Suzuki Goes Bankrupt In USA; To Focus On India

Published: Wednesday, November 7, 2012, 9:47 [IST]

Suzuki, the Japanese carmaker has filed for bankruptcy in the USA after slow sales reduced profits considerably. Suzuki is known globally for its small cars and has always struggled in the US market where customers prefer large spacious cars. Suzuki has filed for bankruptcy under Chapter 11, the same rules that helped General Motors and Chrysler go bankrupt and come out in a better financial shape.

Chapter 11 bankruptcy helps protect companies from claims. Suzuki has taken this route for bankruptcy in a bid to prevent its dealers from extracting any kind of financial gains from it. Suzuki would have been required to pay compensations to its dealers if it had not filed for bankruptcy before exiting the US market. Suzuki will only stop selling its cars after its bankruptcy. It will, however, continue to take care of warranty claims and provide after sales service.

Suzuki's exit from the US market will help the carmaker to focus more of its energy towards its biggest market - India. More than half of Suzuki's global revenues are generated in India . Suzuki's Indian subsidiary Maruti Suzuki has come under pressure from competitors in the past few years. Maruti Suzuki's market share has come down from over half to just over a third.

Suzuki cannot be accused of not trying enough to woo the American car buyer. It launched its Grand Vitara SUV and Kizashi premium sedan to attract buyers. But the two cars were unable to generate the required momentum to propel Suzuki up the sales charts. Incidentally these two cars have not generated much buzz even in India.