Suzuki Tries to Zig as U.S. Market Zags

(MoneyWatch)  Add Suzuki to the list of would-be breakout automotive brands whose task got a whole lot tougher as U.S. auto sales have tanked.

Suzuki sales have tripled in the United States since 1997, but this year, Suzuki's U.S. sales are down 5.3 percent through August, to 70,430. That represents higher market share for 2008, since the overall U.S. market is down 11.2 percent year to date, to about 9.8 million.

However, Suzuki has much higher U.S. volume ambitions, backed up by a growing ad budget; a new advertising agency as of July 15, Siltanen & Partners, Marina del Rey, Calif.; a reorganization in July that for the first time consolidated its automotive, motorcycle and marine engine divisions in the United States; and a slew of new vehicles in the pipeline.

Like a couple of other historically second-tier brands, South Korea's Hyundai and Kia, Suzuki is trying to move the brand upscale and live down its reputation for producing cheap, and cheaply built, entry-level vehicles.

The move to better quality is of course all to the good, and Hyundai in particular has shown a big improvement. Suzuki, on the other hand, is still near the bottom in quality surveys from J.D. Power and Associates, unlike most other Japanese brands.

Fundamentally, the timing is all wrong to move upscale. The U.S. market is turning to small, fuel-efficient cars, just as these brands are trying to introduce bigger, more profitable, and thirstier vehicles.

For instance, Suzuki showed an all-wheel-drive, near-luxury sport sedan at the New York auto show in March, the Kizashi 3 concept car, with a 300-hp, 3.6-liter V-6.

Most U.S. customers continue to associate the Suzuki brand, and also the Korean brands, with cars like the tiny Suzuki SX4 crossover. Its U.S. sales this year are up 157.7 percent through August.

The Suzuki brand's last big hit in the U.S. market was the Suzuki Samurai, a mini-SUV. That was, until Consumer Reports rated the Samurai "unacceptable" in 1988, due to alleged tipping during testing. Suzuki later sued, ultimately settling the long-running case in 2004.

Suzuki has overcome a lot of obstacles since then, but moving the brand into near-luxury territory is a tough assignment.