Holden dealers in Australia are taking the fight to General Motors after they were offered “grossly inadequate” compensation packages by the American automaker.
GM offered Holden dealers monetary compensation to close down their retail storefronts after deciding to axe the Holden brand and cease all local operations in Australia and New Zealand. back in February. The dealer compensation amounts were determined based on a showroom’s average net profit per vehicle between 2017-2019 and the volume of vehicles it sold in 2019. It then used this data set to forecast future sales through to 2022, which is when the dealers’ franchise agreements with GM would have come up.
According to Car Advice, GM’s compensation offers ranged from $100,000 to $2.4 million depending on the dealer’s circumstances.
Now Holden’s entire Australian network of dealerships, consisting of 185 dealer groups and 203 separate retail storefronts, have banded together in defiance of GM over the compensation offers. The dealer group has hired a law firm, HWL Ebsworth, and forensic accountants to handle the matter and negotiate revised compensation offers with GM.
Some Holden dealers say GM encouraged them to invest in their retail storefronts by making costly renovations, buying new signage and performing other upgrades, all while knowing that it was going to pull out of the market in 2020. According to Car Advice, certain dealers had even completed construction work on brand new, multi-million dollar showrooms and were preparing to open them when they received news of Holden’s demise.
In a statement, a Holden spokesperson said the compensation offers are adequate and representative of a dealer’s overall performance.
“Holden is doing the right thing by its dealers during this difficult time,” the automaker said. “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.”
The Australian government has also launched a federal inquiry into GM over its decision to pull out of Australia and plans to hold the automaker to account over any legal obligations it may have to its customers, dealers and employees.
Australian Prime Minister Scott Morrison met with Holden dealers last month and allegedly told them he plans to stick up to GM and “won’t have big overseas corporates destroying Australian family businesses,” according to Car Advice.
GM’s withdrawal from Australia will be complete before the end of the year.
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Source: Car Advice
Comments
So GM could’t hold out and continue 2 more years when the franchise agreements end? Not only would the avoid alot of the contract buyout expenses, it would give the dealers time to find another product to sell. Anything would be better than a blindside.
There were some dealers who had five year contracts as they’d just signed another one within the last few months.
So much for a all must go fire sale, it’s more like a cool ambers sale.
The most comical thing is…….GM thinks it’s worthwhile to convert a few Camaro’s and trucks to sell there? Regardless of price how many will they possibly sell and where do you go to buy/service one after all the Holden dealers are shuttered?
The business plan has not been released yet by HSV (GMSV ?) but their dealers will move to a smaller site or share floor space with another manufacture.
HSV dealers are not Holden dealers, they where a high end section who sold modified holdens within the Holden dealership.
To give examples in my area of those who share their premises under the same dealer.
Ford/Hyundai
Mitsubishi/Kia
Holden/Honda
Mazda/Suzuki
Holden/Volkswagen/Peugeot
Honda/Kia
take the money and start a jap or korean dealership in the building
Consider Great Wall, the Chinese company which bought the GM factories in India (Talegaon) and Thailand (Rayong).
Great Wall sell a lot less cars than Holden currently do. A dealership wouldn’t be sustainable. My local Great Wall dealer doesn’t even keep Great Walls in stock, yet has a lot of Suzukis and Mitsubishis available to look at and drive, but not a single Great Wall. Not even in the showroom.
Now would actually be a good time to take on a Hyundai or Kia franchise, especially in rural areas.
Having said that though, I know of at least one dealer who will not be taking another franchise on and once the obligation to supply parts and servicing is over, are planning to close down completely. This is a dealership that has been in the one place in town since 1965, and under the current family’s ownership since 1979.
I am surprised that GM did not offer the Holden brand to an automaker that does not have a strong presence in Australia. I have to assume that a Chinese brand would jump at the chance, not that Aussies would find that appealing and would quickly deride such a move.
For instance Peugeot should have taken over the Saturn brand in North America. Mitsubishi have a higher than usual penetration in Australia, because they benefited from all the ex-Chrysler dealers.
Although Holden has recently been at the bottom of the top ten in the sales chart, I am sure that their dealers have better capacity and coverage than Honda and Subaru, who are also at the bottom of the top ten. Others that are not in the top ten, such as Peugeot and Renault could benefit from the Holden dealer network.
sad but the Auto unions in Australia are to blame for their domestic production ending ! they were too greedy! OMG, even a lowly busboy/waiter that country gets $25 per hour to start !
the autoworkers were paid too much and it became too expensive to build there !
simple economics,
the auto companies all build cars in USA now even export them !
they found a economic model here that made sense and built factories in non-union states !
yes the workers do not get high wages , but at least have jobs ! and their pay is above the average !
GM did the same w/ Saab dealers ! in USA screwed them ! over 300 in USA ! over a million Saab cars are still on the road !
worldwide !
this at a time when the US taxpayers bailed GM out of BK !
when they killed Saab the dealers were crying for product to sell ! they had customers to buy and none to sell
GM cars about nothing but market share , gross profit
and only makes a few good cars nowadays !