Holden invites dealers to negotiate compensation packages via video chat
General Motors has invited Holden dealers to a video conference in the second week of June to discuss compensation for the sudden shutdown of the brand.
by Joshua Dowling- shares
General Motors says it will not reduce its compensation to dealers, even though the US car giant claimed a fortnight ago it had new calculations which estimated showroom owners may only be entitled to a fraction of the original sum offered.
General Motors Holden has invited its network of 185 dealers – which operate 203 showrooms – to a video conference in the second week of June.
The invitation comes after the Australian Competition and Consumer Commission (ACCC) intervened late last week and compelled General Motors Holden to follow the proper dispute resolution process.
The centre of the dispute surrounds how much money dealers are owed after General Motors announced on 17 February 2020 that it was ending Holden franchise agreements almost three years early.
The sudden and unexpected announcement caught many dealers off guard, as executives from General Motors and Holden had assured the network it was committed to the long term and that new models were on the horizon.
As part of its compensation offer for the early termination of franchise agreements, General Motors offered each dealer the equivalent of $1500 per new-car sold during a set period, in addition to extra costs for showroom upgrades.
Holden dealers, who sought independent financial advice, claim they are owed the equivalent of $6100 per new-car sold during the set period, in addition to extra costs for showroom upgrades.
In early May, General Motors responded with new analysis that showed some dealers may be owed as little as $350 per new-car sold during the set period, in addition to extra costs for showroom upgrades.
As a result of the claims and counter claims, negotiations reached a stalemate.
However, General Motors and Holden have since agreed to “negotiate in good faith” over the compensation offers to dealers for the shutdown of the Holden brand.
Last Friday, the ACCC told CarAdvice it was “preparing for court action had Holden not changed its position”.
“We were prepared to litigate today and institute proceedings in the federal court … however Holden has agreed to follow the proper dispute resolution process,” ACCC chairman Mr Sims said in an interview with CarAdvice.
In a media statement issued on Monday General Motors Holden said it “supports the dispute resolution being overseen by a suitable facilitator” and “has undertaken not to decrease its (initial) offer to dealers”.
The statement continued: “The company notes that good faith participation in dispute resolution does not oblige a participant to accept, make, change or increase any offer of compensation”.
General Motors Holden then repeated its earlier statements that it “firmly believes it has operated in good faith and flatly rejects any claims to the contrary”.
“Our compensation offer is fair and reasonable, and the company continues to seek an outcome that supports the transition for dealers and ongoing support for existing customers,” the statement by General Motors Holden said.
As part of the negotiation process, General Motors Holden invited dealers and their representatives to dispute resolution meetings via video link – “in accordance with COVID-19 safety protocols” – in the week commencing 8 June 2020.
The new deadline for dealers to accept the offer of compensation by General Motors Holden has shifted from the end of May to the end of June.
The opportunity for dealers to remain as a parts and service centre for Holden cars – even after the brand is shut down at the end of 2020 – appears to be linked to acceptance of the General Motors compensation offer.
“As the company has stated previously, GM Holden wants an ongoing relationship with dealers and it does wish to provide them with the opportunity, as part of a compensation package, to enter into an ongoing long-term service and parts supply agreement,” the statement by General Motors Holden said.
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Holden invites dealers to negotiate compensation packages via video chat