Holden dealers have written to the global boss of General Motors, Mary Barra, threatening legal action for what they claim was “deceptive” and “unconscionable” conduct in the lead-up to the shutdown of the iconic brand.
The network of 185 Holden dealers who operate 203 showrooms claim General Motors was aware there was a risk it would close Holden – even though the company had been asking for showroom upgrades and assuring the network it was here for the long term.
The letter from a high powered law firm and addressed to the global boss of General Motors, Mary Barra, (pictured below) has been obtained by CarAdvice.
Lawyers for HBL Ebsworth, acting on behalf of Holden dealers, claim General Motors and Holden “have known for a considerable period of time that (it) was considering exiting the right-hand-drive market which would result in … Holden’s business being unviable”.
The letter also asked General Motors to retain all internal records regarding any decisions on the future of Holden because, it said, “if the dispute cannot be resolved, legal proceedings will be commenced in Australia against Holden and (General Motors).”
A statement from Holden categorically denied the claims and said: “Holden does not comment on actual or threatened litigation. Holden strongly disagrees with any assertion that it has acted improperly. Holden believes the compensation offer to its dealers is fair.”
The legal letter alleges General Motors and Holden “consistently made representations to dealers to the effect that (Holden) were staying in the Australian market in the long term and would continue to sell motor vehicles” and “by their silence, they failed to disclose a risk that … Holden would cease its operations in Australia.”
General Motors is still in compensation negotiations with 185 Holden dealers who operate 203 showrooms across Australia.
Holden dealers claim the initial offer to them is “grossly inadequate”, however General Motors says its calculations are fair and based on the average earning on cars sold over an extended period – and when profits were higher than they were leading up to the shutdown announcement.
Holden dealers say the compensation offered by General Motors amounted to an average of approximately $1500 per car sold over the nominated period, but forensic accounting firm KPMG has calculated that dealers are owed approximately $6100 per car sold over the nominated period, four times more than the initial offer. KPMG also claims Holden dealers in New Zealand are being offered "almost double" the amount offered to dealers in Australia.
When asked to comment on the legal letter sent to General Motors, the secretary of the Australian Holden Dealer Council, David Nicholson, said: “Thank you for your interest in this issue as we work to protect our 9000 employees in this difficult time. In response to your query, we can confirm that the (Australian Competition and Consumer Commission) has been sourcing all of our relevant documents, however our legal team has asked us to make no comment at this time”.
While the Holden dealer network claims up to 9000 jobs could be lost due to the shutdown of the brand, Holden says its figures – supplied by the retail network last year – indicate the true number of employees affected in showrooms was closer to 650 people, and that it expected many of those to be redeployed to other car brands.
When the ACCC was asked for comment on the legal standing of the claims – and to verify if they had received a copy of the letter written to General Motors on behalf of Holden dealers – a spokesperson said: “Unfortunately, we cannot comment on any potential complaints or investigations.”
Meanwhile, most Holden dealers are reporting they have almost sold out of stock following a rush on showrooms driven by big discounts.
Most dealers only have a handful of cars left and models, colours and options are now limited.
Holden forecast it would close the brand by the end of this year, but most dealers will likely be clear of stock by the end of June.
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