There will not be any impact to the Indian subsidiary of Suzuki Motor Corporation (SMC) as none of the cars that is manufactured by Maruti Suzuki India (MSIL) is exported to the US.

The American distributor of Japan-based SMC filed for Chapter 11 bankruptcy protection with the company saying it will cease selling cars in the US.

The Indian manufacturing units at Manesar and Gurgaon in Haryana exports to European countries, West Asia, Africa, Indonesia and Latin America, an MSIL spokesperson told Business Line.

The company exports models including Alto, A-Star, Ritz and Estilo to these countries.

“We have never touched the US market because specifications are very different from other markets,” the spokesperson said.

MSIL in October sold 103,108 units of cars in India, out of which, 7,106 units were exported. SMC’s best selling model Swift is also being exported from its European facility and not from India for the US market.

Meanwhile, Suzuki Motor Corporation, which is closing down sales in the US estimates its debts and liabilities could be anywhere between $100 million and $500 million.

The company is based in California and is the sole distributor of SMC vehicles in the US. The bankruptcy is unrelated to the parent company, Suzuki Motor Corporation, based in Japan.

Suzuki Motor has said it decided to exit the automobile business given the slow sales, unfavourable foreign exchange rates (between the US dollar and the Japanese yen), and high costs all related to US regulatory requirements.

For the first 10 months of 2012, the company sold around 21,000 vehicles in the US market, about 1,000 less than last year, according to reports appearing in the US media.

Though Suzuki's demise in the American car market is not surprising given that the company has reportedly been heading down that road for some time now, the US distributor has instead said it will focus on Suzuki motorcycles, all-terrain vehicles and marine outboard engines in the US.

The Japanese company has also blamed the high value of the Japanese yen and a limited vehicle line-up. It also plans to restructure the company, though its dealer network will continue to provide parts and services.

Suzuki started selling cars in the American market in 1985 and is known for its Samurai sports-utility and the Swift compact car.

The Chapter 11 restructuring petition is to be filed in the US Bankruptcy Court in Santa Ana.

amritanair.ghaswalla@thehindu.co.in

ronendrasingh.s@thehindu.co.in

(This article was published on November 6, 2012)
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