Buy-Bye: Suzuki Buys Out 50 Dealers, Count Drops to 300; Is This Good News?

With its Kizashi sedan, Suzuki promised “something good is coming.” Slow sales, however, have prompted Suzuki to offer buyouts to its dealerships across the United States.

The Japanese automaker offered buyouts to 150 dealers, according to Automotive News. Since March, 50 dealers have accepted the buyout, trimming Suzuki’s dealer network by just under 10 percent. Suzuki affirms that the move is not indicative of a forthcoming exit strategy.

“The dealers who have taken the offer were selling on average about two cars per month,” said Suzuki marketing vice president Gene Brown. “The changes have left us in a better position. Dealer profitability is better, and the profitability of the company is better than last year.”

Suzuki’s buyout package included $50,000 for dealers with refurbished showrooms ($20,000 for those who chose not to renovate), as well as buyback of dealer stock.

“Franchises get hot and cold,” said dealer John Busam. “The stuff nobody wants today, everybody wants tomorrow.”

The move comes after disappointing sales figures from Suzuki’s midsize Kizashi sedan. In the first seven months of 2010, Suzuki moved just 3002 Kizashis, and 9656 models overall. So far, Suzuki sales are down, year-over-year, by 48 percent. Plans to offer a hybrid Kizashi have been scrapped, but an alliance with Volkswagen may prove fruitful.

In December, Suzuki offered prospective customers $100 if they test-drove a Kizashi against either an Audi A4 or an Acura TSX — and didn’t buy a Kizashi.

What do you think? Is consolidation a good sign for Suzuki, or is it a foreboding prediction for its future?

Source: Automotive News (Subscription required)