GOVERNMENT JOINS DEALERS IN CALL FOR GM ARBITRATION

AADA has welcomed the Australian Government’s call for General Motors (GM) and Australia’s Holden Dealers to settle their dispute via arbitration.

Several government members made statements in parliament calling out General Motors’ poor treatment of Holden Dealers, as two days of mediation between GM and Holden Dealers failed to resolve the dispute on compensation for Dealers.

GM’s compensation offer remains unchanged at $1,500 per new car sold over a set period.

“It is clear that we need a circuit breaker and arbitration represents an opportunity for both sides to put their case forward before an independent arbitrator,” said AADA CEO James Voortman.

“I understand the Holden Dealers are willing to participate and I urge GM to agree so we can reach a resolution. GM has constantly claimed that their compensation offer is fair, so I see absolutely no reason why they would refuse to participate in arbitration.”

Mr Voortman said Australia’s Holden Dealers appreciated the ongoing efforts of Minister Michaela Cash to work towards a resolution on this issue.

“Arbitration is less costly and will deliver a quicker resolution than going through the courts. The last thing we need is for this to go through a lengthy court process which could take three years or longer. GM is one of the biggest companies in the world with annual revenue of around $200 billion. It can afford an expensive and lengthy court case, but Australia’s Holden Dealers cannot,” Mr Voortman said.

“GM made their initial offer for compensation in February and hardly any Holden Dealers accepted that offer. In the four months since, the offer has not changed and the number of Dealers that have accepted the offer is negligible.”

“Holden is an iconic Australian brand and GM’s decision to end the brand in Australia should be done in a dignified manner. It seems arbitration is the only way this can be achieved.”

There is a massive power imbalance between new car Dealer and the offshore Manufacturers to which they are franchised. The AADA has been campaigning hard for a minimum set of protections for new car Dealers. A strong set of Dealer specific regulations would stop companies like GM from being able to dump and run, leaving hundreds of Australian Dealers, with billions invested in the brand, to fend for themselves.

Senator James McGrath’s scathing statement in the Senate earlier this year was followed in June by parliamentary statements of support for Holden Dealers from his fellow Federal Government members Rowen Ramsey and Angie Bell.

Senator McGrath accused General Motors of not acting in good faith with Holden Dealers and their staff “for some years”, and expressed concern regarding allegations GM had engaged in misleading and deceptive conduct as defined by ACCC and ASIC regulations.

Mr Ramsey, the Government Whip and Liberal Party member for Grey in South Australia, told federal parliament that although businesses had a right to adapt and withdraw from markets, he did not believe GM had acted in a fair manner after assuring Dealers the company was “here for the long haul”.

“Dealers took that in good faith…then General Motors changed its mind,” Mr Ramsey said. “This left our Dealers in Australia high and dry.”

Ms Bell’s grandfather worked in Holden’s South Australian Woodville plant for 25 years. The Liberal National Party member for Moncrieff in Queensland, told parliament it was unacceptable that the decision for GM to leave Australia “was made without government consultation when it affects so many jobs”.

In his address to parliament, Mr Ramsey criticised General Motors for insisting Holden dealers invest in “fancy showrooms” and “high technology equipment”, and then leaving them with “no Holdens to sell for these dealerships”.

“They have an enormous cloud over their future…through no fault of their own,” he said. “They are victims of a decision made in Detroit.”

On independent financial advice, Holden Dealers believe GM owes them the equivalent of $6,100 per new car sold over the specified withdrawal timeframe.

Mr Ramsey described GM’s initial compensation offer as “manifestly inadequate”.

“In Australia we believe in a fair go and their proposal does not represent that,” he said.

Mr Ramsey told parliament GM was threatening some Holden Dealers with not granting them parts and service agreements unless they signed the compensation offer.

“There is dispute over warranty work. In the past the company has come to the party because they wanted these dealerships to keep selling Holden cars, but we know they are likely to take a tougher line on those things now,” he said.

“General Motors Holden have soaked up hundreds of millions of dollars of taxpayer funds over the years through subsidies while they were manufacturing in Australia (and) has a market capitalisation of more than US$40 billion … and they are penny-pinching on their exit from Australia.

“Maybe they will never return to the Australian market, but my experience tells me, even when you plan not to come back, you should not slam the door on the way out. Treating dealerships in this way is simply not Australian.”

Mr Voortman welcomed the show of support for Holden Dealers.

“The behaviour of Holden, along with Honda more recently cutting their operations in Australia, again highlights the risks that many local car Dealers face and the imbalance that exists between them and the large foreign multinational car companies,” he said.

It’s not just the car companies pulling out of Australia who are a threat to local Dealers. The unfair terms that many of them face in their commercial arrangements are an ongoing problem, not just for the local Dealers but also for Australian consumers and small business who rely on them.

“Since the emergence of the COVID-19 crisis, GM have reportedly turned the screws and failed to budge on their initial compensation offer, telling Dealers their ability to be a future authorised service Dealer is dependent on them accepting the offer,” Mr Voortman said.

He added that after so many Holden Dealers had given so many years to the brand, it was “incredibly disappointing” that during a very tough time for the industry, GM was not exiting Australia in a fair and dignified manner despite their assurances that they would do so.

“We have seen Holden terminate all of its Dealers and Honda have cut a substantial portion too. If these multinationals need to withdraw or restructure their networks, so be it, but there must be a set of regulations that ensure they do so fairly,” he said.

“Dealers are currently doing it extremely tough with some of the worst sales figures in living memory. The ability to recover from this economic downturn will be greatly assisted by laws which protect Dealers against the abuses of multinational vehicle Manufacturers.

“We need local Dealers to provide local jobs and work for local small businesses, and we need to encourage and support local Dealers to invest and grow their business, especially as we look to recover from the terrible impacts of drought, bushfires and COVID-19.”

GM says it believes its offer is “fair and reasonable” and has pledged to continue to support the 1.6 million Holdens still on Australian roads with a parts and service network for at least the next 10 years.

Holden Dealers say GM’s withdrawal threatens 9,000 jobs at 203 showrooms and service departments nationally, while GM argues the number of job losses will be closer to 700.

Australian Holden Dealers have also taken issue with their New Zealand counterparts being offered compensation equivalent to $2,500 per new car sold compared to the $1,500 per car offer made to them.

Holden Chairman and Managing Director, Kristian Aquilina, told ABC TV’s The Business show that in 2019, Australian Holden Dealers averaged a loss of $600 per car for every new Holden they sold.“When it comes to looking at the New Zealand business, it’s just a fact that they were a far more profitable network of Dealers, and as such their (compensation) amount is different,” Mr Aquilina said.

“(Holden Dealers) are being led along by a legal firm that seems hell bent on wanting to take this through the courts and make this a protracted dispute to only serve the benefit of a lawyer’s picnic.”

There is currently a gap of almost $1 billion between the total compensation GM initially offered and the amount Holden Dealers say they are owed.

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