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Why is the leaf spring loosing shape a problem? Once any leaf spring is derated to the point it works properly under a Suzuki it can't hold arch. This is the nature of leaf springs and the Suzuki suspension design -it's not a problem, it's just what they do. Sure, you can increase spring rate and hold any height you want without sagging, at the expense of flex, ride quality and traction. In the photos you have posted the spring isn't really doing anything at all - and that's what happens with folding shackles -they stop the springs working - the shackle does all the work except that it doesn't have any rate - it's not pushing the tires down to generate traction, it's just letting them fall under their own weight which doesn't provide much traction - the wheels that are loaded (compressed) then have to drag the drooped tire out of the hole/rut etc it's in. Sure, the car might feel a bit better because there's less uncontrolled body movement but it doesn't translate to much added traction or capability. Dropping a tire a long way down into a hole means it has to climb back out again - especially if the car has open diffs. That's before you have to deal with the shackles unloading for instance, on the high side of big side angle. Some people claim they don't do this, I'd argue they haven't had their car in a position to have it happen.
Which modification replaced folding shackles? That's an interesting question to ask. They just slowly went away as people realised they have more disadvantages than benefits. I've spent 30 years working on Suzuki suspension. I've seen lots of ideas come and go. We landed on a RUF conversion with narrow tracked spring spacing with OME springs derated and soft valved shocks as pretty much peak performance for a leaf sprung Suzuki. This has been the case for 20 years. Lately, we've been experimenting with running a front panhard rod, which restores full steering lock on cars with soft front springs. We run this setup with twin locking diffs and with a tire size up to 35". It's not perfect - axle wrap is an issue with heavily derated springs but the cars are trustworthy, reliable and stable for a leaf car. Our focus is lowering front roll stiffness and increasing wheel travel in the front whilst leaving the rear end alone, because high rear roll stiffness keeps the car stable when climbing. We have no interest in suspension lift. Whilst there are cars around with much more flex, that doesn't translate to capability. My own car is coil sprung and has a lot of wheel travel and flex, but in real capability the biggest factor in my car's superior performance is wheelbase - I have 100" of wheelbase and that makes the car climb better.
Of course coil suspension will ultimately outperform leaf springs because once axle location is set by links, each element of the suspension can be isolated and adjusted. Of course my car with coils and extended wheelbase will make terrain look easier than a SWB on leaves, but I'm rarely driving something a SWB leaf car can't, my car just makes it look a bit easier - the body stays flatter and I can slow down a bit more - but as I pointed out, there are other factors at play there other than just the suspension. As an aside, I also don't believe in coil springs going loose either - that's the same as folding shackles.