Suzuki Reports Q2 2012-2013 Results
Suzuki made headlines earlier this week when its American subsidiary filed for Chapter 11 and announced it is quitting the automobile business to focus on motorcycles and its marine operations. American Suzuki‘s car business has been struggling for a while and it remains to be seen how these developments will affect its motorcycle business.
Today, Suzuki released its report for the first half of its 2012-2013 fiscal year, providing much needed context to the earlier news. Globally, Suzuki reported a profit of 41.9 billion yen (US$527.5 million) over the six months ended Sept. 30, 2012. This represents a 30.9% increase on the profit of 32.0 billion yen in the first half of the previous fiscal year.
In North America, however, the news is less positive. Suzuki reported net sales of 47.7 billion yen (US$600.4 million) for the first two quarters, down from 49.6 billion yen (US$624.3 million) in the same period of 2011. Despite the decreased sales, the bottom line improved to a profit of 700 million yen (US$8.8 million), an improvement from the loss of 300 million yen in the same period last year.
The prevailing theory is American Suzuki is shifting focus away from cars to motorcycles because its two-wheeled business is more successful. The second quarter report seems to reflect that theory, though the difference is probably less than people realize.
Suzuki sold 606,000 motorcycles in the second quarter, a a year-on-year decrease of 7.3% from 654,000 units in 2011. North American sales stayed relatively steady at 10,000 units. Suzuki’s automotive numbers look fairly similar, with worldwide sales reaching 601,000 cars. In North American however, Suzuki sold just 8,000 cars over the quarter.
Suzuki did sell more motorcycles over that period, but cars are also more expensive more than motorcycles. The cheapest car Suzuki sells in the U.S. is the SX4 sedan which starts at $15,845, while the most expensive motorcycle in American Suzuki’s arsenal is the Limited Edition Boulevard M109 at $14,799. Suzuki was also able to buoy motorcycle sales by offering a 0% interest financing offer this year which no doubt helped improve volume sales at the expense of financing revenue. Motorcycle sales may be doing better than car sales, but not enough so that American Suzuki can rest easy.
Worldwide motorcycle sales generated 112.7 billion yen (US$1.418 billion) over the six month period, down from 137.7 billion yen. That translates to an operating loss of 5.9 billion yen over those six months, compared to a profit of 700 million yen in the same period last year. Car sales were much higher, with revenues of 1.089 trillion yen (US$13.7 billion) and an operating income of 69.2 billion yen (US$870.5 million). Clearly, Suzuki’s automobile business is far more successful than its motorcycle business on a global scale, just not in the U.S.