One of Brisbane’s largest and best-known car dealers, Denmac Ford, has been placed into receivership after a sale slump caused by the Brisbane floods.
Denmac, which also incorporates the Bremer Ford dealership in Brisbane, was placed into the hands of receivers John Greig and Richard Hughes of accounting firm Deloitte on May 11.
“While we are yet to form a final view on the reasons for the appointment, the recent flooding in Brisbane has hurt sales in the first quarter of this year,” Hughes said in a statement.
The business has four locations across Brisbane and Ipswich and turned over $104 million in 2009-10, according to information released by the receivers.
It is continuing to trade while receivers start the process of selling the business as a going concern.
“Although it is still very early in the process we are planning to continue to operate the business in co-operation with the director, staff and existing creditors,” Hughes said.
“We believe there will be significant interest in the business and we are working hard to re-establish the business as we investigate the best way to realise value for the benefit of the stakeholders.”
According to an advertisement for the business, the group had turnover of $75 million between July 2010 and April 2011, which suggests full-year revenue will come in at around $100 million.
Expressions of interest in the business are due by May 27.
Reports suggest Denmac Ford business has been under pressure for some time with the owners reducing inventory and shutting down one location in a bid to reduce costs.
However, any efforts to turn around the business would have been made much harder by the poor sales of Ford Australia’s flagship car, the locally-produced Falcon.
Total Ford sales are down 3.3% in 2011 (versus an industry down 1.5%) and the performance of the Falcon has been particularly worrying.
In April, Ford was forced to reduce production by 20% as demand for large cars slumped. At that stage, sales of the company’s flagship Falcon large car had fallen a staggering 40% in 2011.
Figures released in May showed the Falcon had fallen out of the list of Australia’s top 10 selling cars for the second time this year.
Over the last decade, Falcon sales have slumped from a high of 73,220 cars in 2003 to 29,516 last year.
Of course, most car dealers are currently feeling the pinch from consumer caution.
Motor vehicle sales figures released by the Australian Bureau of Statistics this week shows car sales in April were 3.5% lower than in March, and a worrying 8.4% lower than in April last year.
Total car sales for 2011 are down about 1.5% on the previous corresponding period.
Denmac Ford was contacted for comment but was not available prior to publication.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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