Ireland's leading car distributor, Motor Distributors Ltd, is to lose its Mazda franchise from July 2006 as part of a Europe-wide strategy by the Japanese firm to replace national distributors with wholly-owned subsidiaries.
The two-year notice means that MDL will get no financial compensation. MDL, part of O'Flaherty Holdings, currently holds the Irish franchise for Mazda, Mercedes and Volkswagen. The VW division of MDL also covers Audi and Skoda. The company also has a 50 per cent interest in Hispano Cars, importers of Seat, a VW-controlled brand. Overall, MDL controls about 23 per cent of the Irish market.
John Coffey, chief executive of the Mazda Ireland division of MDL, said he had been notified "very recently of the decision, but it did not come as a surprise". Mazda now controls 85 per cent of its European volume through subsidiaries and has gradually taken over national operations during the past few years.
"These are corporate decisions," said Coffey, "and while we might have hoped to avoid this inevitable decision due to our relatively strong position in the Irish market and being on the margins of Europe, there's an inevitability about it."
An MDL spokesman said: "The announcement relates exclusively to Mazda and has no bearing on any other aspect of MDL operations."
However, it comes nine months after VW expressed an interest in acquiring the Irish import operation of its brands. A carefully-worded statement issued on behalf of MDL at the time said it was "talking" with Volkswagen AG at the latter's behest about marketing and import operations.
Volkswagen dealers we spoke to privately said they were a bit mystified. One said: "Whatever was afoot isn't happening and we have been working together with Volkswagen at MDL on our forward plans." But another said meetings arranged between dealers and MDL were being postponed and rescheduled which could suggest something was happening.
"There is a general dealer meeting now planned for June: maybe we will know more then. If there had to be a date [for a changeover], I think September 2005 would be more appropriate: that's when a new phase of the block exemption regulations takes effect."