Latvia, Markets and Companies, Transport

Maris Bensons.

Regional manager of Honda Motors Baltic Tonu Vahtel said in a telephone interview to the newspaper that Honda Motors Europe will not give any comments now, but will issue an official announcement at the beginning of next week.

"At "Honda" Baltic dealers meeting on March 26, 2008, we were praised as the best representatives in the Baltic countries. However, already on June 26 I received a notice that "Honda" terminates the contract with Bensons auto," says owner and board chairman at Bensons auto Maris Bensons.

Honda Motors Europe took the decision to break the contract with Bensons auto mainly due to its EUR 1.8 million (LVL 1.26 million) debt to the manufacturer for supplied cars.

"In 2007 we were always short of cars to completely satisfy the potential customer demand for "Hondas". On the contrary, in the beginning of this year, we received a significantly larger number of cars. In order to be able to pay the invoice for the received cars on time, I would need to sell them in 21-days time. Due to the investments made in Riga's Bergi automobile showroom, I did not have spare financial resources," Bensons explains.

In his opinion, the fact that the manufacturer did not even try to understand the situation and make a step forward to Bensons auto, seems illogical.

"In my opinion, we are cooperation partners and the manufacturer should do its best to ensure that the dealer is able to supply the cars to its customers on time. But exactly the opposite has happened – the manufacture stopped supplying the cars at all.

From the moment when Bensons became the owner of "Honda" dealer MDL Motors, the enterprise experienced rapid growth and the image of "Honda" significantly improved in Latvia, newspaper Dienas Bizness reports.

Bensons auto's marketing manager Baiba Drengere informed that in the first six months of this year, the company has sold 769 new "Honda" cars, which is less than in the respective period of time last year, when it sold 1,235 new vehicles.

The company's turnover in H1 this year was LVL 14.81 million, compared with LVL 18.92 million in H1 2007.

Bensons auto also has a tax debt of LVL 656,700, according to State Revenue Service's data.

Janis Pormalis, the former director of MDL Motors, currently the general manager of the dealer of "Nissan" cars in Latvia Motorcents admits that probably, when planning long term investments, the enterprise had not considered such a strong slowdown of the market.

He also says that it will take time before "Honda" finds a new dealer. "In any case, the new "Honda" dealer will not be able to provide as high level customer service and attitude, as Bensons auto did."

As reported, Bensons auto, which was operating under the name of MDL Motors until February 2005, started its business activity in Latvia in September 1993 and was the official "Honda" cars dealer in Latvia.