GM’s decision to kill off Holden brand has family businesses across SA on tenterhooks
A decision to kill off Holden means a nervous wait for SA businesses who have invested millions – including City Holden, set to open a new $6.5m showroom at Mile End in May.
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One of Adelaide’s best known Holden dealerships is in the midst of building a new, $6.5 million dealership, as parent company General Motors announces it is killing off the brand.
GM has been urged not to drag its heels on providing fair compensation for dealers, who have been asked not to speak with the media while details of the packages they will be offered are discussed.
City Holden, which is consistently among the best performing dealerships in the nation, turning over about $100 million a year across its four locations, told The Advertiser last year it expected to open its new $6.5 million, purpose-built showroom on Railway Terrace at Mile End in May this year.
Dealer principal Julian Newton said at the time the new Mile End “experience centre” represented an industry trend away from “behemoth showrooms” towards boutique facilities focused on technology.
“There’ll be screens and interactivity, iPads, screens - essentially having a representative range on the floor but being able to showcase the whole lot through technology - Holden call it ‘dealership of the future’,” he said.
“I’m really excited by what we’re doing down there - it’s such a great move into the future and it’s the next stage of City Holden and the Newton family.”
City Holden has been contacted for comment.
Holden dealerships, which are predominantly family owned businesses, many stretching back generations, were blindsided yesterday when General Motors announced it was killing off the Holden brand by the end of the year.
GM told the New York Stock Exchange that the decision to retire the Holden brand would cost it $US300 million ($447 million) in cash and $US 1.1 billion ($1.64 billion) all up, including cash and non-cash charges.
The company’s managing director Kristian Aquilina told a press conference yesterday that dealers would be compensated fairly and assisted with transitioning their businesses.
Mr Aquilina said appropriate packages would be supplied to employees and “compensation” would be available for dealers.
“Our dealers we’ll offer a fair compensation as well as significant support in relation to the inventory they hold and the opportunity to transition their business for a new future,’’ he said.
There are 185 Holden Dealerships in Australia, and the chief executive of the Australian Automotive Dealer Association James Voortman said their owners would have made large investments, in the range of a couple of million dollars to more than $5 million for substantial CDB sites.
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While The Advertiser has contacted a number of Adelaide dealerships for their reaction to GM’s decision, they have been advised not to speak to the media.
Mr Voortman said GM’s decision was heartbreaking for many family businesses which in some cases had relationships with Holden going back several decades.
He said new car sales were weak in Australia, and it would be difficult for some of these businesses to switch to selling other brands or survive on servicing the remaining fleet of 1.6 million Holdens nationwide.
“It’s not a great time, they don’t have many options frankly,’’ Mr Voortman said.
“The automotive market is really struggling. We’ve had 22 months of negative new car sales and frankly there really aren’t that many brands you can hop into.
“I’m not saying there won’t be instances where a Holden dealer is able to take on a new brand, but that’s not always as easy as it sounds, you can’t always repurpose a facility for another brand.’’
Doing so would invariably incur fit-out costs, Mr Voortman said.
“It’s going to be very difficult for these Holden dealers.’’
Mr Voortman said there had been no information released about what dealers could expect in terms of compensation.
“They’re going to apply a formula, and that will have a number of inputs such as when did you last upgrade your facility, how many years did you have left on your dealer agreement ... there will be a range of factors influencing that compensation figure.
“GM just has to do the right thing and come to the party with compensation packages that are fit for purpose.
“The last thing we need is them dragging it out and it becoming a protracted negotiation which just causes more anxiety in the network.’’
Some of Adelaide’s best known dealerships go back more than 50 years, with Hamilton Holden at Somerton Park established in 1960 by John H. Ellers before being bought by the Hamilton family in 1988.
Peter Page Holden was established in 1971, and says on its website: “We know and love Holden, so make us your first port of call for all Holden inquiries.’’
The former Plaza Holden rebranded as Plaza Auto in 2016, when its general manager Stuart Cole told The Advertiser that at least four established SA dealers were told in 2015 that their agreements would not be renewed past 2018.