It’s been four months now since the American Suzuki Motor Corporation announced last November that they would be going through Chapter 11 bankruptcy and eliminating what’s left of its automotive sales division here in the US. Here’s a quick look at how Suzuki sales fared over the past decade, along with a review of how their used vehicle values have trended following the bankruptcy announcement.
The chart below shows a ten year recap of Suzuki sales here in the US. As we can see, Suzuki sales were steadily improving throughout the early part of the last decade before peaking in 2007 when the brand sold over 101k new units.
Then along came the “Great Recession” in 2007. Suzuki, like many other manufacturers, suffered a huge blow to their sales momentum following the onset of the recession, but unlike larger OEMs, American Suzuki didn’t have the brand awareness or the capital required to successfully weather the global economic storm. Ultimately, sales fell by a staggering 62% in the two years following the onset of the recession before bottoming out in 2010 when they failed to cross the 24k unit threshold.
Just when things couldn’t get any worse for the brand, in 2011 Suzuki was dealt another devastating blow as the Japan earthquake spawned a chain of production related disruptions. Last year will be known as the last full sales year for Suzuki here in the US, and another in which the brand saw little to no growth with sales barely crossing the 25k unit threshold. Overall, depressed market conditions, natural disasters, poor brand recognition, and lack of funds for new products were the biggest drivers behind Suzuki’s demise in the U.S.
One of the most important questions surrounding the brand since the bankruptcy announcement relates to its impact on used vehicle values. For the sake of this comparison we will look at how NADA Official Used Car Guide values have changed since the announcement for the 2010 Suzuki Kizashi S sedan and benchmark movement against some of its closest competitors.
The chart above shows average trade-in values for the Kizashi and its competitive set from both the October 2012 and March 2013 editions of the Guide, along with the typically equipped MSRP (not including destination charges). Since October, the Kizashi’s trade-In value fell from $10,800 to $9,225 in March ’13, which is a loss of $1,575 or 14.6%. Values for most other cars in this competitive set have remained relatively flat, or have even appreciated a bit as in the case of the Nissan Altima and Toyota Camry. Clearly the bankruptcy announcement has had an extremely corrosive effect on the Kizashi’s values.
The closest comparison we can make to Suzuki’s is the recent dissolution of Saab. Below is a table showing the value of the Saab 9-3 for three different periods. The first value is November 2011 (the month before the brand filed for bankruptcy) followed by April 2012 (or five months post-announcement, matching Suzuki’s current duration), and November 2012 (or one year post-announcement).
From November 2011 through April 2012, the 9-3 depreciated by 10.5%, and by November ‘12 the car had lost 30.5% of its pre-bankruptcy value.
It’s still a bit too early to predict just how low Suzuki’s values will go, but based on the severity of movement observed to-date and how far values for comparable vehicles fell in the past, we can safely assume that the bankruptcy-induced floor has yet to be reached.