BREA, Calif. | American Suzuki Motor Corp. on Monday filed for Chapter 11 bankruptcy protection and said it will cease selling automobiles in the U.S. as part of a plan to restructure its business.
The company, based in Brea, Calif., is the sole distributor of Suzuki Motor Co. vehicles in the continental U.S.
In documents filed with the U.S. Bankruptcy Court in the Central District of California, the company estimated that its debts and liabilities range from at least $100 million to as much as $500 million.
It also said it has between 1,000 and 5,000 creditors.
American Suzuki Motor said it has enough cash to operate during the restructuring and intends to honor all car warranties and buyback agreements. It will work with its car dealerships to help them transition into parts-and-service operations. In some cases, the dealerships will be shuttered, it said.
It said that it is exiting the car business because of slow sales, unfavorable foreign exchange rates and high costs due to U.S. regulatory requirements.
The company's bankruptcy isn't impacting one Suzuki dealership owner's decision to remain in business. Gary Richardson, owner of Richardson Suzuki in Highland, said his location will remain open since its "main forte" already is vehicle service and used car sales. The dealership will continue to service Suzuki vehicle warranties and its 20 employees will be retained, he said.
Richardson said the inventory of vehicles delivered to the United States has been on the decline "for a while." He also said there have been limited discussions in recent years about product redesigns or new models following the steady success of the Kizashi mid-size sedan and the Grand Vitara sport utility vehicle.
"I had a gut feeling," Richardson said about the bankruptcy. "They went through tough times like a lot of manufacturers with the bad economy and never recovered from it."
Richardson said his dealership sells between 80 and 100 new Suzuki models a year, with last year's total being about 100. He said the peak was in 1999 when about 170 new vehicles were sold. The dealership began to sell new Suzuki automobiles in 1992, which was five years after it opened, according to the dealership's website.
Once it exits bankruptcy protection, American Suzuki Motor said it will focus on selling Suzuki motorcycles, all-terrain vehicles and marine outboard engines.
It sold 2,023 vehicles in October, which was up 5 percent from the same month last year. Its Grand Vitara posted a 64 percent jump in sales last month, although American Suzuki did not say how many of them were sold. In May, the last month it provided a breakdown of its sales, it moved 474 Grand Vitaras, while its biggest seller was its SX4 small crossover, of which 1,101 were sold.
The bankruptcy and reorganization are unrelated to its parent Japan-based Suzuki Motor Corp., which intends to buy the American subsidiary's remaining businesses and automotive service operation.
The reorganized company will retain the American Suzuki Motor name, the company said.