Holden dealers have hired a private investigation firm to find out if US car giant General Motors knew it was going to axe the iconic Australian brand more than a year before the shutdown announcement.
They say General Motors continued to encourage investment in showroom upgrades, promised a raft of new models, and had recently signed the Holden dealer network to five-year franchise agreements even though, they claim, Detroit already had plans to shut its Australian division.
The Holden Dealer Council – which represents 185 dealers who operate 203 showrooms across Australia – has appointed a corporate investigation firm to find out if General Motors tried to sell Holden when it offloaded its European brands Opel and Vauxhall to French car giant Peugeot-Citroen in 2017 – a rumour which was reported on but strenuously denied at the time.
The Holden dealer group – which is in the middle of tense negotiations with General Motors over compensation for ending their franchise agreements almost three years early – also suspects the company knew Holden was going to be axed when it made plans to shut two remaining factories in right-hand-drive countries, Thailand and India.
General Motors sold assembly lines in Thailand and India to China’s Great Wall Motors, with the deals finalised in late 2019 and early 2020.
However, General Motors announced as far back as November 2018 that it was preparing to close two overseas factories – in addition to shutting a number of facilities in North America as part of a global restructure.
In that announcement, General Motors did not reveal which of its two international factories would close.
“In addition to the previously announced closure of the assembly plant in Gunsan, Korea, GM will cease the operations of two additional plants outside North America by the end of 2019,” said a media statement from General Motors issued in November 2018.
Since the end of Australian manufacturing in October 2017, Holden sourced most of its showroom line-up from South Korea and Thailand, two factories that would eventually be closed or sold.
Out of Holden’s entire range, only two cars – the Acadia and Equinox SUVs – came from the US and Mexico, and sold in relatively low volumes in Australia.
A letter from an Australian corporate investigation firm sent to Holden dealer representatives – a copy of which has been obtained by CarAdvice – acknowledges it has been appointed to examine “the sale of Opel by General Motors to the Peugeot-Citroen Group in 2017, and whether Holden was offered as part of the sale agreement”.
“Further to this,” the letter says, “we are also to investigate the sale of the General Motors plant known as Talegaon in India, and whether this sale included the sale of Thailand at the time when negotiations began”.
The investigation firm is based in Australia but works with licenced affiliates in other countries.
Executives from General Motors, Holden and Peugeot-Citroen have consistently denied there was ever a plan for the French company to take Holden as part of the Vauxhall-Opel deal.
However, an expert in automotive franchise agreements, Bob Gardini, says there is a possibility Holden dealers could be entitled to more compensation than what has been offered by General Motors.
Mr Gardini has in the past consulted to Holden dealers and is a former partner at HWL Ebsworth, the law firm appointed by the Holden Dealer Council during compensation negotiations with General Motors.
Mr Gardini told CarAdvice: “The dealer council appears to be following the breadcrumbs General Motors has left in Europe and other exited markets. If they’re able to prove General Motors knew Holden was always on the chopping block, the compensation could be 10 times (higher than) what is being reported, if unconscionable conduct was proven.”
Mr Gardini added: “If legal proceedings are commenced in the United States, punitive damages would be available in addition to damages for economic loss.”
General Motors and Holden have consistently stated that the compensation offer to dealers is fair, based on the average profit per vehicle over a period of time when the business was more lucrative, and that additional allowances have been made for dealers who invested in showrooms and infrastructure in the lead-up to the shutdown announcement.
Last week, the Australian Competition and Consumer Commission (ACCC) said it was monitoring the Holden closure.
ACCC Chairman Rod Sims told CarAdvice: “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”.
Holden says it will continue to have a presence in Australia – even after its showrooms close by the end of 2020 – and plans to support the approximately 2 million Holdens remaining on local roads.
An office with about 200 Holden staff will support service, parts, warranty and safety recalls for "at least 10 years".
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