell as many Suzukis as we can,” said Prihar, who also owns two Suzuki stores in British Columbia, adding that he’s also focusing on pre-owned vehicles.
“We’ll do the best we can with what we have.”
But he would like Suzuki to broaden its Canadian lineup and better promote what it sells here.
The Kizashi mid-size car isn’t well known but “people who drive it, love the car and buy it.”
Prihar said the car would benefit from having a turbo on its 2.4-litre four-cylinder engine or having a V6 engine.
For the Ultimate Driving Event, Ultimate Suzuki gave customers the opportunity to drive and compare the Kizashi with competitors such as the Honda Accord, Toyota Camry, Nissan Altima and Hyundai Sonata. The store followed up by offering customers a monthly event where they have the opportunity to improve their skills in areas such as defensive driving.
Freshwater, the only Suzuki dealer on the Rock, used its music festival sponsorship as a way to let more potential customers know about the brand.
Rob Kinsella of Freshwater Suzuki said the availability of all-wheel-drive throughout the lineup is important for customers who have to contend with difficult winter driving conditions and challenging roads when going to the cottage or hunting or fishing.