Volvo Cars of Honolulu has $6 million in new-car inventory but is not allowed to sell any of those vehicles.
The local franchise dealership at 704 Ala Moana Blvd. received word Jan. 5 that its distributor, New Jersey-based Volvo Car USA LLC, had filed incomplete paperwork with the Motor Vehicle Industry Licensing Board of Hawaii. As a result, the licensing board issued a letter to Volvo Car USA saying the application is in pending status and that Volvo Car USA “is not authorized to distribute motor vehicles in this state.”
“Franchise dealers have a written agreement with the manufacturer or the distributor, and the licensing laws require the manufacturers of the vehicle to be licensed,” said Christine Rutkowski, executive officer of the Hawaii Motor Vehicle Industry Licensing Board. “There’s a connection between the motor vehicle dealer and manufacturer they represent. Volvo Car USA is not licensed because their application requires more documents.”
Volvo Cars of Honolulu General Manager and Vice President John Martinho said the problem apparently stems from Volvo Car USA changing its name from Volvo Cars of North America, effective Jan. 1, 2016. He said Volvo Car USA did not provide the franchise agreement to the state that it has with manufacturer Volvo Group, which is based in Sweden.
Martinho said the paperwork snafu has hobbled his business and ultimately could affect his 45 employees since the dealership, the only Volvo dealership in the state, is unable to sell any of its new cars. He said Volvo Honolulu has $3.5 million in used-car inventory it is able to sell while it waits for the paperwork trail to be resolved. The dealership also continues to service vehicles, representing $200,000 to $250,000 in revenue a month, and sell parts, which makes up about $90,000 to $110,000 a month in revenue.
“We’re left in limbo and are trying to get an answer and trying to find out what we can do legally,” said Martinho, adding that other Volvo dealerships in the U.S. could be affected. “In the meantime we’re paying about $700 a day, or $21,000 a month, for the interest on the money borrowed for the new cars. … We still don’t have an answer when this will be resolved.”
Volvo Car USA’s Brad Moorhead, who acts as a liaison between the franchise dealership and the distributor, could not be reached.