American Suzuki Motor Corporation

views updated

American Suzuki Motor Corporation

founded: 1909 (parent company founded as suzuki loomworks)

Contact Information:

headquarters: 3251 e. imperial hwy.
brea, ca 92621-6722 phone: (714)996-7040 fax: (714)524-2512 url: http://www.suzukicycles.com

OVERVIEW

Suzuki motorcycles, automobiles, all-terrain vehicles, and marine outboard motors are manufactured and sold in the United States by American Suzuki Motor Corporation (American Suzuki), a subsidiary of Japan's Suzuki Motor Corporation (Suzuki). The parent company was established in 1909 as a manufacturer of weaving machines, but after World War II it began to produce motorized vehicles. In the late 1990s Suzuki was the third-ranking manufacturer of motorcycles worldwide, behind Honda and Yamaha, as well as a prominent international manufacturer of small automobiles and marine recreational vehicles. It manufactures and distributes its products in more than 170 countries. Motorcycles make up only about 15 percent of Suzuki's business, but in the United States it is best-known for its fast racing bikes and rugged motocross bikes, as well as its compact SUV (Sport Utility Vehicle) automobiles. There are more than 1,400 independently owned Suzuki dealers in the United States.

COMPANY FINANCES

In 1997, the Suzuki group posted a drop in both sales and profits for the first time in four years. Demand dropped in its domestic Japanese market due to economic problems in Asia, with sales in Japan falling 10.4 percent to $6.15 billion. However, this was partially offset by strong sales in Suzuki's overseas markets. Buyers took advantage of the favorable exchange rate on the weakened Japanese yen, and overseas sales went up 9.6 percent to $6.75 billion. American Suzuki experienced a sales drop of 22 percent in the first 10 months of 1997, compared with the previous year.

ANALYSTS' OPINIONS

Several of American Suzuki's 1997 motorcycles received rave reviews from Cycle World and Motorcycle Online. The Suzuki TL1000S was named Cycle World's "Best Superbike" of 1997, and Motorcycle Online called the bike "an absolute bargain" in its class.

HISTORY

American Suzuki's position as a premier manufacturer of racing and off-road motorcycles could never have been predicted from its quiet origins. In 1909, Michio Suzuki established the Suzuki Loom Works in Hamamatsu, a small seaside village in Japan that is still the worldwide headquarters of the Suzuki Motor Corporation. He hoped to become successful as a manufacturer of weaving machines. In the early 1930s Suzuki decided to diversify by also building small automobiles. However, the company was taken over by the Japanese government as it poured resources into war production, and instead it became a manufacturer of military equipment.

After the war ended, the Japanese economy was so shattered that the weaving business was impossible to revive. Suzuki returned to his idea of creating new types of motor vehicles, introducing a motorized bicycle, or "moped" in 1952. This vehicle, with its tiny 36 cc two-stroke engine, soon was joined by other, more powerful, two-wheeled vehicles, as well as small automobiles. The first Suzuki motorcycles arrived in the United States in 1963. The focus became and remained production of fast, tough road and motocross bikes.

Suzuki's U.S. presence expanded to the marine market in 1977, with the addition of its line of outboard motors, already proven in the international market. All-terrain vehicles were added in 1982. Finally, the Suzuki automotive line was introduced in the United States in 1985, and the American Suzuki Motor Corporation subsidiary created the following year.

STRATEGY

American Suzuki's motorcycle operations must be viewed within the larger picture of Suzuki Motor Corporation's overall strategy. Within Japan, the company has focused on marketing a variety of specialized mini-vehicles, finding great competition from leading companies such as Toyota and Honda in the traditional automotive market. The hallmark of Suzuki vehicles has been their compact and fuel-efficient design.

On an international level, Suzuki has often sought new markets in developing countries with growing populations, where smaller, less costly vehicles are likely to find eager buyers. Developing countries in which Suzuki has found a niche have included Cambodia, India, China, Egypt, Hungary, Pakistan, Indonesia, and the Philippines. Within the United States, Suzuki's approach has been to build small, inexpensive, and tough automobiles such as the Sidekick. Its motorcycles are designed for younger buyers, with the emphasis on speed, sleek design, and off-road capabilities.

Suzuki's ambitious U.S. goals include unit sales of 100,000 by 2001, and adding 100 dealers to its current 300. The company planned to accomplish this through new products and an increase in its relatively quiet U.S. advertising presence.

FAST FACTS: About American Suzuki Motor Corporation

Ownership: American Suzuki Motor Corporation is a subsidiary of Suzuki Motor Corporation, a Japanese public corporation traded on the Tokyo (Nikkei) Stock Exchange.

Ticker symbol: J.SUZ

Officers: Sokichi Nakano, CEO; Ken Ayukawa, CFO

Employees: 13,873 (Suzuki total)

Principal Subsidiary Companies: American Suzuki Motor Corporation has three divisions: Automotive; Motorcycle and ATV; and Marine.

Chief Competitors: Suzuki competes with other manufacturers of motorcycles and other small motor vehicles, including: Honda; Kawasaki; and Yamaha.

INFLUENCES

Suzuki has frequently found itself battered by global events. Its original weaving operations were cut short by the Japanese government's takeover of its operations to produce military equipment in the 1930s and 1940s. The collapse of the Japanese economy following World War II, plus the dismal state of the textile industry, led Suzuki to transform itself into a manufacturer of vehicles.

In the early 1970s, Suzuki was deeply affected by the international repercussions from the OPEC oil embargo. It responded to the gasoline shortages by introducing tiny fuel-efficient automobiles, but it was beaten to market by its competitors, and found itself constrained by new U.S. trade restrictions on Japanese goods. However, a joint venture with General Motors, which sold Suzuki automobiles through GM under the names Chevy Sprint and GEO Metro, helped it to establish itself in the American marketplace.

A significant low point for Suzuki in the United States occurred in the mid-1980s, when the Suzuki Samurai recreational automobile was judged to be unsafe by Consumer Reports magazine, which wrote that the vehicle's high center of gravity made it likely to flip over when taking turns. In an illustration of the potential pitfalls of cross-cultural communication, the apologetic resignation of the entire team of Japanese executives running American Suzuki was widely misinterpreted as an abandonment of the U.S. market. In the 1990s, sales of Suzuki automobiles improved somewhat after changes were made to improve safety, and increased sales of its motorcycles helped to balance the earlier losses. Still, the company found it difficult to compete when other car manufacturers began to offer small sport utility vehicles with newer designs and more marketing muscle behind them.

CURRENT TRENDS

American Suzuki is determined to maintain a niche as a manufacturer of unique products. No longer known as a manufacturer of small two-stroke motorcycles, American Suzuki now concentrates on making and selling four-stroke streetbikes and rugged, high-performance models. Its bikes are noted for speed, a reputation that is aided by the numerous international races won on Suzuki bikes. With the rapidly growing popularity of Harley Davidson motorcycles in the later 1990s, American Suzuki also is placing more emphasis on marketing large cruising motorcycles, particularly the Bandit 1200S.

In its automotive line, American Suzuki continues offering its four wheel drives in the robust U.S. sports utility vehicle market, and added the Esteem subcompact sedan and wagon.

PRODUCTS

In 1997 American Suzuki manufactured over 30 different models of motorcycles and ATVs (All-Terrain Vehicles), all of them far removed from the original "Power Free" 36 cc motorized bicycle introduced in 1952. Engine sizes ranged from 600 to 1200 cc.

Six automotive models are produced, including the Sidekick sport utility vehicle, the Swift coupe, and the Esteem sedan and wagon.

CORPORATE CITIZENSHIP

American Suzuki, like other motorcycle manufacturers, is concerned about having safe riders on the road. It is a founding member of the Motorcycle Safety Foundation, and encourages both new and experienced owners of its motorcycles to take riding skills courses sponsored by the organization. As of 1997, over 1 million motorcyclists had graduated from these courses. Because so many of its bikes are designed for off-road use, American Suzuki also participates in the national "Tread Lightly" program, which reminds off-road riders to respect the environment and the rights of other trail users.

Suzuki helps fund the Air Bag and Seat Belt Safety Campaign under the auspices of the National Safety Council. The goal of this campaign is to educate the public about proper use of seat belts and child safety restraints in cars with airbags, in order to maximize the effectiveness and minimize the risk of these safety devices.

CHRONOLOGY: Key Dates for American Suzuki Motor Corporation

1909:: Parent founded as Suzuki Loom Works
1937:: Begins to diversify product lines by building a small automobile
1945:: Following the war, Suzuki begins producing looms again
1951:: The cotton market collapses and Suzuki again focuses on automobiles and motorcycles
1952:: Introduces a moped
1963:: First Suzuki motorcycles arrive in the U.S.
1977:: Introduces marine outboard motors in the U.S.
1982:: Introduces all-terrain vehicles in the U.S. market
1985:: Introduces automobiles into the U.S. market
1986:: Creates the American Suzuki Motor Corporation subsidary

GLOBAL PRESENCE

Suzuki first marketed its motorcycles in the United States in 1963, soon after the company attracted international attention when one of its small early models won the famous Isle of Man race. Following the oil embargo of the early 1970s, Suzuki also began exporting its motorcycles to other countries in Asia, notably Thailand, Indonesia, and Taiwan. The United States is Suzuki's largest overseas market, and 80 percent of its Suzuki motorcycles are produced outside of Japan.

Suzuki employs almost 14,000 people worldwide, and distributes its products (automobiles, motorcycles, and marine vehicles) in more than 170 countries. One factor which has generated valuable worldwide publicity for Suzuki since the early 1960s has been the many motorcycle races won by Suzuki bikes. According to figures compiled by American Suzuki, Suzuki motorcycles have won 9 World Championships in the Grand Prix roadracing category, 27 World Motocross Grand Prix titles, and numerous victories at American Motorcycle Association championship competitions, LeMans, the Bol d'Or, and the Isle of Man.

EMPLOYMENT

Amercian Suzuki Motor Corporation employs hundreds of staff members in sales, marketing, technical assistance, and distribution at its Brea, California, headquarters.