GM v Holden dealers court action looms

The fight between General Motors and 185 Holden dealers over compensation has taken another step closer to court action after mediation failed to resolved their differences over the past two days.

Representatives for both GM and Holden dealers attended a video mediation adjudicated by retired federal court judge Peter Jacobson QC on Wednesday and Thursday (June 10-11) in an attempt to negotiate the compensation gulf between them.

Both GM Holden and the Australian Holden Dealer Council issued press statements reviewing the meditation this evening, and they were wildly different in their tone.

GMH described the mediation as two days of “constructive discussion” while the ADHC statement slammed the auto giant for its “appalling behaviour”.

Both parties confirmed the GMH compensation offer was unchanged.

Sources close to the Holden dealer body told carsales tonight they were “infuriated and united” and accepted that court action against GMH was now likely.

GM terminated its agreement with Holden dealers in February when it announced it was axing the brand and exiting Australia by the end of 2020.

It has offered the dealers the equivalent of $1500 per car sold over a set period, partial capital works reimbursement and access to ongoing service operations as compensation.

The dealers have rejected the offer, saying it is totally inadequate.

Dealers were initially given until May 31 to accept the compensation offer, but that was pushed back by GM until June 30 after the Australian Competition and Consumer Commission (ACCC) threatened court action. At the same time GM offered to go into mediation.

On the eve of the mediation the dealers angrily lashed what they called GM’s “bullying tactics” after Holden interim managing director Kristian Aquilina (pictured below) revealed outside suppliers were interested in securing the profitable spare parts and servicing business that could cater to up to 1.6 million Holden owners.

In Thursday night’s statement, the ADHC doubled down on that aggressive language.

“GMH's offer fails to adequately compensate dealers for their expected losses and millions of dollars in investment to support the Holden brand which is why dealers fought hard to get GMH to engage in what they thought would be a good faith negotiation process.

“Australian Holden dealers have loyally supported the General Motors owned brands for almost 90 years. To effectively terminate dealer agreements 2.5 years early, without satisfactory compensation, and exit the country in the midst of a pandemic when livelihoods are already under immense pressure is appalling behaviour and is inconsistent with the ethical practices General Motors espouses.”

The ADHC statement even expressed displeasure that representative from GM head office “failed to show up”. This was later clarified to mean senior management from Detroit or its international operations division. Aquilina was the senior GM leader involved in the mediation.

“We respect the confidential nature of those discussions, so can make no further comment, other than to say the discussions were constructive but no agreement was reached,” GM Holden’s statement read.

“Holden considered all matters raised during the discussions and remains of the view that its offer is fair and reasonable.

“The compensation package covers a per vehicle amount for the remaining part of the franchise agreement, unamortised capital expenditure related to new Holden sales such as showrooms, a highly profitable five-year parts and service agreement and also takes account of certain special circumstances.”

But that cut no ice with the dealers.

“GMH has backed dealers into a corner and has shown a complete unwillingness to accept the magnitude of the losses that dealers are facing as a consequence of GMH mismanaging their brand,” the AHDC statement said.

“One thousand five hundred dollars per car fails to adequately compensate Holden dealers for losses including millions of dollars in showrooms, facility upgrades and corporate signage – investments that were made based on GM’s promises about their commitment to Holden and the Australian market.”

The two statements are below.

Australian Holden Dealer Council

General Motors’ compensation offer unchanged, unacceptable and unfair to Australian Holden dealers after mediation.

Dealers question GM Holden's commitment to good faith negotiations.

After two days of settlement discussions facilitated by retired Federal Court Judge, the Honourable Mr Peter Jacobson QC, the compensation offer from General Motors Holden (GMH) remains unchanged.

GMH's offer fails to adequately compensate dealers for their expected losses and millions of dollars in investment to support the Holden brand which is why dealers fought hard to get GMH to engage in what they thought would be a good faith negotiation process.

The Australian Holden Dealer Council (AHDC) said GMH had to be dragged to the negotiating table only after the ACCC intervened with the threat of legal action against it. Even then, representatives from General Motors’ Head Office failed to show up.

On the eve of the mediation, General Motors Holden made comments in the press suggesting the removal of future servicing revenue if dealers didn’t sign up to inadequate and uncommercial compensation packages.

These types of statements are consistent with the bullying tactics dealers have had to endure since GM announced plans to stop supplying new cars for dealers to sell and effectively terminate dealer agreements in order to receive GMH's derisory compensation package.

GM’s actions, and the severity of their impact on dealers, highlight the substantial imbalance of power that exists between franchisee and franchisor.

GMH has backed dealers into a corner and has shown a complete unwillingness to accept the magnitude of the losses that dealers are facing as a consequence of GMH mismanaging their brand.

All roads seemingly lead to a dead end for dealerships, creating major uncertainty for more than 9000 employees supporting Holden dealerships.

The AHDC categorically rejects GMH’s claim that it is “over-compensating dealers” and believes GMH has a legal and moral responsibility to recognise the investment dealers have made in making the Holden brand an Australian icon and to fairly and equitably compensate dealers for their losses.

$1,500 per car fails to adequately compensate Holden dealers for losses including millions of dollars in showrooms, facility upgrades and corporate signage – investments that were made based on GM’s promises about their commitment to Holden and the Australian market.

Australian Holden dealers have loyally supported the General Motors owned brands for almost 90 years. To effectively terminate dealer agreements 2.5 years early, without satisfactory compensation, and exit the country in the midst of a pandemic when livelihoods are already under immense pressure is appalling behaviour and is inconsistent with the ethical practices General Motors espouses.

GM Holden statement

Holden executives engage in dispute resolution talks

Holden has spent two days having constructive discussions with dealer representatives, facilitated by former Federal Court Judge Peter Jacobson.

Three senior Holden representatives attended, including the Interim Chairman and Managing Director, and each side was represented by a team of experienced lawyers and accountants.

We respect the confidential nature of those discussions, so can make no further comment, other than to say the discussions were constructive but no agreement was reached.

Holden considered all matters raised during the discussions and remains of the view that its offer is fair and reasonable

The compensation package covers a per vehicle amount for the remaining part of the franchise agreement, unamortised capital expenditure related to new Holden sales such as showrooms, a highly profitable five-year parts and service agreement and also takes account of certain special circumstances.

Our offer of $1500 per vehicle for the next 2.5 years (against last year’s average loss of $600 a car) remains open for dealer acceptance until the end of this month.

We are focussed on supporting the 1.6 million Holden drivers out there. Our preference is for an ongoing relationship with our current dealer network to provide that service.

We will continue to work with dealers who wish to transition their businesses and access our transition support package. Our broader focus is with our 1.6 million Holden customers.