From a press release:American Suzuki Upbeat About Suzuki/Kawasaki Alliance

— Alliance Will Strengthen Suzuki’s 2003 Product Line, Competitiveness and Global Brand Equity –

BREA, Calif.-– Suzuki’s alliance with Kawasaki will directly benefit the Suzuki brand, growth rate, dealer network and expanding customer base.

That’s the theme of remarks by American Suzuki Motor Corporation (ASMC) Vice President of Motorcycle/ATV Division Mel Harris, delivered recently to replace erroneous and unconfirmed rumors with the reasons, benefits and forecasts behind the unprecedented alliance.

Suzuki Motor Corp. (SMC) of Hamamatsu, Japan announced plans in August 2001 to form an alliance with Kawasaki Heavy Industry Ltd., also based in Japan.

According to Harris, the alliance will bolster current ASMC growth and competitiveness.

“ASMC provides products of superior value and considers its dealers vital partners in the company’s current growth trend. Although Suzuki has had a reputation for being a conservative company, we are becoming considerably more aggressive.”

Harris said ASMC’s retail sales have doubled in the last four years, during which time Suzuki has produced many – if not the most – new and desired high-volume models in the industry. The company has renewed its commitment to the all-terrain vehicle (ATV) market with a completely new lineup of QuadRunners and QuadSports. ASMC has also stepped-up its commitment to racing by fielding more teams and winning more championships to elevate Suzuki brand awareness both globally and in the customer’s mind.

“We will remain an aggressive, independent marketer in the future as we continue to make the Suzuki brand a very valued product,” emphasized Harris.

Other details of the alliance released by Harris to Suzuki’s dealer network include:

1. Suzuki and Kawasaki will share certain production platforms (or OEM- produced product). As an example, the DR-Z125 will be a KLX125 and a KX65 will be an RM65.

2. Suzuki and Kawasaki will share parts sourcing, which will help both independent companies remain competitive in the global marketplace.

3. Suzuki and Kawasaki will co-develop future industry-leading motorcycle and ATV models that will fill in product line gaps and create new sales opportunities.

Expanded 2003 Product Line

In product news, ASMC announced its 2003 off-road, competition, Dual Sport™ and QuadRunner (QuadSport) lineup, which has been expanded thanks to the addition of OEM models from Kawasaki. According to Harris, Suzuki dealers can now complement their current lineup of RM85, RM85L, RM125 and RM250 competition models with the RM60, RM65 and RM100.

On the off-road side, the addition of the DR-Z110 to Suzuki’s JR50, JR80, (DR-Z110), DR-Z125/DR-Z125L, DR-Z250 and DR-Z400/DR-Z400E models means that Suzuki can provide a vehicle to match any rider or riding ability.

Suzuki also offers its most comprehensive ATV lineup ever. In 2001, the company introduced the new LT-A50; the new Eiger series LT-F400, LT-F400F, LT-A400 and LT-A400F; the award-winning Vinson LT-A500F; the award-winning LT-F250 Ozark; and the chart-topping LT-Z400 QuadSport Z400. These new units, coupled with the popular LT80, LT-F300F and LTF500F, give the company a vastly improved breadth of QuadRunners for retail growth.

For 2003, Suzuki announces the new LT160 and Vinson LT-F500F. “Because Suzuki has enjoyed success in its ‘flagship’ lines GSX-R, Hayabusa, Katana, Bandit, Intruder and Marauder, the resources have been available for investment in quads and new motorcycles,” explained Harris.

Unparalleled Competitiveness

Under the alliance, Suzuki will sell OEM product to Kawasaki, which will market that product as Kawasaki models through the Kawasaki dealer network – much the same as certain Kawasaki OEM models will be sold by Suzuki dealers under the Suzuki brand. The result for Suzuki, according to Harris, will be one of – if not the – most competitive vehicle lineups in the industry.

“Suzuki will have more models for all types and skill levels of customers — making the Suzuki dealership a true ‘one-stop shopping center.’ Harris reiterated that remaining competitive is a primary objective of any business and Suzuki is no exception. “Part sourcing will allow us to update models with enhanced features and quality like never before.

“In addition, an increase in buying power should help with production components and replacement parts, as well as help us counter the volatility of currency with competitive pricing amid dollar/yen turmoil. Suzuki has always had economies-of-scale opportunities for parts with autos, marine outboards and motorcycles/ATVs,” explained Harris. “Now, with the addition of the Kawasaki alliance, our buying power has been magnified to enable us to secure the highest-quality parts at the most competitive prices. For the Suzuki dealer, the result is more product updates and features than ever before.”

Harris explained that one of the most important benefits of the alliance is the long-term co-development of new models. “More production and more parts sourcing will lead to more new motorcycles and quads in the coming years.”

The new joint effort between manufacturers, designers and engineers will translate into more new products and major model updates realized in a shorter time frame. Models involved in co-development include large cruisers, motocrossers, off-road and larger-displacement scooters. In addition, the alliance will enable Suzuki to realize the competitive advantages of adding select models not currently available in its lineup – a benefit that will be especially relevant in the 2004 product line and beyond.

One area of dealer concern has been the future of Suzuki’s flagship sportbike, the GSX-R. Harris assured dealers that they – and only they – will sell Suzuki’s increasingly popular signature series.

“No OEM collaboration on these sport models is part of the alliance. The GSX-R series represents our best-selling, most prolific vehicles, and will always be a key area of company excellence and dealer performance. Likewise, many standard and on-road Suzuki models will remain 100 percent Suzuki – forever maintaining Suzuki dealers’ status as the strongest retailers in the industry.”

Harris is quick to point out that Suzuki and Kawasaki will remain competitors by maintaining separate dealer networks and by marketing the brands separately. As an example, SuzukiFest and QuadFair will remain Suzuki marketing tools, as will Suzuki Direct Finance.

Replacement parts for the new OEM models for retail will come from Suzuki, says Harris. Dealers will order OEM parts as part of their regular Suzuki parts order. All OEM parts will be eligible to be used with all parts allowance or return programs provided by Suzuki.

Warranty on OEM units will be handled the same as Suzuki-produced units. All normal warranty periods for units will be the same as comparable Suzuki model current programs. Suzuki’s Flat Rate Manual will cover all models since the 2003 book is produced and supplied for the upcoming season.

FAQs

Q: Will a subsidiary company be established in the future?
A: Plans are to use the alliance for increased retail sales volume of each model. There are no current plans for a spin-off subsidiary company or combined brand.

Q: Are there plans for unifying companies in the future?
A: There are no plans for unifying the two companies. The alliance has been established to provide a competitive product lineup to make dealers competitive.

Q: Will the OEM product exchange cause a negative effect on the motorcycle business, as customers have a strong personal preference?
A: With 30 to 40 percent of Suzuki volume being sportbikes, which aren’t part of the alliance, OEM product with the Suzuki identity will remain strong, as these are the “flagship” models. With more models, creating more sales opportunities to keep customers on Suzuki products forever, there will be a Suzuki for all riders and all skill levels.

Q: Will racing activities be combined?
A: Suzuki will continue to race separately, as racing helps create a strong brand image. Racing also helps develop new technologies that can be used in future models.

Q: With Motocross models being part of the co-development, will Suzuki remain competitive against all other brands?
A: Motocross racing combines many factors besides the motorcycle itself. Rider techniques, tuning of bikes and management of teams all contribute to team success. Suzuki will remain competitive as racing is used to improve brand image.

Q: Will the companies advertise and promote together?
A: Both Suzuki and Kawasaki will have separate dealer networks as well as separate marketing programs. Separate branding will remain a commitment of each manufacturer.

Q: Will the co-developed (or shared OEM) product offer only “color” (for example, yellow or green for motocross) as the main differentiating factor?
A: Each company will offer specific product differences (i.e., shape of fenders and placement of instruments, for example, in addition to the paint and decals).

“As the alliance continues to materialize, benefits will become more apparent and will make Suzuki’s the most competitive and desired products in the industry.” concluded Harris.