‘Reckless’ GM kept Holden dealers in the dark, Senate hears

Senate hears a ‘reckless’ GM exploited its Holden dealers, a claim the Detroit giant rejected as ‘conspiracy theories’.

Crossley Holden owner Ben Hancock outside the Proserpine dealership in February, following the shock announcement that General Motors would shutter the brand. Picture: Deborah Friend

General Motors treated Holden dealers recklessly and exploited them by allowing them to continue investing capital in their businesses before the brand’s closure, a Senate committee has heard.

Speaking to a Senate Committee on GM Holden’s decision to withdraw Holden from Australia on Monday, Australian Automotive Dealer Association CEO James Voortman said that GM-Holden was “reckless”. Many dealers only learnt about the brand’s withdrawal on February 17, shortly before the media reported it.

“GM’s actions by allowing this level of investment by dealers was reckless,” Mr Voortman said.

“GM seems to be a law unto themselves and the epitome of a large, offshore multinational using their powers to exploit small businesses.

“They have set a very dangerous precedent and in the process, they have emboldened other vehicle manufacturers to exploit the imbalance in power that exists between them and their dealers.”

Mr Voortman called for changes to the “impotent” franchise code, as well as the implication of “a system of binding arbitration,” calling a recent amendment designed to help dealers inadequate in the face of a compensation deal from GM that left 185 Holden dealers with no choice but to accept what they considered to be an inadequate compensation offer, Australian Holden Dealer Council secretary David Nicholson said.

The compensation package allows for a payment of $1500 per vehicle over the next two and a half years, based on the 2019 dealer volumes, plus the opportunity to serve as an authorised service provider for Holden vehicles for the next five years.

Speaking to the same committee, head of industry growth for the Ministry of Industry, Bruce Wilson, said that the amendment to the franchising code was chosen because a separate code pertaining to car dealers “was not considered to be the best way forward”.

GM Holden interim chairman and managing director Kristian Aquilina. Picture: AAP

Mr Wilson also responded to accusations from the Holden Dealers’ Council, revealed by The Australian on Monday, that the group was “blown off” by Ms Andrews on 24 occasions since March, forcing the group to send an email of complaint to all government MPs.

Mr Wilson said he was not aware of the letter of complaint. The ministry received 42 pieces of correspondence from the Holden Dealers’ Council, but did not respond as it considered them “daily updates”, he said.

“I looked at those emails, the vast majority of which senator, really, were update emails,” Mr Wilson told Labor Senator Deborah O’Neill.

“I decided the content of those emails were more in the characterisation of daily updates and didn’t really have specific requests of the Minister … that needed a specific response.”

GM Holden chairman and managing director Kristian Aquilina told the committee that he wanted to put an end to “conspiracy theories” that claimed General Motors Holden knew about the brand withdrawal months before the announcement, and that he only found out three days prior.

“I was advised of the decision that was taken overnight my time on the Friday leading up to the announcement and then over the weekend we prepared for that,” he said, adding that he advised the Australian Holden Dealer Council that same day.

Mr Aquilina also said he provided “input into a study that considered a whole range of options” regarding the future of the Holden brand in December of 2019.

Revealing that 90 per cent of the nation’s Holden dealers had now signed up for the compensation deal, Mr Aquilina said that General Motors Holden’s decision to refrain from entering into an arbitration process with dealers was due to the view it was no longer necessary.

Representatives from the ACCC told the committee that they were treating an investigation as to whether GM Holden treated dealers unconscionably as “the highest of priorities,” with a finding expected to be produced by the end of the year.

Executive General Manager of Enforcement Rami Greiss confirmed one of the allegations they are investigating is whether GM Holden encouraged dealers to invest in their businesses while knowing the Holden brand would cease.

“Well, it’s certainly one of the allegations levelled against General Motors, and I stress, it’s an allegation at this stage,” Mr Greiss said.

Minister for Industry, Science and Technology Karen Andrews earlier on Monday announced GM will not see “another cent” of Australian government support after making the decision to wind up the Holden brand without consultation.

“I, like most Australians, was extremely disappointed at GM Holden’s decision to walk away from our country, their local workers and loyal dealers,” Minister Andrews said.

“Australian taxpayers have given this multinational company more than $2bn in financial assistance over recent years, and it still decided without consultation to wind up the Holden brand in Australia.”