2013 Suzuki KIzashi
Suzuki Canada Inc. dealers say they deserve a payout from the auto maker over its plan to halt vehicle sales in Canada next year.
The dispute has ended up in the Ontario Superior Court of Justice, where Suzuki has filed a motion seeking dismissal of a claim dealers brought against the company under the National Automobile Dealer Arbitration Program (NADAP), which settles issues between dealers and the car companies that supply them.
"What we're looking for is fairness," said David Baker, who owns South Deerfoot Suzuki in Calgary and is one of 48 dealers identified in Suzuki's court action.
American Suzuki Motor Corp., which went into U.S. Chapter 11 bankruptcy protection in November, 2012, and announced it was pulling out of the U.S. market, treated its dealers fairly and offered them compensation, Mr. Baker said.
"In Canada, what they have tried to do is get away from any compensation," he said, without specifying how much dealers will seek.
U.S. dealers were offered between $25,000 (U.S.) and $1-million each in the bankruptcy filing, industry trade publication Automotive News said in a Dec. 10, 2012, article.
The dealers' argument centres on notices of non-renewal Suzuki sent to them between December, 2012, and March 22, 2013, informing them that their franchise agreements would be extended for one year instead of the usual three-year term because of uncertainty surrounding the future of the auto maker in Canada in light of the U.S. situation.
Suzuki's motion urges the court to dismiss the NADAP claim, saying the arbitration program does not apply to decisions by manufacturers to discontinue product lines.
"The claims relate to the 'discontinuance by a manufacturer of any or all of its product lines,'" which is not subject to arbitration under NADAP rules, the court filing said.
The Japan-based company announced on March 26 that it will stop selling vehicles in Canada next year, ending a 30-year history in Canada that once included production of Suzuki vehicles at a joint-venture assembly plant the company shared with General Motors of Canada Ltd. Production of Suzuki vehicles at the Ingersoll, Ont., factory was halted in 2009 and GM bought out its partner later that year.
The notices of non-renewal meet the terms and conditions in dealer agreements, Suzuki senior vice-president Bill Porter said in an e-mail response to questions. The company offered dealers the opportunity to remain in operation beyond when sales of new vehicles will stop so they could provide service and warranty repairs to Suzuki owners, Mr. Porter said. He did not respond to the question of whether compensation was offered to dealers and noted that the court case limits what he can say about the dispute.
Mr. Baker said dealers were told that the period before end of sales next year will allow them to make a transition to a new business model.
"I'm in a major market here and I'm very close to nearly every other franchise represented," he said. "So what is my new business model? That's something which we're still addressing."
Deliveries of new Suzuki vehicles fell 32 per cent from year-earlier levels in April, the first full month of sales after the March 26 announcement that Suzuki would stop selling vehicles. Sales fell 36 per cent in the first four months of the year.
Mr. Baker said his dealership has sold 10 vehicles since the announcement.