Holden’s interim managing director Kristian Aquilina has been advised by federal government ministers to ensure that the company is being a “good corporate citizen” as negotiations with its dealer group continue.
Recent meetings in Canberra between he and ministers Michealia Cash and Karen Andrews resulted in multiple missives from the ministers’ offices, exhorting Holden and General Motors to finalise arrangements to compensate its dealer network before a mutually delayed deadline of June 30.
“Dealers have repeatedly shown they are committed to working with GM Holden to reach an outcome and finalise protracted negotiations stemming from GM’s decision to retire the Holden brand in Australia,” read a statement from the pair issued last week. “GM Holden should demonstrate that same commitment.”
The fight over compensation has rumbled on since GM announced in February it was shutting Holden’s doors, which triggered a process to recompense dealers for the three-year balance of a five-year franchise deal.
“From day one the Morrison Government has made it clear to GM Holden that we expect them to negotiate in good faith and ensure a fair outcome for the Australian dealers who’ve carried their brand for decades, as well as their workers,” said the minsters, who also referenced “more than $2 billion in taxpayer support” for the US-based company.
At the heart of the dispute is the $1500-per-car predictive offer from Holden on projected sales for its 186-strong dealer group, which Holden still maintains is fair.
“We steadfastly maintain that our offer of compensation to Holden dealers for the loss of new car sales business is fair, reasonable and indeed generous, as confirmed by the analysis by PricewaterhouseCoopers,” Holden said in response to the ministers’ joint statement.
“In 2019 dealers lost on average $605 per new car sold, and only made $351 per new car over the 2017-2109 period. GM Holden is offering $1500 per vehicle (based on 2019 sales) and has not adjusted this for the severe deterioration of industry sales.”
The company also claims that it has also offered the dealer group compensation for building works, as well as special provisions for a handful of standalone Holden dealers.
“GM Holden is providing additional compensation to dealers for unamortised capital investments, special circumstances and dealers who are solely dependent on Holden,” read the Holden statement.
“GM Holden is also paying for the removal of signage and has provided dealers with $130 million in stock liquidation bonuses that enabled them to make substantially enhanced profits following the announcement of the retirement of the Holden brand.”
Listen to the WhichCar Weekly Holden special
The dealer group has maintained a fairer offer is $6000 per car and an increase in the compensation for capital expenditure, putting the two parties around $500,000,000 apart with days to go before the deadline to solve the impasse.
Overseeing the fracas is the Australian Competition and Consumer Commission, which has responded to complaints that GM Holden was placing “undue pressure on dealers by imposing an unnecessary deadline for acceptance of the proposed compensation package.”
“This meant that dealers would have been forced to choose whether to accept the compensation offer before completing a dispute resolution process,” said the ACCC in May.
“The ACCC’s investigation is ongoing and is examining allegations relating to the good faith obligations of the Franchising Code of Conduct and the unconscionable conduct provisions of the Australian Consumer Law,” noted the ministers.
If a deal isn’t reached by June 30, the dealer group will likely have to engage GM Holden in potentially costly and drawn-out legal action.
It could potentially look to a US statute that requires its citizens and businesses to assist court inquiries from other countries.
This could force GM to produce documents that may reveal it was, as the dealer group alleges, planning to exit Australia at the same time it was signing dealers up to its five-year franchises.