Federal Government launches Senate Inquiry into Holden shutdown

The Senate Inquiry – which has been supported by both sides of politics – was announced 24 hours after a delegation of Holden dealers met with Prime Minister Scott Morrison in Canberra on Wednesday.

They were lobbying the Federal Government to use its powers to ensure US car giant General Motors pays due compensation to the network of affected Holden dealers and its employees.

In addition to the loss of 600 jobs at Holden head office, there are a further 9000 jobs at Holden’s 203 showrooms across Australia.

One major Holden dealer has estimated his redundancy payments to staff alone will cost in excess of $800,000, while another dealer has told Drive he will need to sell his house to cover his shutdown costs.

The Senate Inquiry announcement comes as Holden dealers are mounting a campaign seeking more compensation than what has initially been offered by General Motors.

Drive understands the initial offers range from $100,000 to $2 million per dealer.

Holden says it has so far only made formal compensation offers to 13 per cent of its showroom owners, however high ranking dealer sources claim the payments will be “roundly rejected” by the rest of the network as being insufficient to cover their shutdown costs.

In Parliament today Liberal frontbencher Jonathon Duniam said: “Australians are angry and disappointed by General Motors’ decision to retire the Holden brand”.

Meanwhile, Greens Senator Mehreen Faruqi said: “We need to urgently deliver a coherent, forward-looking, clean and green industry with decent jobs that value workers.”

General Motors says it will retain a presence in Australia for at least 10 years to support servicing, parts, warranty claims and recalls for the 1.6 million Holdens still on the road, but dealers are saying that won’t be enough to make up for their lost income.

The peak body representing car dealerships, the Australian Automotive Dealer Association (AADA), which represents 1500 dealer groups across all brands, covering 3500 new-car showrooms and more than 60,000 employees nationally, has renewed calls for an overhaul of current franchise laws so dealers are not left high and dry when an automaker terminates their contract early.

In a statement issued today, AADA CEO James Voortman said: “As an industry we were shocked by (General Motors’) decision and the way it was communicated. However, we have been even more shocked by reports from our members on the grossly inadequate compensation on offer.” 

Mr Voortman added: “The withdrawal of (General Motors) from the Australian market leaves around two hundred dealerships in the lurch, and up to 9000 workers out of a job.”

The AADA says Holden dealers invested “significant capital in facilities, stock and equipment” and that many signed up to “long term leases” for their showrooms. 

“They employed people in their businesses and took on apprentices. All of these decisions were made in good faith based on commitments from Holden that they were in Australia for the long-haul,” said Mr Voortman.

The AADA says the Senate Inquiry into the Holden shutdown is “crucial” as it will “set the benchmark for other … car manufacturers considering an exit from the country, a rationalisation of their network, or a change in their distribution model".

Meanwhile, a statement issued by Holden today shed some light on its calculations for each dealer's compensation package – offers which the car maker believes go well beyond its minimum obligations.

The Holden statement to Drive said: “Holden is doing the right thing by its dealers during this difficult time. We believe the offer is fair. In most cases Holden dealers will receive compensation a factor of four times the average Holden new car profit per unit of all dealerships over the 2017-2019 fiscal years. This number includes the sale of highly profitable domestically produced Commodore units in 2017 and 2018.”

The statement added: “The compensation formula Holden is using is applied consistently for all dealers and covers reasonable earning expectations from the new Holden sales department over the remaining portion of the Dealer Agreement. All dealers also have the opportunity to continue as Holden Authorised Service Outlets, maintaining their current service and repair client base. This is a consistently very profitable part of their businesses”.

Holden says the compensation package will also include a provision to “reimburse dealers for a portion of their unamortised investments in their new car showroom, as well as full reimbursement of unamortised investments in Holden dealer signage.”