Holden dealers target GMSV

Holden dealers embroiled in a bitter compensation dispute with General Motors have called on the federal government to investigate whether the US auto giant should be allowed to establish another dealer network in Australia.

GM is in the process of closing down the Holden business in Australia and has given dealers until June 30 to accept its compensation offer for axing franchise agreements nearly three years early.

The dealers have rejected the compensation offer and are now threatening court action  after mediation last week failed to bridge the yawning gap between what they are being offered and what they want.

At the same time as all this is going on GM is in the process of finalising a new distribution business in Australia, GM Specialty Vehicles (GMSV), which is to offer US-sourced vehicles including the new C8 Chevrolet Corvette supercar and Silverado 1500 pick-up through a new dealer network made up of former Holden dealers.

GM is expected to own the business and contract the Walkinshaw Auto Group to perform local right-hand drive conversions of US models.

Now the Australian Holden Dealer Council (AHDC), the peak body that represents Holden’s 185 dealers, has confirmed to carsales a dealer has written to federal industry minister Karen Andrews questioning whether it is appropriate for GM to set up GMSV.

“GM is effectively seeking to collapse the dealer network which has loyally supported it for decades only to establish a new one competing directly with the very dealers they’ve left in the lurch without adequate compensation,” the AHDC statement said.

“GM have proven they are unable to fulfil contracts with dealers and, by default, consumers and we have asked the Government if it is appropriate that they can operate a new franchise agreement network when they have not fulfilled their obligations to their current network of franchise dealers.”

The dealers haven’t go out of their way to cuddle up to Andrews though, criticising the “minister’s office” for sitting on new regulations and legislation to protest franchisee agreements.

This is a reference to proposed improvements to dealer compensation and tenure that are yet to see the light of day, as is a wider review of franchising code of conduct.

Carsales reported on connected moves that were introduced this month to improve the power of dealers in their relationship with manufacturers and how it could also benefit the public.

Carsales has approached both Minister Andrews’ office and GM Holden for reaction to the AHDC’s statement.

The AHDC’s focus on GMSV is its latest attempt to exert pressure on GM via Australian parliamentarians. Both Andrews and prime minister Scott Morrison have criticised the axing of Holden and a senate committee inquiry has been set up into the decision and its impacts.

LNP Senator James McGrath last month offered to buy Holden from GM for $1, while yesterday Queensland independent MP Bob Katter dressed as the Grim Reaper as a parade of classic Holdens drove past parliament house in Canberra.

His protest came shortly before he introduced a motion calling for support for a revitalised car manufacturing industry with a majority Australian shareholding and to ensure that all cars bought by the federal government are locally made.

All this comes as crunch time looms for Holden dealers in their campaign to improve GM’s compensation package.

While it’s understood only a handful – at most – of dealers have accepted the deal so far, a significant number of them signing up on June 30 could reset the battlefield.

While Holden dealers are publicly united against GM, the reality is not all of them will have the finances or stomach for a multi-million dollar court battle that could drag on for years.

While GM is offering the equivalent of $1500 per car sold over a certain time – when the dealers want $6100 – and partial compensation for capital works, the real carrot for signing up is a five-year spare parts and servicing agreement that all parties agree is lucrative.

The AHDC even looks at that servicing offer with suspicion, as GM has committed to providing at least 10 years parts and servicing support.

Immediately before mediation started, GM Holden revealed that independent service networks were offering to take on the job of maintaining the 1.6 million Holden car parc if it couldn’t come to an agreement with its dealers.