Holden dealer compensation revealed

The 200 dealers still selling and servicing Holden products in Australia have received a compensation offer described by a Holden spokesman as "fair".

And included in the offer is an undertaking that the dealers can continue to service Holden products, a lucrative revenue stream for the dealerships in the absence of new-car sales.

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

“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.

“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. 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.

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

Holden was still building and selling the VF Series II Commodore until October 2017, when it closed the Elizabeth manufacturing plant in South Australia. Profit based on sales of vehicles during that period – particularly the locally-built Commodore sold throughout 2018 as well – was far ahead of per-unit profit for each sale in 2019 and 2020.

Not only did the last of the locally-built Commodore sell in significantly larger numbers than the imported ZB model Commodore that replaced it, the VF II Commodore also sold at a higher profit level per unit.

Yet the Australian Automotive Dealer Association (AADA) has denounced Holden's offer to its dealer network. Last week, AADA CEO James Voortman said: “As an industry we were shocked by GM’s decision and the way it was communicated. However, we have been even more shocked by reports from our members on the grossly inadequate compensation on offer.

“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.”