Legal threat sends Holden back to negotiating table with dealers

Holden has been forced into further negotiation with dealers surrounding compensation for the car company’s exit from Australia.

Holden has been forced into further negotiation with dealers following legal threats by the ACCC.

The consumer watchdog said Holden was effectively bullying dealers into accepting a settlement deal after General Motors decided to leave Australia in February.

Holden dealers were originally given until the end of May to accept what ACCC chair Rod Sims described as a “take it or leave it deal”.

They now have an extra month to work with Holden in a dispute resolution process that could result in larger payouts to dealers who invested in the brand.

But the manufacturer said there are no guarantees of extra cash for franchisees.

Under the original offer, Holden said a typical medium-sized dealer might receive about $700,000, while bigger dealers would get closer to $1.75 million in compensation for lost sales.

Holden said dealers represented by law firm HWL Ebsworth wanted the same sized businesses to receive almost $9 million and $22 million – more than 10 times its offer.

Mr Sims said Holden was given an ultimatum – agree to negotiate with dealers, or face court on Friday.

“We were either instituting proceedings in Federal Court or arriving at this undertaking,” he said.

Holden has been told to go back to the negotiating table. Photographer: Liam Kidston.

“We’re delighted this is where we’ve got to.

“It was very close to court action, and Holden – General Motors – knew that.

“We were very concerned that what they were doing was placing undue pressure on dealers with an unnecessary deadline.

“Really, overall, when you’re dealing with them for decades, it was an extremely unfortunate way to treat [dealers].”

Holden maintains it “has operated in good faith and that its offer is fair and reasonable”.

A statement issued by the brand said “good faith participation in dispute resolution does not oblige a participant to accept, make, change or increase any offer of compensation”.

While Holden will not sell cars in Australia after 2020, it plans to retain a parts, service and warranty presence through some of its 185 dealerships.

Australian Automotive Dealer Association chief executive James Voortman said Holden’s original offer was “unacceptable”.

“There is a sense of relief among Holden Dealers and they are incredibly grateful that the ACCC pressured GM to extend the deadline for its compensation offer and to engage in good faith negotiations with dealers,” Mr Voortman said.

“General Motors’ treatment of the 185 Holden Dealers has been disappointing to say the least, but this represents an opportunity for them to sit down with the dealer network and develop a fair and reasonable plan to compensate these dealers.”

A spokesman for the Australian Holden Dealer Council said it looked forward to reaching a “mutually acceptable” resolution with General Motors.

“We view this as a step in the right direction as Holden dealers continue to seek fair and reasonable compensation that reflects our long term relationship, and financial commitment, to Holden,” he said.

This week’s development comes after Liberal senator James McGrath offered to buy the Holden brand from General Motors for $1. Speaking under parliamentary privilege on May 14, senator McGrath said General Motors “acted with the ethics of a granny-smacking purse-snatcher” when it decided to leave Australia.

Originally published as Legal threat sends Holden back to negotiating table with dealers