Volkswagen has previously professed a desire to become the largest carmaker in the world, and of late, it's been looking like a realistic goal. With the recent acquisition of Porsche and the topsy-turvy market that is 2009, Volkswagen has already beaten Toyota in total global output. Now new reports are saying VW is looking to add even more to its global empire with the acquisition of 20% of Suzuki.

VW also recently nabbed the Car of the Year award in Europe for the Polo small car, which will be headed to the U.S. soon, so getting a stake in Suzuki could position VW to help further expand its small-car reach. Suzuki is undeniably successful in the small-car arena with its Kei cars in Japan and similar small vehicles in India. Neverthelses, the 2010 Kizashi, which may be the company's best car ever, is a borderline compact/midsize sedan. Read up on the Kizashi with our review here.

The acquisition of a 20 percent interst in Suzuki could open the door to materials and parts sharing between the two companies. So far the stake purchase isn't official, though multiple sources familiar with the matter are reported as saying it's going to happen.

Despite the lack of official confirmation, taken in light of VW's plans for expanding its global presence and market share, the partnership with Suzuki makes a lot of sense, as smaller cars will sell more quickly and more numerously in rapidly emerging Asian and Southern Hemisphere markets.

American Suzuki Motor Corporation ("ASMC") Announces Restructuring and Realignment to Focus on Motorcycles/ATV and Marine Divisions

ASMC to wind down and discontinue new automobile sales in continental U.S.

Consumers will be protected and all warranties will continue to be fully honored

BREA, Calif.--(BUSINESS WIRE)-- American Suzuki Motor Corporation ("ASMC" or "the Company"), the sole distributor in the continental United States of Suzuki Motor Corporation ("SMC") automobiles, motorcycles, all-terrain vehicles and marine outboard engines, today announced that it plans to realign its business to focus on the long-term growth of its Motorcycles/ATV and Marine divisions. Following a thorough review of its current position and future opportunities in the U.S. automotive market, ASMC will wind down and discontinue new automobile sales in the continental U.S. The Company has determined the best path to achieve this realignment in an efficient and orderly manner is to restructure its operations under chapter 11. The case will be filed in the United States Bankruptcy Court, Central District of California in Santa Ana.

Consistent with ASMC's long history of standing by its products, owners of Suzuki automobiles will be protected. All warranties will continue to be fully honored and automobile parts and service will be provided to consumers without interruption through ASMC's parts and service dealer network.

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. 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. 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 KingQuad ATV line, as well as its flagship DF300AP, state-of-the-art DF20A, and DF15A, among other models. Additionally, ASMC is working to further build its market share through continued investment in additional support for dealers through marketing and advertising activities and sales promotion. Suzuki will continue to have a strong presence as a sponsor of teams in supercross, outdoor motocross and road racing.

In evaluating its position in the highly regulated and competitive U.S. automotive industry, ASMC determined that its Automotive division was facing a number of serious challenges. These challenges include low sales volumes, a limited number of models in its line-up, unfavorable foreign exchange rates, the high costs associated with growing and maintaining an automotive distribution system in the continental U.S. and the disproportionally high and increasing costs associated with stringent state and federal regulatory requirements unique to the U.S. market. While the decision to discontinue new automobile sales in the U.S. was difficult to make, today's actions were inevitable under these circumstances. ASMC is dedicated to honoring its commitments to Automotive customers through and after the wind down of new automobile sales in the continental U.S.

An Orderly Process to Serve Consumers
ASMC intends to work within its current U.S. Automotive dealer network to help structure a smooth transition from new automobile sales to exclusively parts and service operations, or, in some instances, an orderly wind down of dealership operations. ASMC 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. ASMC intends to honor any automobile buyback agreements that are currently in place with financial institutions.

As part of its chapter 11 filings, ASMC will submit a proposed Plan of Reorganization and Disclosure Statement that specifies how the Motorcycle, ATV and Marine divisions will be maintained and enhanced, and how its relationship with Automotive dealers will be largely transitioned to support consumers and dealers through continued parts and service operations. SMC 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 will request permission from the Court to borrow additional funds from SMC needed during the restructuring.

Honoring Commitments
ASMC 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. ASMC 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 expects existing agreements with other dealer and consumer financing providers to continue as well.

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. ASMC also expects to pay vendors in the normal course of business for goods and services delivered on or after its November 5, 2012 filing. Payments for goods received before ASMC's November 5, 2012 filing will be made in accordance with the chapter 11 procedure.

SMC, the 100 percent interest holder in ASMC, is not a debtor in the chapter 11 filing.

ASMC's legal advisor on the restructuring is Pachulski Stang Ziehl & Jones LLP, and its financial advisor is FTI Consulting, Inc. Nelson Mullins Riley & Scarborough LLP is serving as special counsel on automobile dealer and industry issues. Further, ASMC has proposed the appointment of M. Freddie Reiss, Senior Managing Director at FTI Consulting, as Chief Restructuring Officer, and has also added two independent Board members to assist it through this period.

Additional information regarding ASMC's business realignment can be found at the Company's website, www.suzuki.com, or via an information hotline at 1-877-465-4819.

"We have no intention whatsoever of withdrawing from the US market. The U.S. market is a very important market."

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