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Holden Responds To Dealer Compensation Lawsuit, Calling It ‘Bizarre And Illogical’

Holden has responded to a lawsuit filed by its Australian network of dealerships earlier this year that sought to secure more compensation from the automaker in its exit from the market.

The suit, which was filed against Holden by all of its Australian dealers (consisting of 185 dealer groups and 203 separate retail storefronts), accused Holden and parent company General Motors of offering “grossly inadequate” compensation packages to dealerships.

The dealer compensation packages were determined based on a showroom’s average net profit per vehicle between 2017 and 2019, and the volume of vehicles it sold in 2019. GM and Holden then took this data set to forecast future sales through to 2022, which is when the dealers’ franchise agreements with GM would have come up. Compensation offers ranged from $100,000 to $2.4 million depending on the dealer’s circumstances.

Now, GM has responded to the claims made in the suit, saying the proposed compensation “is over four times what the average dealer made in the new vehicle department over this same timeframe.” It also said the lawsuit “omitted to factor in dealers’ opportunity to continue the service, repair, warranty and parts activities.” Holden retail storefronts are free to operate their aftersales and service divisions following the automaker’s exit from the country this year.

“Aftersales is typically one of the most profitable parts of a dealer’s business representing on average up to 115 percent of a dealer’s total net profit in 2019,” Holden said. “GM Holden is committed to maintaining an aftersales operation in Australia for at least 10 years to provide warranty, service and parts to Holden customers.”

But the dealers’ suit also claimed that GM encouraged them to make costly renovations to their brick and mortar dealerships in the way of new signage and other upgrades whilst planning to pull out of the market in 2020. Holden and GM say its offer “also includes compensation for un-recouped Holden facility investments,” and noted that these sums “are valued independently and dealt with separately in addition to the compensation offered,” for individual vehicle sales. The dealer suit alleges that GM had planned to wind down its Australian operations five years ago.

“These claims are based on a bizarre and illogical argument that GM has secretly planned to shut down Holden since at least 2015, but made various significant investments in programs, plans and strategies to support and promote Holden in order to mislead dealers into thinking that there was no secret plan to shut down Holden.”

Australian Prime Minister Scott Morrison has sided with the Holden dealers in the ongoing row, telling them he “won’t have big overseas corporates destroying Australian family businesses.”

GM Authority plans to keep up with the ongoing legal battle, so be sure to subscribe to GM Authority for more Holden news and around-the-clock GM news coverage.

Sam loves to write and has a passion for auto racing, karting and performance driving of all types.

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Comments

  1. If the Aussie Government sides with the dealers in the class action and eventually decides to joint ventures with internal private enterprise and takes over the former plants down the road they always did built great salable quality products( like G8)and could do so without GM and for sure imports from China for the domestic and some export of high margin well built off road vehicles !

    Reply
  2. How is it that GM has failed in every right hand drive market in the world, while every other car maker including the 3 other American companies can succeed in both left and right hand drive markets. This to me is a cause for concern

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  3. Astra, Commodore ZF, Trax, Equinox, Acadia, Colorado, Trailblazer (based on Colorado)
    Give the dealerships nothing. If they can’t sell the above lineup, they deserve to go broke.

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  4. However, to gauge the secrecy of what was going on with Holden, replay the Jay Leon’s Garage You-Tube presentation with Tadge J. in which the C8 Convertible was presented to the public by both both of them. Making a right-hand drive version was discussed and then Jay Leno asked Tadge a question with regard to the Holden group. It is a brief and obviously unrehearsed segment. From it, those going back over the video should check the body language and use of language by each man in terms of volume, words chosen, change of cadence from other parts of the video. This is a classic in terms of students of body language, body position, the use of the eyes, etc., if one were teaching one of those FBI communication courses in which their detectives are taught to tell whether a person is lying or telling the truth. In my career, I saw clips like this. This one is pretty subtle. Also I am not say any conclusions can be drawn from this Leno’s Garage Presentation. Really, there are no inferences to be drawn. But in light of the Holden Lawsuit, the Leono’s Garage presentation is in deed interesting. You better download this video now, if you want to see it in the future, because there is a chance that it might be, “pulled” from the Internet. If it were me, though, I would not want Australians to get hold of this episode, even though this episode sold my on the idea of procuring a C8. AF

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  5. Most dealers will sell out all existing stock and rebrand their site, my local dealer owns the Holden site but rents their mitsubishi / kia site, after the Holden name is gone m/k are moving in, one less site to maintain.

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    1. Jason turner

      But you don’t make Money selling KIAs and Mitsubishi’s. Dealerships rely on spiffs from the manufacture for moving an ever increasing amount of tin.

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  6. Thus we are back again to the question: How will Corvette take advantage of the fact that Australians love Corvettes. They want to take the roof off and put it on again, but they likely won’t be interested in the Convertible to any great extent. In the meantime, my other suggestion for content, would be an in depth vlog on Eikon Motorsports version of Lambo doors for the Corvette. Currently under development and there are a lot of pre-orders, according to my interview with “Jessica,” over at Eikon Motorsports. She will direct you to their “Facebook” presentation for a video review of how the doors work. Might be just the thing in certain tight spaces where there is parallel parking, if you dare put your car there.

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    1. Corvette will most likely be sold via GMSV dealers along side Silverado once their business case is revealed, as for options it’s wait and see.

      The only real issue some dealers have is those who completed expensive renovations only to be told too bad you wasted your money.

      Reply

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