American Suzuki raised some eyebrows after news broke yesterday the company was cancelling franchise agreements with numerous dealerships in the U.S. The company was already under close scrutiny after making the bold decision to quit selling cars to focus on powersports when it filed for Chapter 11 in November. Reducing its dealer network appears to go against that idea, at least on the surface.
Facing some backlash for the decision to cut dealerships, American Suzuki has spoken up, explaining the decision. Larry Vandiver, American Suzuki sales and marketing senior director explains the actual number of dealerships being cut loose is 98, not the the 100-200 dealerships initially reported by PowersportsBusiness.
“We’re not cutting 200 dealers. Approximately 90 percent of our dealers received a letter that their contract has been assumed by ASMC,” Vandiver tells PowersportsBusiness. “It’s all part of our restructuring under Chapter 11 to secure long-term growth of Suzuki.”
Only 98 of American Suzuki’s 930 dealerships were let go. The other 832 dealerships will be retained with the newly formed Suzuki Motor America company.
The dealers that were not renewed were selected for their low sales performance. According to Vandiver, those 98 dealerships, representing 10.5% of American Suzuki’s network, accounted for only 2.5% of the company’s retail sales over the last 12 months and only 2.8% over the last three years. Most of the eliminated dealerships also sold other brands.
Vandiver also says Suzuki will eventual look to add dealerships, once the company’s restructuring is complete.