GM Holden fails to reach agreement in dealer talks

GM Holden fails to reach agreement in dealer talks

Holden is holding firm to its compensation package for dealers, after two days of dispute resolution discussions failed to deliver an agreement.

Earlier this year parent company General Motors (NYSE: GM) announced the 160-year-old vehicle brand would be phased out by 2021, but since then the Australian Competition and Consumer Commission (ACCC) has received complaints from dealers over the multinational's approach.

Dealers had previously complained that Holden was applying undue pressure by imposing an unnecessary deadline of 31 May to accept its proposed compensation package. 

The ACCC said this meant dealers would have been forced to choose whether to accept the offer before completing a dispute resolution process, raising concerns over good faith obligations under the Franchising Code of Conduct and unconscionable conduct provisions of Australian Consumer Law.

The ACCC's threats of court action prompted Holden to commit to extending its deadline and negotiating in good faith with dealers, but today it appears those talks may have been in vain for dealership franchisees hoping for a better outcome.

In a statement, Holden claims it held constructive discussions with dealer representatives, facilitated by former Federal Court Judge Peter Jacobson.

"Three senior Holden representatives attended, including the interim chairman and managing director, and each side was represented by a team of experienced lawyers and accountants," Holden said.

"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.

"Holden considered all matters raised during the discussions and remains of the view that its offer is fair and reasonable."

The vehicle manufacturer's compensation package covers a per vehicle amount for the remaining part of the franchise agreement, unamortised capital expenditure related to new Holden sales such as showrooms.

GM-Holden also touts a "highly profitable" five-year parts and service agreement.

"Our offer of $1500 per vehicle for the next 2.5 years (against last year's average loss of $600 a car) remains open for dealer acceptance until the end of this month," the company said.

"We are focussed on supporting the 1.6 million Holden drivers out there. Our preference is for an ongoing relationship with our current dealer network to provide that service.

"We will continue to work with dealers who wish to transition their businesses and access our transition support package. Our broader focus is with our 1.6 million Holden customers."

On 22 May, ACCC chair Rod Sims highlighted that as franchisees, dealers have less bargaining power than Holden. At the time the commission made it clear it would be continuing a broader investigation into Holden's engagement with dealers in relation to its withdrawal from Australia.

"Holden was putting pressure on dealers to accept the compensation package by 31 May without giving a proper opportunity to negotiate and engage in a dispute resolution process. We believe this deadline was unnecessary and also unfair," Sims said at the time.

"We expect Holden to negotiate fairly with dealers who have represented the Holden brand in Australia for decades. We will continue to closely monitor Holden's commitment to engage in good faith negotiations."

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