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Federal government to probe Holden closure

By Tim Robson, 28 Feb 2020 Car News

Holden closure to probed by Senate Inquiry

Shock development prompts Australian federal government inquiry into General Motors closure of Holden

  • Federal government inquiry passed in parliament

  • All parties passed the motion unopposed

  • Holden refutes claims that compensation offers are insufficient

A parliamentary inquiry has been announced to investigate the decision by General Motors to close Holden’s doors in Australia.

Led by the Australian Labor Party Senator for Western Australia Louise Pratt, the Senate inquiry was passed unopposed by all parties when it was put to the vote in the upper house on Thursday.

Politicians furious with GM

"General Motors, stop selling the Holden dealers a clunker and compensate them fairly," said ALP Senator for Queensland, James McGrath. "General Motors, this is not how you should treat honest, hard-working Australians. You should be ashamed of your shameful, rank, rancid, ethically deficient conduct. General Motors, be better."

"Australians are angry and disappointed by General Motors' decision to retire the Holden brand," Liberal frontbencher Jonathon Duniam told the parliament.

"Holden's shutdown should be a wake-up call to the Morrison government," Greens senator Mehreen Faruqi said.

"We need to urgently deliver a coherent, forward-looking, clean and green industry with decent jobs that value workers."

MORE Holden closure: what now for Australians?

In formal terms, the Senate referred the inquiry into the announcement by General Motors to withdraw the Holden brand and operations from Australia to the Education and Employment References Committee for inquiry and report by the first sitting day in May 2020.

The inquiry will look at the impacts of GM’s decision on local Holden workers, dealers and owners, as well as the fate of Holden’s extensive research and development assets.

It will also look into the government’s proposed amendments to the franchise code, which will have an impact on policy settings in relation to dealerships. The deadline submission is March 20.

READ MORE

Automotive industry welcomes federal inquiry

The decision to form an inquiry has been welcomed by the head of the Australian Automotive Dealer Association’s CEO, James Voortman.

“This inquiry is crucial as the way in which Holden is allowed to exit Australia will set the benchmark for other offshore car manufacturers considering an exit from the country, a rationalisation of their network or a change in their distribution model,” Mr Voortman said in a statement.

“The decision of the Senate to review the impacts of GM’s decision is very welcome, particularly as it will also look at the broader context of the Franchising Code and its role in this mess.”

Mr Voortman said he attended the meeting held on Wednesday with Prime Minister Scott Morrison, industry minister Karen Andrews and a representative body of Holden dealers, who are upset with the allegedly insufficient amounts of compensation on offer.

Holden says it's "disappointed" with the dealer group

Holden has denied these allegations, saying that is “disappointed” that a “small number” of dealers are making their grievances public.

“Holden is doing the right thing by its dealers during this difficult time. We believe the offer is fair,” said a Holden spokesperson.

“In most cases, Holden dealers will receive compensation a factor of four times the average Holden new car profit/unit of all dealerships over the 2017-2019 fiscal years. This number includes the sale of highly profitable domestically produced Commodore units in 2017/18.

Holden Commodore

“The compensation formula Holden is using is applied consistently for all dealers and covers reasonable earning expectations from the New Holden sales department over the remaining portion of the Dealer Agreement.”

Holden has a case to answer, says dealer association

Mr Voortman, however, believes that Holden has a case to answer.

“The withdrawal of GM from the Australian market leaves around two hundred dealerships in the lurch, and up to nine thousand workers out of a job,” Mr Voortman said.

“Holden dealers invested significant capital in facilities, stock and equipment. Many signed up to long term leases. They employed people in their businesses and took on apprentices. All of these decisions were made in good faith based on commitments from Holden that they were in Australia for the long-haul.”

MORE This $6.5m Holden dealership will never open

Holden refutes these claims.

“All dealers also have the opportunity to continue as Holden Authorised Service Outlets, maintaining their current service and repair client base. This is a consistently very profitable part of their businesses,” said the spokesperson.

“The proposed compensation also includes a provision to reimburse dealers for a portion of their unamortised [sic] investments in their new car showroom, as well as full reimbursement of unamortised investments in Holden dealer signage.”