Volvo dealer can sell new cars again

Volvo Cars of Honolulu is back in business.

Dealership officials removed “not for sale” stickers off cars on their lot Friday afternoon after getting word Thursday night from the state Department of Commerce and Consumer Affairs’ Motor Vehicle Industry Licensing Board that the agency had cleared Volvo Car USA to distribute new vehicles in the state.

Volvo Cars of Honolulu, at 704 Ala Moana Blvd., stopped selling new cars about two weeks ago because of incomplete paperwork submitted by New Jersey-based distributor Volvo Car USA in connection with its annual license renewal application. The licensing board had placed Volvo Car USA’s application in “pending status” and said the company could no longer distribute vehicles in Hawaii until the matter was cleared.

“It feels pretty good to finally get clarification that we are allowed to sell new cars,” John Martinho, vice president and general manager of Volvo Cars of Honolulu, said in an interview at the dealership. “We’re thankful that DCCA gave us a call last night and let us know that. The scary thought of it was for all the employees that we have with that uncertainty. Now knowing we can sell cars again, we can fully operate business, serve our customers and make sure our employees have a home.”

Martinho said Volvo Cars of Honolulu was able to service cars, distribute parts and sell used cars during that period but acknowledged that not being able to sell new cars since Jan. 5 was costly.

“We’re still calculating that out, but it could be a significant dollar amount,” Martinho said. “Our monthly expenses are pretty high, and without any revenue that comes in from the sales portion of it, it could be significant. A rough range we’re looking at is about $13,000 a day for the past two weeks.”

At that rate the lost revenue could amount to at least $182,000, excluding the time it will take to get the word out to bring back customers.

Volvo Cars of Honolulu said to restore consumer confidence in the Volvo brand, and especially its dealership, that it is offering a 30-day price match guarantee on all Volvo automobiles.

“We’re going to give a price-match guarantee so if you come buy a brand-new Volvo from us and if you can find it advertised anywhere (in the country), we’ll go ahead and match that price within 30 days of purchase,” Martinho said.

Employees clapped and were rewarded with pizza after Martinho broke the news to the group shortly after 1 p.m Friday.

“They were a little afraid because they didn’t know what would happen if the situation took to the end of the month,” he said. “We might have gone out of business if there wasn’t a decision made faster. I have about 45 employees, and about three or four on the sales side left their positions during this time period because, obviously, sales people are commission-based. So without any sales coming in, they’re not making any money for their families, and the company isn’t making any. So they had to make a decision on what’s best for their families and themselves.”

Volvo Cars of Honolulu is owned by Mike Fedotov, who purchased it with a couple of partners in December 2012 and then bought out his partners in October 2014.

The paperwork mix-up apparently happened when a new entity, Volvo Car USA, took over the distributorship from Volvo Cars of North America, effective Jan. 1, 2016. Volvo Cars of North America’s license was forfeited June 30, but Volvo Car USA wasn’t notified in writing until Dec. 29 that its application for a license to continue selling vehicles in Hawaii was deficient. The licensing board said Volvo Car USA failed to submit a copy of an agreement granting it the franchise to distribute vehicles in the state. Volvo Cars of Honolulu had continued selling vehicles since June 30 because it wasn’t made aware of the notice until Jan. 5.

“I don’t really know why it happened,” Martinho said. “Maybe it’s because Volvo is growing really fast and there’s maybe some mismanagement on their end. Maybe because they’re focused on other portions of the business and we’re the only Volvo dealer in the state of Hawaii, so we could be easily forgotten.”