Senate inquiry to hear ‘GM misled Holden dealers’

The Senate inquiry into the axing of Holden by General Motors will tomorrow be urged to examine misleading behaviour by GM and its treatment of dealers in the wake of the once-dominant Lion brand's demise.

Australian Automotive Dealer Association (AADA) CEO James Voortman will also use his opening statement to urge the Senate Education and Employment References Committee hearing into the GM’s operations in Australia to make recommendations on how the “power imbalance” between “offshore vehicle manufacturers” and dealers can be remedied.

Voortman will be the first public witness at today’s hearing at 9:30am. The Australian Holden Dealer Council (AHDC) will give evidence in-camera at 8.30am.

The most anticipated witness will be interim Holden managing director Kristian Aquilina, who will lead a delegation that is listed to give evidence at 11:20am.

The day’s evidence will be streamed live on the Australian Parliament House website.

GM announced the closure of Holden in February this year and was involved in a fractious compensation negotiation with the AHDC that was concluded on June 30.

Voortman will be highly critical of GM in his statement, a copy of which was obtained by carsales in advance, pointing out the 185 Holden dealers – who are all members of the AADA – had been encouraged to invest in their businesses right up until the pull-out.

“This Inquiry needs to examine the way in which Dealers were misled in recent years by GM,” says Voortman.

“GM was allowing Dealers to continue with expensive capital expenditure which they had demanded.

“GM’s actions in allowing this level of investment by Dealers was incredibly reckless and there is no doubt it has harmed many Australian businesses and their employees.”

He said the compensation offer GM made and the way it behaved was unfair to dealers, declaring there was a need to address dealer protection.

“GM seem to be a law unto themselves and are the epitome of a large powerful offshore multinational using its position of power to exploit the smaller businesses it deals with.

“They have set a very dangerous precedent and in the process they have emboldened other vehicle manufacturers to exploit the imbalance in power that exists between them and their franchisees.”

Voortman was referencing Honda and Mercedes-Benz, which have both announced their intention to shift from the traditional franchise retail model to an agency model in Australia, in which dealers make a set commission for each vehicle sold, by 2022.

“For some time, the AADA has been calling for stronger regulatory measures to govern the relations between Australian dealers and offshore manufacturers and the Holden example is further proof that the Franchising Code remains impotent and grossly inadequate in protecting Dealer interests," he said.

“You need look no further than the United States for an example where Dealers are afforded appropriate protections.

“I cannot overemphasise the level of urgency with which such regulations need to be put in place and in particular we need a better system to resolve disputes, with a system of binding arbitration when mediation fails. This should be the central recommendation of this inquiry.”

Others giving evidence to the inquiry include the Australian Competition and Consumer Commission (ACCC), which continues to investigate the way GMH managed its compensation negotiations with its dealers.

Representative of the Federal Chamber of Automotive Industries (FCAI), the Motor Trades Association of Australia (MTAA), the Australian Manufacturing Workers Union (AMWU), the Australian Automotive Aftermarket Association (AAAA), the Department of Education, Skills and Employment and the Department of Industry, Science, Energy and Resources are also expected to appear.

Former Holden executive and HSV boss John Crennan will also appear as a witness.

The terms of reference for the inquiry into Holden’s departure include:

a. The impacts of that decision on:
i. Holden employees,
ii. The Holden dealership network (small and medium sized businesses and family enterprises, and their employees),
iii. The Holden research and development facilities, and
iv. Owners of Holden vehicles (including service and repair);
b. The role of the Franchise Code and the Government’s proposed dealership amendments to the Franchise Code;
c. Government or other policy settings on manufacturing, research and development, business support and transition, and employee support; and
d. Any related matters.