Holden dealers incensed by compo deal

The ACCC is examining Holden's exit from Australia following complaints by unhappy dealers.

General Motors and Holden dealers are on a collision course after the company refused to budge from an original compensation offer.

Dealers represented by law firm HWL Ebsworth are asking for more than 10 times the compensation offered by GM and are accusing the company of misleading them about its plans to close Holden.

They believe GM decided to axe the brand years before February's announcement, but continued to encourage them to invest in their dealerships.

Holden says investment in new right-hand-drive cars such as the Corvette is evidence it intended to keep selling cars in Australia.
Holden says investment in new right-hand-drive cars such as the Corvette is evidence it intended to keep selling cars in Australia.

An ACCC spokeswoman said the consumer watchdog "has received a number of complaints about Holden's exit from Australia and the potential impact on dealers and consumers".

"While it is still very early, we will look at this in relation to any potential breaches of the Australian Consumer Law and Franchising Code of Conduct," she said.

Breaking its silence following February's announcement that the brand would stop selling cars, GM said its offer its offer was "more than fair and reasonable" and that suggestions it misled dealers about the brand's future were "baseless".

The manufacturer says its settlement offer amounts to calculating lost sales from the next 2.5 years, paying dealers $1500 per car - a figure Holden says is "over four times what the average dealer made in the new vehicle department". Holden says HWL Ebsworth asked for $6110 for each car dealers might have sold.

Holden says proposed compensation was calculated in part using profitable V8 models built toward the end of local manufacturing.
Holden says proposed compensation was calculated in part using profitable V8 models built toward the end of local manufacturing.

It says a medium-sized dealership might receive a $712,500 payout under Holden's offer, while a larger dealership might get $1,747,500 - figures that pale against the $8.94 million and $21.92 million dealers want for equivalent outlets.

Holden plans to offer servicing, warranty and parts support for the next 10 years. A statement issued by the brand said aftersales "is typically one of the most profitable parts of a dealer's business".

But one senior executive from a dealer group, who declined to be named, said the Holden deal didn't take into account the inevitable decline in service and parts business after Holden exited the country.

Holden and its dealers dispute the value of future service and warranty work.
Holden and its dealers dispute the value of future service and warranty work.

"They are basing their figures on ongoing levels of sales and service business but there's no way it will be at the same level it is now. Why would customers keep going to a Holden business for their services? Most people who bought a Holden are angry with the brand," he said.

"They've over-estimated the value of service and parts business to dealers."

He believed dealers could make a strong case that they had been treated unfairly by General Motors since it axed the Holden brand.

"I think the ACCC will be interested in how Holden has behaved," he said.

The brand had not budged from its original compensation offer and was only giving dealers until the end of May to accept the offer.

Some dealers invested in new infrastructure shortly before Holden’s decision to pull out of Australia.
Some dealers invested in new infrastructure shortly before Holden’s decision to pull out of Australia.

It is believed the Holden dealer council was due to meet Holden on Tuesday to discuss compensation and was instead sent the statement rebuffing claims for compensation.

The brand was also only compensating dealers for the last two and a half years of their contracts when most could have reasonably assumed their agreements would be routinely extended by another five years once they were finished.

They had made investments in their premises based on those long-term assumptions, he said.

Holden said its offer includes "compensation for un-recouped Holden facility investments" calculated in addition to lost sales.

Originally published as Holden dealers incensed by compo deal


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