BREA, Calif. -

Although American Suzuki Motor Corp. announced plans late Monday to file for Chapter 11 bankruptcy, chairman Takashi Iwatsuki told dealers and vehicle owners that warranties will be honored, and service will be provided without interruption through the company’s parts and service network.

“Following a thorough review of our current position and future opportunities in the U.S. automotive market, we have made the difficult but necessary decision to wind down and discontinue new automobile sales in the continental U.S. Consistent with our long history of standing by our products, Suzuki automobile owners will be protected,” Iwatsuki wrote in a letter released at the same time as the company’s bankruptcy announcement.

While Suzuki is getting out the automobile business in the U.S., the company said it is using the bankruptcy proceeding to focus on the long-term growth of its motorcycles/ATV and marine divisions.

The company determined the best path to achieve this realignment in an efficient and orderly manner is to restructure its operations under Chapter 11, a case that will be filed in the U.S. Bankruptcy Court, Central District of California in Santa Ana.

“ASMC remains firmly committed to motorcycles/ATV and marine products, and these divisions are competitively positioned in their respective markets, allowing for long-term growth as economic conditions improve,” officials said.

“The realignment is intended to better position ASMC for long-term success and is a return to the company’s roots in the U.S. market, which began with motorcycles and has grown to include ATV and marine products,” they continued.

“ASMC remains very proud of its high quality, high performance motorcycle, ATV and marine products. The company will continue to bring ASMC products to market, including its full lineup of sportbike, cruiser, touring, scooter, dualsport, motocross, off-road motorcycles and the KingQuad ATV line,” company officials went on to say.

More Details about Dealer Impact, Inventory Liquidation

As part of its Chapter 11 filings, the company said it plans to specify how its relationship with dealers will be largely transitioned to support consumers and dealers through continued parts and service operations.

Officials said parent company, Suzuki Motor Corp., or its nominee, intends to purchase ASMC’s motorcycle, ATV and marine businesses as well as the automotive service operation responsible for parts and warranties, through a new U.S. subsidiary that will retain the ASMC brand name.

ASMC believes it has sufficient cash on hand to operate its businesses during the restructuring. If necessary, ASMC said it will request permission from the court to borrow additional funds from SMC needed during the restructuring.

The company reiterated on Monday that it intends to work within its current U.S. automotive dealer network to help structure a smooth transition from new-vehicle sales to exclusively parts and service operations, or, in some instances, an “orderly” wind down of dealership operations.

Furthermore, ASMC added that it intends to market and sell its remaining U.S. automobile inventory through its automotive dealer network.

“Through and after the restructuring, all warranties will be fully honored and automobile parts and services will be provided to consumers through the dealer network,” officials said. “ASMC intends to honor any automobile buyback agreements that are currently in place with financial institutions.”

In response to Suzuki's decision to exit the U.S. market, Bill Underriner, chairman of the National Automobile Dealers Association, issued the following statement:

“NADA is saddened to learn that American Suzuki will exit the U.S. car and truck market. Of course, all of us are especially concerned about the impact on Suzuki customers and dealers," Underriner said. "We are pleased to hear that Suzuki intends to honor all warranties and plans to maintain a parts and service network.

"But the announcement is, nevertheless, devastating to the more than 200 Suzuki dealers operating in the U.S.," he continued. "NADA will do everything possible to ensure that Suzuki dealers and vehicle owners are treated fairly through this difficult wind-down process.”

ASMC has filed a series of first day motions requesting approval to continue paying employee wages and benefits in the ordinary course, offering dealer incentives and payments under customer warranties.

The company also expects to pay vendors in the normal course of business for goods and services delivered on or after its Monday filing. Payments for goods received before ASMC’s filing will be made in accordance with the Chapter 11 procedure.

Officials said SMC, the 100-percent interest holder in ASMC, is not a debtor in the Chapter 11 filing.

Furthermore, ASMC said it intends to operate its motorcycles/ATV and marine businesses as usual and is “dedicated to completing the realignment process as smoothly and efficiently as possible.”

The company indicated it will continue to “fully stand behind” all of its products and honor all warranties from these divisions. ASMC is working with GE Capital’s retail finance and commercial distribution finance businesses to continue providing motorcycles and ATV consumer financing programs and motorcycle, ATV and marine dealer inventory financing respectively.

The company also expects existing agreements with other dealer and consumer financing providers to continue as well.

In closing his message to customers and dealers, Iwatsuki wrote, “We remain grateful to you for your loyalty and shared passion for our products throughout the years.”

Suzuki’s Soft U.S. Vehicle Sales

ASMC reported a 5-percent new-vehicle sales rise last month. Still its network of more than 200 franchise dealers nationwide turned just 2,023 units. Through the first 10 months of this year, the automaker moved 21,188 units.

For comparison, Bloomberg cited Autodata Corp. information that indicated Suzuki’s nearest Asian competitor, Mitsubishi, sold 50,103 new models through October. Furthermore, Cars.com pointed out that Mazda turned 18,622 new vehicles in October alone.

“Suzuki is no longer among the carmakers like Toyota or Honda to have an advantageous position in the U.S., so why not focus on what it is good at?” Satoshi Yuzaki, a Tokyo-based general manager at Takagi Securities Co., told Bloomberg in this online report. “It makes sense for Suzuki to focus on India and other Asian markets.”