Nissan's regional distributor is locked in a court battle with the Japanese automaker’s original local authorised dealer, which is refusing to concede its exclusive right to sell the brand’s vehicles in Cambodia and has accused the distributor of circumventing its showroom floor.
Narita Motorcare (Cambodia) Co Ltd, which was appointed as the sole authorised dealer of Nissan vehicles in Cambodia in 2005 by Danish vehicle supplier Kjaer Group, Nissan’s regional distributor at the time, claims it is the only company licensed to sell Nissan vehicles in the Kingdom.
However, the company’s exclusivity was challenged in 2009 when Nissan Motor Co Ltd dropped Kjaer Group and appointed Tan Chong Motor (Cambodia) Pty Ltd, a subsidiary of Malaysian auto sales and marketing firm Edaran Tan Chong Motor Sdn Bhd (ETCM), as its sole distributor to the Cambodian market.
According to Long Narith, managing director of Narita, negotiations that year between Kjaer, ETCM and Narita resulted in an agreement in which Tan Chong would supply Nissan vehicles, while Narita would continue to operate as the exclusive retail dealer in Cambodia.
“The old distributor [Kjaer Group] gave rights for Narita to sell in Cambodia exclusively, and they all agreed that the new distributor would do the same by keeping the same agreement based on the meeting in Phnom Penh on 9-10 March, 2009,” he said.
ETCM appears to have had other plans. In May 2009, the company’s listed parent firm, Tan Chong Motor Holdings Berhad, announced in a disclosure to the Bursa Malaysia that it would sink $5 million into its Cambodian operations. The investment plan included setting up showrooms, with an initial sales target of 200 units per year, it said.
For Narita, however, it was business as usual for the next five years. But 2015 saw problems crop up, as Tan Chong moved closer to launching its own Nissan showroom in Siem Reap.
Narith said that ETCM representatives approached his company last year demanding that he agree to a new arrangement in which Tan Chong would assume sole exclusive dealer rights for Siem Reap, and Narita’s exclusivity would be limited to Phnom Penh.
He said when he refused to sign off on the dual-dealer arrangement, shipments of Nissan vehicles to Narita’s showroom soon dried up.
“We didn’t sign that agreement,” Narith said. “So they stopped supplying cars to us in mid-2015.”
He said Tan Chong was only authorised to supply Nissan vehicles to Narita and had no business getting into retail sales in Cambodia.
“They cannot distribute and sell by themselves,” he said.
“We had exclusive rights since Kjaer Group [appointed Narita as the sole Cambodian dealer,] and an agreement was made following a meeting between the old and new distributors that the conditions [of the original dealership agreement] would not be changed.”
Narith said his company had “clear reason” to file a lawsuit against Tan Chong, but was leaving the door open to negotiations.
“If they want to negotiate, we can negotiate for win-win solutions,” he said.
“They should supply us and we can do business together.”
Khun Sovannrithy, a defence lawyer for ETCM, said Narita lost its right as the exclusive Cambodian dealer when Nissan ended its contract with Kjaer Group in 2009.
“They don’t have [dealership] rights,” he said.
“Narita’s agreement ended when Kjaer Group’s contract ended. Nissan Japan has given all rights to ETCM and Tan Chong Motor Cambodia, and we have the official letter to prove it.”
Sovannrithy said until now Tan Chong has supplied Narita “based on merit”, as they did not want the company to abruptly lose its market, but “what Narita is claiming is far beyond what they deserve.”
Kjeld Olsen, former managing director of Kjaer Group, said in 2005 Nissan appointed his company as the exclusive distributor of its brand in Cambodia, Vietnam and Laos. When Kjaer Group pulled out of Indochina markets four years later, Nissan selected Tan Chong Motors as its replacement.
Olsen said in return for Narita’s best efforts in developing Nissan’s image in Cambodia, his company agreed with Nissan and Tan Chong to maintain Narita’s existing exclusive dealer status.
“The introduction/handover meeting was made in Cambodia at the office of Narita Motorcare in March 2009,” he said, adding that he personally attended the meeting.
Olsen expressed regret that the relationship between Tan Chong and Narita had turned acrimonious.
“I had always expected that both sides – the new distributor and the dealer – would cooperate with each other well to develop Nissan’s business in Cambodia,” he said.
“They should sit down and settle the differences amicably and try to find a win-win solution among them that benefits their companies and Nissan.”