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Wednesday, September 7, 2011

Rick Damelian Car Yards Go Broke

Rick Damelian 61 and wife Jacqueline 28

Rick Demelian was once described as the "King of Taverners Hill" and "Car dealer to the stars." But not anymore. Eight of his Sydney car yards were placed in receivership yesterday and a statement from receivers said that he owes around $80 millions to the National Australia Bank. Past clients include Kerry Packer and Lara Bingle who paid $200,000 for her Aston Martin and his companies once turned over $300 million a year and sold over 100 cars every week.

Twelve days ago there was a desperate attempt to sell off three properties on Parramatta Road - his Honda, Renault and Saab dealerships - but they were passed in because there were no bidders. The reason for the decline is said to be the GFC and falling sales of Hondas, once its lifeblood and real estate used as collateral to the banks has been devalued by a slump in the market.

Experts think that Rick Damelian is just the first of many to hit the wall in NSW, as consumers tighten their belts, a new car is not on the priority list. NSW Motor Traders Association CEO James McCall said manufacturers have been too greedy, they force dealers into spending $5 million upgrading their yards then only give them three year contracts to recoup their investment. "Add to that unsympathetic banks, this is an industry under extreme stress" he said. He went on "His (Demelian) cash cow, the Honda, declined in popularity and he had all his money tied up in cars just sitting there in the yards. He had to pay interest on them but they were not going out the front door."

So it looks like there are rough times ahead for those vested in the motor industry in Australia.