THE DISPUTE BETWEEN GM Holden and its dealers could take some time to resolve. GM Holden received the Australian Holden Dealers’ Council’s most recent letter regarding dispute resolution late on Monday 22 June and moved quickly to give its contents due analysis and consideration.
A detailed reply has been sent to the AHDC but in response to ongoing media interest GM Holden seeks to make the following points.
“For the team at GM Holden, we are still heartbroken by the decision in February to retire the Holden brand and the impact on our Australian dealer network.
As we continue to work through this very difficult wind-down process, we conducted good faith discussions with our dealer partners that includes fair compensation and the opportunity to maintain a more profitable ongoing relationship.
We steadfastly maintain that our offer of compensation to Holden dealers for the loss of new car sales business is fair, reasonable and indeed generous, as confirmed by the analysis by PricewaterhouseCoopers. In 2019 dealers lost on average $605 per new car sold, and only made $351 per new car over the 2017-2109 period. GM Holden is offering $1500 per vehicle based on 2019 sales and has not adjusted this for the severe deterioration of industry sales.
GM Holden is providing additional compensation to dealers for unamortised capital investments, special circumstances and dealers who are solely dependent on Holden. GM Holden is also paying for the removal of signage and has provided dealers with $130 million in stock liquidation bonuses that enabled them to make substantially enhanced profits following the announcement of the retirement of the Holden brand.
All dealers have been given the opportunity to enter a new long-term agreement to continue highly profitable service and repair work for a new five-year term. GM Holden has taken on board a number of suggestions from the dealers in relation to the service agreement.
This compensation offer has been on the table since February and has been discussed in great detail since then with Holden dealers and their legal and accounting representatives, including in good faith settlement discussions overseen by a former Federal Court judge.
A great deal of time effort and care has been expended in developing Holden’s compensation offer and discussing and negotiating it with dealers which remains open through June 30.
GM Holden has a strong desire for an ongoing business relationship with its dealers as we focus on our parts and service commitments to the 1.6 million Holden owners in Australia.”
One wonders what kind of business plan GM Holden had in place to make dealers lose $605 for every car they sold. As for paying for the removal of signage, some dealers have spent considerable sums on their dealerships, based on the premise (and promise) that the brand would continue.
At this moment, it appears GM Holden and the dealers are still some way from an agreement.