Why Suzuki is preparing for short term pain

Suzuki punches above its weight. For one of the smaller car bands operating in the UK it makes a lot of noise. Consistently winning awards from the motoring press, a top performer in the JD Power Customer Satisfaction Survey and rated highly in the National Franchised Dealers Association’s Dealer Attitude Survey.

All of this places the Milton Keynes based brand in the sweet spot of the new car market. Its customers are happy, loyal and passionate, achieving retention rates the envy of bigger players.

Likewise its dealers are not only happy, loyal and passionate but also profitable and motivated. The franchise has always appealed to family-run and owner-driver retailers, embedded in their local communities, and is increasingly sought after by bigger regional groups. Retailers like the way the brand does not micro-manage them and the reasonable levels of investment it expects. They also appreciate the big bucks marketing support.

High profile marketing

Recent television campaigns have featured the likes of Ant and Dec and Take That and sponsorship of Gogglebox; all aimed at raising awareness of the brand as a maker of cars, not just motorbikes, and driving footfall to its retailers. Indeed, an Ant and Dec campaign put the double act in a showroom to reinforce the message.

UK sales have been tracking at 38,000, hitting a record high of 40,343 in 2017, with the brand last year outselling the likes of other reasonably priced marques Fiat and Dacia, achieving a 1.6% market share.

You would think the sales success, multiple awards and survey plaudits would mean Suzuki is pretty much where it needs to be and ideally positioned to grow organically to 50,000 sales. 

Not so. 

Planning for a sales dip

Speaking to DriveTribe, Dale Wyatt, Suzuki’s director of automobile, is far from complacent having recently introduced a strategy which will see sales dip to around 32,000 units before it embarks on an electrified future.

“We’ve got happy customers, high brand awareness, we’re winning awards and have products like the Jimny that are getting noticed. Why would we want to change anything? But, what I’ve said to our dealers is we are all facing four unstoppable forces: emissions legislation; products shifting from internal combustion engines to hybrid and electric; changing customer behaviour; and the power of the internet.” 

Wyatt, who has led the car business since 2007, says the brand faces some short term pain to enable it to transition to an electrified future.

Impact of European emission rules

Like all OEMs Suzuki is addressing the decisions it needs to make to reduce the average emissions across its fleet to comply with tough new legislation dictating C02 targets from 2020.

Even though the brand specialises in small cars powered by small engines it is not immune and is looking at ways to bring down the average C02 levels across its fleet to 90.3g/km by the time the rules become mandatory.

An early casualty is its most popular petrol engine, the 1.0-litre BoosterJet, used in the Swift, Vitara and S-Cross, which will be phased out by the end of the year.

Hybrid future

For Suzuki the immediate future is hybrid technology and the transition will be accelerated by Suzuki’s new alliance with Toyota, which has seen both carmakers making long-term financial investments in each other. 

Next year rebadged Suzuki hybrid-only versions of the RAV4 and Corolla estate will roll off Toyota’s UK production lines.

By the middle of next year Suzuki will offer hybrid as standard across all its ranges with a choice of 1.2 and 1.4 petrol engines, the only exception being the popular Jimny 4X4 which appears not to have an electric future.  

The brand discontinued its only diesel engine, a bought-in Fiat unit, last year. As part of the line-up clear-out the under-performing Celero and unprofitable Baleno ranges were withdrawn from Europe in September. 

Future growth

“We believe hybrid will be the stepping-stone between petrol and electric. But this transition means our volumes in the UK will dip in the short term, we’ll be sub 40,000 but more than 30,000.

“This is just a moment in time, rather than a downturn in the brand’s fortunes. My career goal is to get to 50,000 but we will only get there when we deserve it; but I do think the Suzuki brand is worth 2% of a 2 million new car market and that is doable,” said Wyatt.

In the meantime it’s all about Suzuki managing this short-term disruption. Derivatives will drop from the line-up as the brand moves towards electrification by initially migrating its customer base to hybrid and then to EVs.

Suzuki is later than most to the plug-in EV party having only shown a Swift concept with a range extender back in 2010. The alliance with Toyota, of course, could jump start its EV plans.

Growth is expected after 2020 when the brand will be a hybrid specialist, boosted by the mid-year introduction of the two as yet unnamed Toyota built models which will take it into new market segments. After which we will see its first EV and new versions of the Vitara, Swift, Ignis and S-Cross.

The UK is Suzuki’s biggest European market and its fifth largest global market which enables Wyatt to get things done.

“We have more autonomy than most other manufactures to what’s right for our market. The reason I stick around and do this job is I genuinely believe I’m one of the most empowered UK bosses in the motor industry. When you have that empowerment you have to be brave and do the right thing and that is what makes the job fun.”