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Suzuki meets setback in merging its China sales

By George Gao  From Gasgoo.comNovember 03, 2008

Shanghai, November 3 ( The ambitious plan of Japanese carmaker Suzuki Motor to merge the sales networks of its joint ventures in China has come to a halt due to the conflicting interests between the two JV companies, said Beijing News today. All the 4S stores of Changhe Suzuki have withdrawn from the merger project, with only two Changan Suzuki 4S stores keeping the trial channel in the Beijing market.

In an attempt to boost its brand image and sales, Suzuki Motor started its "Greater Suzuki" plan in China last year by trying to merge the sales networks of its two Chinese ventures Changhe Suzuki and Changan Suzuki and selling their vehicles along with imported Suzuki cars in the same stores. However, the two ventures as well as their dealers have not been cooperative enough, and as a result this trial merger has stopped.

"We will not sell Changan Suzuki's cars any longer and will focus on selling our own models again such as Beidouxing and Liana cars," said the sales staff of a Changhe Suzuki 4S store in Beijing. Only a few months ago, this store had lots of Changan Suzuki cars in its showroom, but this company didn't renew its sales contract with the Changhe Suzuki 4S store, its staff said.

The other three Changhe Suzuki 4S stores in Beijing have also stopped selling Changan Suzuki's models, but there are still two Changan Suzuki 4S stores selling Changhe Suzuki's cars in the capital city, allegedly because of their renewed contract. According to a sales executive of Changan Suzuki, the company has also scrapped the merged sales in other Chinese cities as in Beijing.

According to the Changhe Suzuki sales executive, uneven distribution of supplies and interests among other other's 4S stores has partly led to the sales merger's abortion. He said that Changan Suzuki provided enough hot-selling cars to its own 4S stores while Changhe's stores had limited supply of the same models. A 4S store of Changhe Suzuki sold no more than 20 units of the best-selling Suzuki SX4 model last year.

The two Chinese joint ventures of Suzuki Motor have shown little enthusiasm for the Suzuki sales merger plan as they may have their own distinctive advantages in the market. For example, the Changan Suzuki's Suzuki SX4 and Changhe Suzuki's Liana are derived from the same platform, and the hot sales of the former consequently affected the sales of the latter.

Despite these setbacks it has met, Suzuki Motor recently promised it will continue to carry on the merger plan in the Chinese market. However, the Japanese carmaker may have an uphill task ahead to moderate the specific interests of its joint ventures in China.

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