GM v Holden dealer battle erupts

Holden dealers have blasted the “bullying tactics” of General Motors on the eve a judge-adjudicated mediation process starting today to try and resolve the chasm between them over compensation.

They were reacting to a report in yesterday’s Australian Financial Review in which interim Holden managing director Kristian Aquilina confirmed outside operators were interested in snaring the potentially lucrative rights to providing spare parts and servicing to the 1.6 million Holden owners across the country.

GM has given its dealers until June 30 to accept compensation that ties a service operations agreement with partial capital works reimbursement and the equivalent of $1500 per car sold during a set period.

But that has been rejected by the 185 Holden dealers, who were informed in February that GM was terminating their agreements nearly three years early, axing the brand and exiting the country by the end of 2020.

“We've got a lot of interest from other operators. There's a big opportunity, a big car park,'” Aquilina said of the servicing business that will continue after Holden exits retailing.

“It's still a strong business. It's still meaty volumes coming through'”.

The secretary of the Holden Dealer Council David Nicholson made it clear dealers regarded Aquilina’s comments as a threat, especially because of their timing.

“Unsurprisingly today, the day before mediation begins, Holden decided to threaten its dealer network publicly by advising they might offer the service and parts business elsewhere,” Nicholson told carsales in a written reply to questions yesterday.

“This is in line with the bullying tactics Holden dealers have had to endure from GM in the months since the February 17 announcement.

“It is certainly not in keeping with the high ethics, nor good faith that GM pretends to adhere to. The dealers only want a fair deal – it is after all not the dealers who have breached the dealer agreements.”

A GM Holden spokesman stressed only dealers had been offered the “profitable parts and service opportunity” and that remained the preferred model.

“That doesn’t stop interested parties enquiring when those dealers publicly state that the opportunity is not real or that they might not take up the opportunity,” the spokesman added.

“As Holden has said consistently, the company wants an ongoing relationship with its dealers. Holden looks forward to discussing this at the mediation.”

The mediation arranged by GM will take a revised form in the COVID-19 era, with retired federal court judge Peter Jacobson QC shuttling between GM Holden and dealer representatives on separate Microsoft Teams screens, rather than physically moving between rooms in the same building.

While both parties in the dispute will be in Melbourne, Judge Jacobson will be in Sydney.

The mediation comes after GM’s deadline for dealers to accept the compensation offer was extended from May 31 following pressure from the Australian Competition and Consumer Commission (ACCC).

The ACCC said it was preparing for court action had Holden not changed its position.

The ACCC had received complaints that 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 the dispute resolution process.

Even so, there continues to be doubt among Holden dealers that the compensation issue will be resolved by June 30.

“We estimate there are only around 2000 Holden vehicles left to arrive in Australian showrooms yet almost a third of Holden dealers have yet to receive a compensation offer, let alone one that is fair and reasonable, reflecting decades of dealer loyalty and significant investment in the Holden brand,” said Nicholson.

There is also angst about the higher $2500 per car offer made to Holden dealers in New Zealand.

“NZ Holden dealers are being offered compensation almost double that offered to Australian dealers on the basis they were more profitable,” said Nicholson.

“This is both unfair and insulting from General Motors given Australia has subsidised New Zealand Holden dealers since the beginning.

“But for the Australian Holden dealer network and they Australian taxpayer, Holden wouldn’t exist across the Tasman.”

While GM is trying to unhitch itself from Holden and its dealers it’s also trying to negotiate a new deal to set up GM Specialty Vehicles (GMSV) in Australia to replace it.

That process has been delayed by the current compensation row and concerns among some current Holden and potential GMSV dealers about the possible pitfalls of entering a new dealer agreement with GM and the global auto giant’s commitment to business.

Separately, a delayed Senate inquiry into GM’s axing of Holden will sit this week, before submissions close on June 25 and a report is tabled to federal parliament in November.