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Holden culls Adelaide dealerships to deal with ‘customer backlash’

By Barry Park, 18 Dec 2017 News

Holden culls Adelaide dealerships to deal with customer backlash

Court documents show the decision to end Holden Commodore production sparked fears of a significant buyer downturn

HOLDEN has revealed it is closing several Adelaide dealerships in response to what it expects to be a big buyer backlash – a direct response to its decision to quit Australian manufacturing.

The car maker earlier this year announced it would not renew dealership agreements at about 70 sites throughout Australia as it reduces its dealer network to a more manageable 200 – about the same as market leader Toyota.

The fears of a customer backlash – the first time such concerns have been publicly aired by Holden – are revealed in court documents relating to the closure of one of Australia’s most successful dealerships, Metro Holden in Adelaide.

GM Holden’s decision in 2015 to not renew a dealership contract with Metro is currently before the Federal Court, with Metro chairman Jack Torcaso claiming in a video posted to Facebook (that has since been removed) that the car maker had effectively told him and his 73 staff to “go to hell”; a claim Holden “strenuously denies”.

However, while last week refusing Metro’s separate application for an injunction that would have stopped the dealership agreement ending on December 31, Federal Court judge Justice White said Holden believed dealerships in Adelaide had a more widespread problem to deal with – a backlash in the wake of the car maker’s decision to quit Australian manufacturing.

Justice White’s judgment states Holden had “deposed to particular considerations relating to South Australia given GMH’s expectation that the sales of Holden vehicles in the Adelaide metropolitan area will decline following the cessation of manufacture of Holden vehicles at its Elizabeth plant”.

He went on to say that in the wake of a market study based on a five-year review of its dealer network, Holden then faced a “choice between which of two [Adelaide city] dealerships, City Holden or Metro Holden, should be renewed”. A decision was then made based on the “relative connections of the owners of Metro Holden and City Holden with the Adelaide community, the extent to which they had secured fleet sales, the nature of their respective succession plans and the ownership of properties”.

Holden’s current round of dealer contracts will expire in 2022.

The court case, in which Metro Holden claims GM Holden breached its franchising code of conduct and engaged in unconscionable conduct, is still being heard.