Politicians slam General Motors over Holden dealer compensation 

US car giant General Motors has again been roundly criticised in federal parliament over its handling of the closure of the Holden brand and the compensation offered to dealers – as mediation between the two parties started in Melbourne today.

Five politicians – from both major political parties – today lined up to strongly criticise the closure of the Holden brand, and again called on General Motors to do the right thing by dealers and their employees.

Rowen Ramsey, the Government Whip and Liberal Party member for Grey in South Australia told federal parliament today: “I acknowledge that times change, businesses adapt and come and go, and they have a right to do so. But in doing so they need to act in a fair way and sadly General Motors are not.”

Mr Ramsey repeated early claims by Holden dealers that they had been assured by the car giant that it was “here for the long haul”.

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

Mr Ramsey said General Motors demanded Holden dealers invest in “fancy showrooms” and “high technology equipment”, but they now have “no Holdens to sell for these dealerships”.

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

Within days of Holden’s announcement on 17 February 2020 that the brand would be retired by the end of this year, Prime Minister Scott Morrison said: “Australian taxpayers put billions into … this multinational company and they let the brand just wither away”.

General Motors offered Holden dealers $1500 per new-car sold over a set period as compensation for announcing the end of their franchise agreements almost three years early.

Holden dealers, after seeking independent financial advice, say they are owed the equivalent of $6100 per new-car sold over the set period.

Mr Ramsey said the initial compensation offer by General Motors to Holden dealers is “manifestly inadequate”.

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

General Motors has consistently said its compensation offer to Holden dealers is fair and reasonable, and that it will continue to support the 1.6 million cars still on Australian roads with a parts and service network for at least the next 10 years.

However, Mr Ramsey expressed concern some future warranty claims may not be approved as readily, if Holden is no longer selling cars in Australia.

“There is dispute over warranty work,” said Mr Ramsey. “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.”

Mr Ramsey also claimed some dealers were being threatened with not being granted parts and service agreements unless they signed the compensation offer, “saying to the dealerships … ‘maybe you won’t get the service agreements for the long term’.”

In his closing remarks, Mr Ramsey 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 $US40 billion … and they are penny-pinching on their exit from Australia.”

“Maybe they will never return to the Australian market,” said Mr Ramsey, “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”.

Angie Bell, the Liberal Party member for Moncrieff in Queensland, whose grandfather worked in Holden’s South Australian Woodville plant for 25 years, told parliament: “It’s not acceptable that this decision was made without government consultation when it affects so many jobs”.

Holden dealers have estimated the closure of the brand threatens 9000 jobs at 203 showrooms and service departments nationally.

General Motors says the true number of showroom and service department jobs potentially affected by the Holden closure are closer to 700, based on the most recent figures supplied by dealers.

Holden dealers in Australia are also upset their counterparts in New Zealand were offered compensation equivalent to $2500 per new car sold over a set period compared to the $1500 per car pledged to them.

Holden boss Kristian Aquilina, in a rare interview since the closure of the brand was announced, last night told ABC TV’s The Business show: “Last year a Holden dealer (on average) made a loss of $600 per car for every new Holden they sold, which isn’t great. Our offer to them is $1500 (per car).

“When it comes to looking at the New Zealand business,” Mr Aquilina told ABC TV, “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 also said: “They (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.”

At the moment, as the first day of mediation starts, there is almost $1 billion gap between the total amount of compensation initially offered by General Motors to all its showrooms combined – and the amount Holden dealers have calculated they are owed.

Holden dealer Neil Beer, based in the country town of Seymour in Victoria, who invested $700,000 upgrading his showroom in the past 12 months, told ABC TV: “The number of years that we’ve been in business, I’m sure if we had of put our business on the market 12 months (to) two years ago, that certainly the goodwill factor would be far in excess of what’s being offered.”

Mr Beer conceded Holden dealers will be compensated separately for showroom upgrades, however, he said: “when it comes to the bottom line, generally speaking, they’ll be well and truly out of pocket”.