Dealers question timing of Holden closure


Global automotive giant General Motors may have been formulating plans to axe the Holden brand in Australia well before a shock decision was announced in February, a Senate inquiry will be told.

The Australian Automotive Dealer Association says the way Holden’s demise played out raises serious questions of whether dealers were misled.

Other submissions to the Senate investigation, which will hold a public hearing on Monday, have indicated Holden was still taking on new workers on the very day the closure decision was revealed.

The AADA said for some time GM had been adamant, both privately with dealers, and publicly through the media, that it was in Australia for the long haul, despite the end to local car manufacturing.

On the basis of those assurances, and the fact that many agreements still had more than two years to run, Holden dealers had a clear expectation that the brand would remain in Australia with some investing millions of dollars to upgrade their operations.

“This inquiry needs to question whether General Motors Corporation, headquartered in Detroit, made the strategic decisions to exit the right-hand-drive car market globally some years in the past,” the association said.

“Operationally, the announcement of the sale of the plant in Thailand where Australia’s top-selling Holden vehicle, the Colorado ute, was manufactured was announced at the same time as the closure of Holden.

“Common sense dictates that the minute the decision was made to sell the GM Rayong plant in Thailand is the exact moment that serious questions would have emerged about Holden’s future in Australia.

“One would expect that the purchase of a vehicle assembly plant would facilitate a lengthy process of probity and due diligence by the purchaser.

“It is not unreasonable to suggest that the sale process was likely a year in the making, yet Holden dealers were left unaware.”

The demise of Holden brand, to be completed by the end of 2020, was announced on February 17, with company officials adamant all avenues were explored to keep the iconic name alive.

In its own submissions to the Senate inquiry, General Motors Holden said the decision to retire the brand was made only a few days before the public statement.

“Every realistic possibility was carefully examined but none could overcome the challenges of the investments needed for Australia’s highly fragmented and right-hand-drive market, the economics to support growing the brand, and the need for an appropriate return on investment,” the company said.

“Despite hopes of reaching a different outcome, the inescapable conclusion was that GM could not sustain further investment into Holden.

“GM reluctantly made its decision to wind down Holden a few days before the public announcement which was made with great sadness.”

In another submission to the inquiry, a former Holden engineer, who withheld their identity, said the closure came as a complete shock to the company’s remaining employees.

“No warning was given to Holden staff about the potential closure of the business and there was no request from Holden management for staff to make any contribution to avoid the closure,” the engineer said.

“On the day of the closure announcement, eight new engineers commenced employment at Holden.

“Perhaps nothing better illustrates how unprepared we were for this announcement.”

At the time of the closure announcement, Holden had about 185 dealers across the country and still employed about 800 staff.

About 600 of those were expected to be made redundant including more than 200 engineers and more than 250 management and administrative staff.

There are currently about 1.6 million Holdens on the road in Australia.



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Holden dealers claim they have been abandoned by government


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“A Holden dealer has written to Industry Minister Karen Andrews about the GMSV plans and expressing disappointment at the inaction of the minister’s office, which has sat on draft legislation that would help resolve the dispute with GM and address the substantial power imbalance between franchisee and franchisor,” a spokesperson for the Australian Holden Dealer Council said.

Ms Andrews said she continued to engage with dealers, meeting and speaking with them directly about their ongoing negotiations and also had been in contact with dealer representatives.

“Minister Cash and I also met this week with GM Holden to reiterate the expectation of the government, and Australians, that they negotiate in good faith and ensure a fair outcome for the Aussie dealers who’ve carried their brand for decades,” she said.

ALP senator Deborah O’Neill said the failed mediation showed the substantial imbalance of power that existed between franchisors and franchisees.

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“It has been over 15 months since the Parliamentary Report into Franchising highlighted this exact issue that Holden dealers now face, but this government refuses to stand up for small business and is beholden to large franchisors such as General Motors who are abandoning their car dealers here in Australia,” she said.

Holden’s offer to the dealers, of $1500 per vehicle for the next 2½ years alongside partial reimbursement for capital expenditure such as showroom refurbishments and a continuing service arrangement for dealers beyond the current franchise agreements, is open until the end of June.

However, the compensation offered by Holden, which equates to approximately $146 million, is well short of dealers’ demands for $6100-a-car, which they say takes into account the full extent of the losses they face and would result in a compensation figure of $594 million.

One of the affected franchisees is Ken Jacka, who has been forced to sell his Holden dealership in Maryborough which was started by his father in 1979.

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“General Motors has been saying you can stay on offering parts and service but that’s difficult when you have no new cars, that is the crux of what we do,” he said. “As much as I want to make it work, it doesn’t work.”

Mr Jacka said he had sold what remained of the business and the property to the local Toyota dealership in a “bittersweet” deal which retained jobs for about half his staff.

“We sold it at less than building value only, we have basically given the business to them,” he said. “It’s sad. I’m glad my old man is not here to see what has happened to the brand. I have never driven anything but a Holden car and I don’t know what I will drive now.”

A spokesperson for Holden said the company had considered all matters raised during its discussions with dealers and remained of the view that its offer to dealers was fair and reasonable.

“We will continue to work with dealers who wish to transition their businesses and access our transition support package,” a spokesperson for Holden said.

“Our broader focus is with our 1.6 million Holden customers.”

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