Iceland’s Car Dealerships in Trouble Skip to content

Iceland’s Car Dealerships in Trouble

Kaupthing Bank took over the operations of Hekla car dealership yesterday. Around 200 people work for Hekla and its board hopes that they won’t have to be laid off. Other dealerships may also suffer the same fate because of high debts and plummeting sales.

The photo is unrelated to the story. By Páll Stefánsson.

“Hekla has been around for 75 years and we aim for the company to exist for at least another 75 years,” Sverrir Vidar Hauksson, managing director of Hekla’s auto division, told Fréttabladid. Hekla sells Audi, Skoda and Volkswagen.

Hauksson said that Hekla’s owners had decided the most important thing was to protect the company and that it is a victory in itself that it is continuing operations. “Our staff will carry on doing their best and work their way through these difficulties.”

Özur Lárusson, managing director of the Icelandic Federation for Motor Trades and Repairs (BGS), said every car dealership in the country is facing operational difficulties. They had prepared for a recession of 20 to 35 percent, he explained, but the sale of new cars collapsed with the banking system with a recession of 95 to 98 percent.

BGS has pointed towards two ways to improve the dealerships’ position.

The government could either lower the excise tax on cars or calculate taxes and tariffs of new cars according to the exchange rate at the time of importation rather than when they are collected from the customs.

Lárusson said nearly 2,000 people work at car dealerships in Iceland so a lot is at stake. Last week, the Competition Authority approved the takeover of car dealership B&L by car dealership Ingvar Helgason. The merger is self-defense, Lárusson described.

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