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D-Day for Holden dealers as they weigh 'low ball' Detroit offer

Business

Holden dealers, having watched the iconic brand shut down by US-based parent company, say General Motors is short-changing them in its compensation offer for their lost businesses. Today the matter goes to formal mediation before a Federal Court judge.

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As a Holden dealer for the best part of half a century, Neil Beer was betting on a bright future with General Motors.

In the last 12 months, he invested more than $700,000 to improve his dealership at Seymour in Victoria.

“We were intending to remain a Holden dealer and that was certainly our understanding that would be the case,” Beer told the ABC.

Still reeling from Holden’s shock announcement in February that it was pulling out of Australia, Neil Beer said many dealers feel they are being short-changed by a low ball compensation offer of $1500 per car.

“After the number of years we’ve been in business, I am sure that if we had put the dealership on the market 12 months, two years ago, the goodwill factor would be far in excess of what’s being offered,” he argued.

Dealers want more than $6,000 a car — four times what’s on the table — but Holden has refused and today, a Federal Court judge acting as a mediator will try to help the two sides reach a compromise.

Holden’s interim managing director Kristian Aquilina said that based on sales figures from the last few years, the offer is generous.

“Last year, a Holden dealer made a loss of around $600 per car for every new Holden they sold, which isn’t great,” he responded.

“Our offer to them is $1500.”

However, what has also angered Australian dealers is that their counterparts in New Zealand are being given two-thirds more — $2,500 for every car.

Again, Holden is standing its ground.

“When it comes to looking at the New Zealand business, it’s just a fact that they were a far more profitable network of dealers and, as such, their amount is different,” said Aquilina.

“The formula we used for New Zealand dealers is the same one we applied in Australia.”There are nearly 200 dealerships across the country and many, like Neil Beer’s in Victoria, have invested big money, in some cases running into the millions.

Some Holden showrooms are now sitting empty.

Holden said it is also compensating dealers for any upgrades. Neil Beer sees it differently.

“Certainly they’ll be compensated, but I think when it comes to the bottom line, generally speaking, they’ll be well and truly out of pocket,” he said.

On that subject, Holden’s Kristian Aquilina makes the point that 90 per cent of Holden dealers also sell other makes of cars, so their dealerships will still be in use.

Holden is also offering five years of guaranteed servicing and parts, which it argues is where dealers make their profit.

It added that it is open to negotiating on any other special circumstances. It is a far cry from yesteryear, when Holden was the most popular make on Australian roads.

The writing has been on the wall, though, since the last Australian-made Commodore rolled off the production line in October 2017.

Since then, sales have plummeted further to just 43,000 vehicles in 2019.

Despite that, when the decision to leave was announced in February, it sparked plenty of anger, led by the Prime Minister.

“Australian taxpayers put billions into this multinational company and they let the brand just wither away,” Scott Morrison said on February 17.

Holden’s owner GM relied on Federal Government assistance from the start, as did the other big multi-national car makers in Australia. Once it dried up, the industry was doomed.

Holden is breaking a franchise agreement that still had two-and-a-half years to run and many dealers say its attitude to compensation has made a bad situation worse.

One, who did not want to be named, told the ABC it is a hatchet job.

Another described Holden’s behaviour as bullying.

Claims Holden rejects.

“They are being led along by a legal firm that seems hell-bent on wanting to take this through the courts and make this a protracted dispute to only serve the benefit of a lawyers’ picnic,” argued Mr Aquilina.

Neil Beer has some sympathy for Holden.

After so long in the car industry, he knows some Holden executives very well and said several have been calling him to say they are very upset with what has happened.

“These decisions are being made in the United States,” he said. “We’re just a number to them.”

On the subject of numbers, and compensation, the dealers and Holden are nearly half-a-billion dollars apart.

A huge gulf mediation will be hoping to bridge.

-ABC/Business Editor Andrew Robertson

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