Supply-restricted Suzuki sales take a dive

INTERRUPTED supply of two core models has cost Suzuki about 1800 sales this year, or one-third of its projected total volume, according to general manager of its Australian operations Tony Devers.

But with plenty of stock on the way from both Japan and Hungary set to revive sales and pump funds into Suzuki Australia’s marketing department, the company claims it will soon be primed to go hard and make up for lost ground in the second half of the year.

As it stands, Suzuki sales are down 33.1 per cent this year to 5041 units, with April figures of 1078 units (down 37.0 per cent) labelled as “disastrous”. Sales of all models except the niche APV van are down by between 25.3 and 56.4 per cent.

A further headache is that the 25.3 per cent drop is on the SX4, which is currently in runout as it slowly makes way for the larger S-Cross, meaning it won't be there for a great deal longer.

Mr Devers attributes this savage drop to several factors, namely a return to Japanese production for the Swift (away from Thailand, which will instead make the Alto-replacing Celerio for us from 2015) which left the company bereft of stock for several months.

The 37.5 per cent drop in Swift sales to kick off the year, following boom months in November and December 2013 that saw it at or near the top of its segment, are the biggest cause of Suzuki’s alarming drop over the first third of the calendar year.

The Swift makes up about 50 per cent of Suzuki’s total sales here, meaning any impact on volume will keenly felt.

“We did not have a Swift in stock at the end of December, it cost us 400 sales that month because we were running out the those Swifts from October,” said Mr Devers. “Reverting the production back to Japan (meant) we lost 2 months production.

“(It) takes 4-6 weeks from production to arrival, so that took care of March as well... We saw it coming from November, what happens in our production timing is we order 4 months out, so we're placing orders now for August production to arrive September or October.

“We still wont have standard stock levels until mid-June. Dealers normally carry 1200-1500 Swifts, a month's stock, and we carry 1200 as well. Now currently dealers have about 400 in stock with more arriving towards end of May.” The other major impediment to Suzuki sales this year has been the slow start for its S-Cross small SUV, launched last December, blamed on issues with securing the required numbers from Hungary. The S-Cross is the first Hungarian-made Suzuki sold here.

At the time of launch, Mr Devers said the company expected 500 monthly sales, but in the first four months of the year it sold just 473 units total. With better supply and the recently-reduced $22,990 drive-away starting price, the company hopes to sell more in the back end of the year.

A less tangible but still painful side-effect of this, according to Mr Devers, has been the necessary reduction in its promotional budget for other models including the re-positioned Kizashi (down 54.6 per cent) and the familiar Grand Vitara (down 34.6 per cent).

“It's almost been a perfect storm,” Mr Devers told GoAuto. “If we’re not wholesaling cars then we’re not getting revenue, and that’s where our cash flow comes from, so we had to dramatically cut back on adverting and our campaign structure.” The aim now is to bump that total sales figures to near-parity by year’s end, with a target of restoring Swift sales to 1000 per month and gaining incremental sales through the S-Cross with keener deals.

Crucially, by selling more cars to its dealer network, the Suzuki Australia wholesale organisation will have the funds it needs to start spending on advertising in large scale, with numerous campaigns in the pipeline to put it back on the public radar, says Mr Devers.

“(Now) we're getting cars we can sell to our network, the revenue will free up and we’ll be back in the game,” he said.

Another small but potentially significant factor that will help Suzuki make up lost ground is the imminent return of the Jimny micro-sized bush-basher later in the year, replete with familiar rugged styling and basic internals but now fitted with mandatory ESC.

Looking beyond this year, Suzuki will no doubt be hoping to get a strong bump into 2015 with the arrival of two important new models, the Alto-replacing Celerio that could well become Australia's cheapest new car, and the all-new IV4 small SUV.

The IV4, which as we reported last week could well be called Vitara if Mr Devers gets his way, will sit between the S-Cross and Grand Vitara in the line-up, and bring with it incremental sales growth.