US car giant General Motors on collision course with Holden car dealer partners

The dealerships and car yards are fighting for better compensation as the brand is axed from Australia.

US car giant General Motors appears to be on a collision course with its car dealer partners in Australia after two days of settlement discussions over GM’s decision to dump the Holden brand failed to reach a compensation deal.

Negotiations facilitated by retired Federal Court judge Peter Jacobson were unable to improve the compensation offer from General Motors Holden.

The dealerships and car yards, many of which have been selling and servicing the iconic Holden car for decades, claim the current compensation offer from GMH fails to adequately compensate dealers for their expected losses and millions of dollars in investment to support the Holden brand.

Many dealers were irate at the initial offer of compensation from GM of $1500 per car following the shock news in February the Holden brand would be axed by the end of the year with the loss of 600 local jobs.

The Australian Holden Dealer Council, which represents 185 Holden dealers, said on Thursday night that GMH had to be “dragged to the negotiating table” only after the Australian Competition and Consumer Commission intervened with the threat of legal action against it.

“Even then, representatives from General Motors’ Head Office failed to show up,’’ the Australian Holden Dealer Council said in a statement.

Bullying tactics

It also claimed GM was engaging in bullying tactics.

“On the eve of the mediation, General Motors Holden made comments in the press suggesting the removal of future servicing revenue if dealers didn’t sign up to inadequate and uncommercial compensation packages.

“These types of statements are consistent with the bullying tactics dealers have had to endure since GM announced plans to stop supplying new cars for dealers to sell and effectively terminate dealer agreements in order to receive GMH's derisory compensation package.”

GM’s actions, and the severity of their impact on dealers, highlight the substantial imbalance of power that exists between franchisee and franchisor, the car dealer group said.

“GMH has backed dealers into a corner and has shown a complete unwillingness to accept the magnitude of the losses that dealers are facing as a consequence of GMH mismanaging their brand.

“All roads seemingly lead to a dead-end for dealerships, creating major uncertainty for more than 9000 employees supporting Holden dealerships.”

The AHDC also said it categorically rejects GMH’s claim that it is “overcompensating dealers” and believes GMH has a legal and moral responsibility to recognise the investment dealers have made in making the Holden brand an Australian icon and to fairly and equitably compensate dealers for their losses.

“$1500 per car fails to adequately compensate Holden dealers for losses including millions of dollars in showrooms, facility upgrades and corporate signage – investments that were made based on GM’s promises about their commitment to Holden and the Australian market.”

In February, the nation’s biggest car dealer, the publicly listed AP Eagers, called on GM to deal with it fairly and reasonably as it looks to compensate car sellers as Holdens disappear from Australia.

Offer ‘fair and reasonable’

In a statement on Thursday night, Holden said it had spent two days having constructive discussions with dealer representatives, with three senior Holden representatives in attendance including the interim chairman and managing director, and each side was represented by a team of experienced lawyers and accountants.

“We respect the confidential nature of those discussions, so can make no further comment, other than to say the discussions were constructive but no agreement was reached.

“Holden considered all matters raised during the discussions and remains of the view that its offer is fair and reasonable.”