SOUTH DUBLIN Mercedes-Benz dealership Alo Kavanagh Cars has gone into receivership.

The business, operating out of the Stillorgan Industrial Park in Dublin, was one of the main outlets for the premium German brand in Ireland, representing it in the lucrative Blackrock and Sandyford areas.

Allied Irish Banks has appointed Liam Dowdall of Smith Williamson Freaney as receiver of the company, with a view to selling the business as a going concern.

Mr Dowdall said he believed there would be an interest for taking over the business within the motor trade, given its prominent location.

Founded in 1983 by Alo Kavanagh, the dealership employed over 25 staff in recent years.

However, numbers had fallen to 17 lately.

Last night, Mr Kavanagh said he deeply regretted the situation but praised the loyalty of staff and customers over the years and said he hoped the dealership could reopen soon.

In its last filed accounts, holding company Alo Kavanagh Ltd reported operating losses of €546,832 for the year ending October 31st, 2009.

The accounts also show that, along with a debenture held by AIB over the assets of the company, including its premises in Stillorgan, Bank of Scotland also held a fixed charge on the premises for €500,000.

The firm had debts of €1.8 million falling due within one year, and further long-term debts of €1.9 million.

While sales of new Mercedes vehicles by Kavanagh Cars had reached 250 earlier in the decade, in recent years they are believed to have fallen closer to 100.

The dramatic drop in car sales between 2008 and 2009 hit premium brands badly, with the overall new car market dropping 62 per cent.

Sales of new Mercedes cars fell from 4,056 in 2008 to just 1,037 a year later.

This year, sales have recovered slightly with 2,015 new Mercedes cars sold up to the end of September.

However, the pick-up in sales has been accompanied by a significant drop in new car prices which, in turn, has reduced the value of used cars on many dealer forecourts.

Kavanagh Cars was the only Mercedes dealership in Ireland not to take on other brands.

Given that it is now likely to lose its Mercedes franchise, it brings the total number of outlets nationally for the German brand to 19, with six remaining in the Dublin area.

It follows on from the closure last year of another Mercedes dealer in Dublin, Belgard Motors in Tallaght.