Motor Distributors Limited (MDL), Ireland's largest car importer, has agreed to hand over the importation and distribution rights of its most significant range of cars to Europe's biggest carmaker, Volkswagen AG.
From October 1st, 2008, the German manufacturer will take control of the distribution of all new Volkswagen, Audi and Skoda cars as well as new Volkswagen commercial vehicles in Ireland, bringing an end to a 57-year partnership between MDL and the German carmaker.
While neither company would disclose the level of compensation paid by the German carmaker, Volkswagen did confirm that a compensation payment was part of the agreement. The figure is believed to be a substantial eight-figure amount.
VW is said to be impressed by the 16.7 per cent of the Irish new passenger car market that the Volkswagen, Audi and Skoda brands now control under the management of MDL. It has been in negotiations to regain direct control of the Irish import and distribution operation since 2003.
Motor Distributors is a profitable arm of O'Flaherty Holdings whose major shareholders are Michael O'Flaherty (74) and his brother Nigel (69), who is chairman of the distribution company.
In 2004, MDL made profits in excess of €25 million. That year however, it had control of Mazda as well as VW, Skoda, Audi and Mercedes-Benz cars and commercial vehicles.
From October 2008, MDL, which is based at the junction of the Naas Road, Long Mile Road and Walkinstown Avenue in west Dublin, will have lost the best-selling models from its range and will distribute just Mercedes-Benz cars and its remaining commercial vehicles operation.
As part of the agreement with Volkswagen, MDL will establish a new company named Volkswagen Group Ireland later this year into which all VW import business will be transferred.
However, MDL also has a substantial dealer network of its own, under the Motor Services Ltd (MSL) and these operations will continue.
The dealers under MSL control include Park Motors on the North Circular Road, Ballsbridge Motors and Grange Motors, all in Dublin, and Turner's Cross Motors in Cork.
While the managing director of the new company will be appointed by Volkswagen, the agreement stipulates that all 120 MDL employees who work across the three marques in Ireland will continue on the payroll of the new company.
In addition, all 63 Irish dealers will have their contracts transferred to the new company without any changes to conditions.
