Holden dealers reject GM’s compensation offer

GM Holden’s compensation offer has failed to win acceptance by any of 185 Holden dealers.

Holden dealers are preparing for a protracted legal battle with GM Holden. Picture: Cameron Bates

General Motors Holden’s compensation offer has failed to win acceptance by any of Australia’s 185 Holden dealers, as the legal stoush between the two groups intensifies.

Speaking to The Australian, Evan Stents, lead partner of the automotive industry group at HWL Ebsworth lawyers, challenged the claims of GM which were released in a statement on Tuesday, saying the dealers were preparing for a protracted legal battle.

“If the offer was so fair and reasonable as Holden says, then why is it that not one of the 185 dealers have accepted the offer. No one’s accepted the offer, not one,” Mr Stents said.

“The fact is also Holden … has flatly refused to budge on the offer made to dealers some time ago. As matters stand, I don't see how this plays out other than this going to court.”

Mr Stents was responding to a statement released by the Detroit-based automotive giant on Tuesday.

Drawing on analysis undertaken by PricewaterhouseCoopers and Norton Rose Full Fullbright, GM rejected modelling conducted by consultancy firm KPMG on behalf of Holden dealers, while labelling rumours of a Holden exit planned since 2015 “bizarre and illogical”.

GM said PwC’s analysis had identified a number of “inaccurate assumptions and cost allocations” in the KPMG modelling, which found compensation per vehicle should be $6110, significantly larger than the $1500 offered by GM.

“For example, it omitted to factor in dealers’ opportunity to continue the service, repair, warranty and parts activities. Aftersales is typically one of the most profitable parts of a dealer’s business representing on average up to 115 per cent of a dealer’s total net profit in 2019,” the statement said.

“PwC, after making appropriate corrections and adjustments, concluded that an appropriate range of compensation is actually $350-1409 per vehicle.”

However, Mr Stent alleged the numbers from Holden were premised were a “complete misconception of the true facts.”

“The numbers from Holden are premised on a false assumption that the service and parts elements of the dealers business remain profitable,” he said.