The federal government’s peak consumer and business watchdog, the Australian Competition and Consumer Commission (ACCC), is monitoring the compensation negotiations between US car giant General Motors and Holden dealers, the chair of the ACCC Rod Sims has confirmed.
"We don’t normally comment on any potential investigations but we’ve had representations from politicians as well as dealers (about the Holden shutdown and its impact on dealers and consumers), so I think it’s appropriate to make some acknowledgement of this," Mr Sims told CarAdvice.
"We have had a number of complaints," he said. "We are in the very early stages, but certainly it is something that is potentially very serious."
Mr Sims said the ACCC has not "formed any views, but we most certainly will look at it in relation to any potential breaches of Australian Consumer Law and the franchising code".
A bulletin written by the Holden Dealer Council and sent to all Holden dealers – a copy of which has been obtained by CarAdvice – says it had “an extensive phone hook-up with the Australian Competition and Consumer Commission (ACCC). We can confirm that the ACCC considers the Holden case a priority matter and are putting considerable resources into all of the allegations made”.
The letter urged dealers to “please urgently forward any email from your Dealer Transition Manager, especially in relation to (allegations that) … ‘Holden would prefer you deal directly with them rather than your legal representation’.”
The letter from the Holden dealer council to its network of 185 dealers which operate 203 showrooms across Australia also said “please urgently forward any evidence that points to discussions or emails which state or infer that a Service and Parts Agreement will only be offered if you accept the compensation package offered”.
Holden dealers claim the compensation they are being offered by Detroit for ending their franchise agreements almost three years early is “grossly inadequate”.
They say it is approximately four times less than what they are owed, based on calculations by forensic accounting firm KPMG, commissioned by Holden dealers.
Holden dealers claim the shock shutdown announcement in February came after the company promised a long line of future models and had encouraged dealers to continue investing in their showrooms and operations.
General Motors has insisted from day one its compensation calculations are fair and based on the average dealer profit at a time when the Holden business was more lucrative. CarAdvice understands the GM compensation offer mirrors similar calculations used in shutdowns of car dealerships in other markets, including North America.
The Holden Dealer Council letter urges dealers to “please urgently advise of any ‘off the record’ discussions you may have had with your Dealer Transition Manager. This could include if they have told you they view the package of compensation as unfair and advised you of any … delay and/or negotiation tactics Holden has advised them to use”.
CarAdvice has been told the ACCC has been provided with a list of current and former Holden executives – and their contact details – who may wish to provide the government agency with more information.
CarAdvice has seen the list of approximately 40 former or current high-ranking Holden executives – which includes two former Holden bosses – however we have chosen not to identify the people nominated on the list.
CarAdvice has learned most of the compensation offers made to Holden dealers have ranged from $100,000 to $3.2 million depending on their circumstances, but some dealers claim to have spent much more than this on new showrooms.
General Motors says there is provision to offer additional compensation to those dealers who have recently made substantial investments in new facilities, but those discussions are private.
A statement previously issued by Holden head office 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.”
Holden noted the 2017 fiscal year included higher than average profits from the last of the locally-made Commodores (pictured below).
The leaked dealer bulletin about the ACCC phone conference is the latest development behind the scenes in the compensation negotiations between Holden dealers and General Motors.
Last month, Holden dealers sent a letter from a high powered law firm to the global boss of General Motors, Mary Barra (pictured below).
Lawyers for HBL Ebsworth, acting on behalf of Holden dealers, claimed 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).”
At the time 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.”
Over the past five years the ACCC has also compelled brands such as Holden and Hyundai to sign “court enforceable undertakings” to “improve compliance with consumer guarantees under (Australian Consumer Law). Both Holden and Hyundai also committed to reviews of past consumer complaints”, the ACCC wrote at the time.
CarAdvice understands General Motors has made an offer to meet with the Holden Dealer Council across several potential timeslots next week.
In the meantime, most Holden dealers contacted by CarAdvice claim they have almost sold out of stock. A number of dealers are sitting on their last 50 to 100 cars; a handful of standalone dealers are trying to operate for as long as possible.
However, it seems likely most Holden showrooms will be out of stock by the middle of the year and may not make it to the end of 2020 as originally planned.
Last month Holden dealers reported their strongest sales in more than a year buoyed by discounts of up to $17,500, although it was up to each dealer’s discretion how much of the savings would be passed on.
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