Holden dealers and US car giant General Motors remain at a stalemate over compensation for the sudden shutdown of the brand – despite two days of mediation.
Representatives for General Motors and Holden dealers have been in mediation for the past two days, overseen by retired Federal Court Judge, the Honourable Mr Peter Jacobson QC.
Although the mediation was conducted out of Melbourne, the discussions were held via video link due to coronavirus restrictions.
The Australian Holden Dealer Council repeated earlier claims that the initial offer of compensation by General Motors is “grossly inadequate”.
The US car giant said it remains of the view that its initial offer is “fair and reasonable” and that the mediation process was “constructive”.
“We respect the confidential nature of those discussions, so can make no further comment, other than to say the discussions were constructive but no agreement was reached,” the Holden statement said.
General Motors initially offered Holden dealers the equivalent of $1500 per new-car sold over a set period, in addition to separate payments for recent upgrades to showrooms.
Holden dealers in New Zealand received the equivalent of $2500 per new-car sold over a set period.
However, General Motors claimed that was because Holden showrooms in New Zealand were more profitable, whereas their Australian counterparts lost on average $600 per new-car sold over the previous year.
Holden dealers received independent financial advice they are owed the equivalent of $6100 per new-car sold; General Motors responded by saying it had done new calculations that found some dealers may be owed as little as $350 per new-car sold.
The two parties were forced into mediation after the business and consumer watchdog, the Australian Competition and Consumer Commission (ACCC), intervened and threatened General Motors with legal action.
In a media statement issued Thursday evening, representatives for Holden dealers said General Motors had to be “dragged to the negotiating table” and accused the Detroit-based car giant of “bullying tactics”.
In particular, Holden dealers have taken exception to suggestions by General Motors they would not be awarded parts and servicing contracts unless they sign the original compensation offer.
General Motors said it has been canvassing enquires from other mechanical workshops to take over the parts and service business.
However, a statement from General Motors said it has “not offered the profitable parts and service opportunity to anyone other than its current dealers, which is our (preference).”
“That doesn’t stop interested parties enquiring when those dealers publicly state that the opportunity is not real or that they might not take up the opportunity,” the General Motors statement said.
Holden dealers claim “GM’s actions, and the severity of their impact on dealers, highlight the substantial imbalance of power that exists between franchisee and franchisor.”
In addition to fighting for more compensation than what they were initially offered by General Motors, Holden dealers appear to be standing their ground because of the precedent this might establish if and when other car companies decide to end their franchise agreements early.
When Holden announced on 17 February 2020 that it planned to retire the brand and stop selling cars in Australia, there were still almost three years remaining on the five-year dealer franchise agreements.
One industry insider who asked to remain anonymous said Holden dealers are standing firm not only because they believe the offer is unfair, but because it would set a formula for compensation that other brands might follow.
There are 185 Holden dealers who operate 203 showrooms nationally. Of those, approximately 90 per cent are multi-franchise dealers who sell more than one car brand; the remaining 10 per cent sell Holdens only.
Holden boss Kristian Aquilina, in his only interview since the closure of the brand was announced, told ABC TV’s The Business earlier this week: “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.”
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