Car dealer Damelian Group collapses with $80 million in debt, but car sales still strong

As the motor industry crosses its fingers for one million new cars to be sold this year, it has been rocked by the collapse of upmarket Sydney motor vehicle dealership group Damelian Automobile.

The business, founded by Sydney personality Rick Damelian in 1978, has been placed in receivership after a secured creditor pulled the plug after plans to sell property did not succeed.

The secured creditor, which is owed about $80 million, is reported to be National Australia Bank.

According to media reports, the business has been in financial difficulty since around the start of 2010, and automotive insiders are sceptical about whether it can be resurrected.

Ferrier Hodgson partners Steve Sherman and Jim Sarantinos have been appointed receivers and managers of Damelian, which has nine dealerships in Sydney and around 100 employees. They say they are working with manufacturers Honda, Suzuki, Renault, Citroen, Fiat and Alfa.

As part of the receivership process, customers who paid deposits will receive their purchase, but servicing has been halted.

The collapse follows industry outcry over the Gillard Government’s decision to scrap its Green Car Innovation Fund, which was to deliver $1.3 billion to manufacturers to push forward the construction of hybrid and electric cars, with companies to receive a dollar from the Government for every $3 put into construction.

Other factors in the industry over the past few years have been the GFC, the high Australian dollar increasing the attractiveness of imported cars, high petrol prices, and the changing preferences of consumers for smaller cars or four-wheel drives.

Figures released yesterday showed August was a bumper month for car sales, with growth in Queensland and demand for Japanese-made cars underpinning the result and boosting hopes for one million in car sales this year.

The Federal Chamber of Automotive Industries figures showed 88,082 new vehicles were sold last month, an increase of 7.3% year on year. Queensland vehicles sales rose 14.6% year on year after slumping following its natural disasters over summer.

FCAI acting CEO Steve Payne says the results, while positive, come off a run of sub-par months.

“We’re behind last year’s figure by 60,000, but we think we will get over a million,” Payne says.

“It’s the first good result for several months. We think a million sales would be a good result.”