Suzuki Puts Brakes On US Car Sales; Distributor Plans To File For Bankruptcy

Japanese automaker Suzuki announced Tuesday that it is halting the sale of cars in the U.S. and plans to exit the market as the company's U.S. arm American Suzuki Motor Corp plans to file for Chapter 11 bankruptcy protection in California.

Hurt by a strong yen and limited choice of vehicles that failed to excite consumers, Suzuki's departure marks the end of a 27-year effort to gain traction in world's second-largest auto market.

The company announced that it plans to wind down auto sales but has not provided a timeline as yet. Suzuki stated it will honor warranties and indicated parts and service will continue uninterrupted, CNN Money has reported.

Unfavorable exchange rates, small lineup of models contributed to multiple challenges in the United States, where it managed to capture a small share of 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," the company told in a statement.

American Suzuki happens to be in debt to the tune of $346 million of which $173 million is owed to the parent company. The distributor is said to have close to 1000 creditors, court documents stated.

American Suzuki plans to focus on selling All Terrain Vehicles (ATVs), motorcycles and outboard marine engines. The company stated that it remains "firmly committed," to those product lines.

"These divisions are competitively positioned in their respective markets, allowing for long-term growth as economic conditions improve," the company said.

Suzuki's move is expected to benefit mostly Kia Motor and Nissan Motor the two brands that car shoppers often compared with Suzuki.

Suzuki sold 21,188 vehicles in the United States through October this year, a 5 percent drop from the previous year at a time when the overall market was up by 14 percent, Reuters has reported.

American Suzuki had 365 employees as of last count, CNN Money has stated.

Reportedly, the Japanese parent company plans to buy the motorcycle, ATV and engine operations and shift its auto business to service existing vehicles on the road.

The new U.S. operating unit plans to keep the American Suzuki name, Reuters has indicated.