Suzuki Official Says XL7 Not Meeting Expectations

SAN ANTONIO – American Suzuki Motor Corp. had high hopes for the XL7 when it launched two years ago, but an official admits the cross/utility vehicle has not lived up to expectations.

“We like the vehicle, but sales haven’t been as strong as we might have liked,” Gene Brown, vice president-marketing, public relations and product planning, tells Ward’s in a recent interview here.

The current XL7 debuted in fall 2006 as an ’07 model and is a relative of the Chevrolet Equinox midsize CUV. Both Theta-platform models are built at Suzuki’s North American joint-venture plant with General Motors Corp., CAMI Automotive Inc., in Ingersoll, ON, Canada.

GM owns a 3% stake in Suzuki after having divested 17% in 2006.

CAMI was to build 60,000 units of the current-generation XL7 annually, with 50,000 earmarked for the U.S. market.

Suzuki sold 10,948 XL7s in 2006 and 23,176 last year, Ward’s data shows. In the year’s first eight months, sales of the XL7 were up 15% to 19,300 units, but deliveries fell 28.3% in the third quarter and plunged 79.1% in August.

Brown doesn’t think the similarity with the Equinox is hurting sales, calling it and the XL7 “pretty different vehicles” due to the longer length of the XL7 and third row, which now is standard for ’09 to differentiate it from Suzuki’s other CUV, the 2-row Grand Vitara.

Suzuki having tough time differentiating XL7 from other large CUVs.

Rather, he says it’s been difficult for the auto maker to “break into a new category of vehicles larger than you’re known for,” given the current state of the new-car market.

Compounding this problem is the fact the XL7 doesn’t have anything to offer that separates it from the pack of large CUVs, Brown says.

There are nine models in the Ward’s Large CUV category, including the Buick Enclave, Ford Taurus X, GMC Acadia, Honda Pilot, Hyundai Veracruz, Mazda CX-9 and Saturn Outlook.

“(The) XL7 is a very good product without having, honestly, a single standout feature,” the Suzuki executive says. “ It’s got a lot of good features but to be on the radar in a hugely contested segment, it lacks that single standout feature.”

Buyers who have purchased the XL7 “really like it” Brown says, although “most still don’t know about it.

“There’s no one message we can send out that would really put it on the radar. So we’ve really struggled in that regard.”

When the XL7 debuted, its 252-hp 3.6L V-6 engine, designed by GM, was one of the highest-output mills available among large CUVs. But the engine since has been eclipsed by more powerful mills, including GM’s own 275-hp 3.6L available in the Acadia.

Due to bulging inventories of the XL7, as well as the Equinox and sibling Pontiac Torrent, CAMI production is down this week, the first of six weeks in which the plant will be down through the end of the year.

“The plant’s down for a little while to allow the dealers to work out of that (oversupply situation with the XL7),” Brown says.

The XL7 had a 134 days’ supply at the end of August, up from 63 days’ at the end of July, Ward’s data shows.

Brown declines to comment on reports suggesting the XL7’s sluggish sales mean the CUV will exit Suzuki’s lineup when the current generation runs out.

GM is due to release a redesigned Equinox next June, based on the next-generation Theta platform, dubbed Theta Epsilon, which already underpins the current Saturn Vue CUV.

In 2005, an American Suzuki official told Ward’s the auto maker would decide in 2007, when GM’s new Theta platform was to debut, whether it would continue to use the architecture.

Both Ward’s and forecasting firm Global Insight Inc. anticipate the XL7 will remain in Suzuki’s lineup.

Global Insight’s Rebecca Lindland says the XL7 actually has outperformed the firm’s sales forecasts for this year, despite the challenges Suzuki faces.

“Suzuki is a brand that continues to struggle in the U.S. for solid ground,” she says. “It’s an incredibly difficult market, and even the big boys are scrambling.”

Lindland agrees with Brown’s estimation that trying to gain sales in a new segment has been an issue for the XL7.

“This is a difficult time to try and stretch your brand’s image, especially since consumers are moving away from ‘larger’ vehicles.”

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