AADA and Holden Dealer Council executives have met with Prime Minister Scott Morrison to discuss General Motors’ planned exit from the Australian market, marking the end of the Holden brand.
The meeting, which took place in Canberra in late February, came after Holden dealers rejected what they felt were inadequate compensation terms offered by GM. Current Holden franchise agreements were contracted until 31 December 2022, but GM terminated those agreements after it decided to end right hand drive manufacturing by the end of 2020, deeming it unprofitable to continue.
The Holden Dealer Council (HDC) also met with Deputy Prime Minister, Michael McCormack, and the Federal Minister for Small Business, Michaelia Cash, the day prior to meeting Mr Morrison. The HDC and AADA are seeking government help in negotiations with GM to ensure a fair deal for all Holden Dealers.
Initial compensation offers are understood to cover just 16 percent of Dealers’ liability, an unacceptably low percentage for Dealers to agree to. If a significantly better offer is not forthcoming, Holden Dealers could combine to launch a lawsuit against GM for an amount of up to $2 billion (see story – page 25).
Many Holden Dealers are coming perilously close to selling out of their current stock, having taken advantage of discounts offered by GM.
The situation further reinforces AADA’s determination that the retail automotive industry must have its own Code of Conduct, as the current Franchise Code that covers everything from dealerships to Jim’s Mowing franchises is simply inadequate to deal with the scale and complexity of the franchise automotive industry. The Automotive Code proposed by AADA would protect Dealers in cases such as this, whereas the current Franchise Code leaves them vulnerable to unfair terminations and inadequate compensation.
GM says it has allocated $1.1 billion to compensate Dealers, which is only around 20 percent of what the HDC says they are owed.
Various federal governments have pumped more than $2 billion into GM’s coffers over the years in attempts to keep the carmaker afloat locally, and Mr Morrison expressed strong disappointment in the company’s decision to bail out of Australia.
Mr Morrison is reported to have told the meeting that “I won’t have big overseas corporates destroying Australian family businesses”, so it will be interesting to see what action the government takes on behalf of Holden Dealers.
Image Credit: “Llegada de Scott Morrison, primer ministro de Australia” by G20 Argentina is licensed under CC BY 2.0