The Australian Automotive Dealers Association (AADA), which has presented a submission to the federal government’s Senate inquiry into GM’s conduct, said the remaining 60 dealerships that did not sign the compensation agreement as outlined by GM were now expected to continue to push for a better settlement.

GoAutoNews Premium understands the remaining Holden dealers are now preparing to fund a class action lawsuit.

The Australian Competition and Consumer Commission (ACCC) continues to review GM Holden’s actions which may result in the car maker being taken to court if the ACCC deems GM”s conduct to be unconscionable.  

AADA CEO James Voortman said that just because many dealers signed up to the GM offer did not mean that they think it is a fair offer. 

“We still believe GM needs to be held to account and the Senate inquiry provides an opportunity for our elected officials to ask important questions of GM and also put forward recommendations to stop such a situation happening again,” he said.

He said that given the potential precedent of the GM issue to dealers of other franchises, the AADA is now considering possible amendments to its submission. He said the senate committee has already indicated it will be happy to receive any amendments.

The AADA said that the collapse of the compensation offer has left not only Holden dealers but all franchised automotive businesses in a “dangerous precedent” that allows OEMs to withdraw from agreements with its franchisees and ignore the “good faith” element written into the Australian franchise code.

“The AADA believes that the failure to offer fair compensation for walking away from its contracts; the way GM has conducted itself since presenting its offer of compensation; and the actions in the lead up to its withdrawal announcement all pose serious questions as to whether GM has acted in good faith,” said Mr Voortman. 

“The AADA also believes a Senate inquiry needs to explore the unique and massive power imbalance which exists generally in commercial relations between new car dealers and car manufacturers. 

“Poor treatment of dealers is not isolated to GM and other brands also exploit the power imbalance. 

“In countries like the US, specific automotive laws regulate this relationship between dealer and manufacturer. Australia has recently introduced such laws, but they fall well short of what is required to make a difference.” 

The background of the confrontation between Holden dealers and GM this week hit its low point when, as the June 30 deadline approached, GM “flat out refused a federal government request to extend the deadline and refused to participate in arbitration with its dealers”, said Mr Voortman.

“Over the past four months, 184 Holden Dealers have remained united in their opposition to the grossly inadequate offer of compensation from GM,” he said.

“Ultimately, GM’s complete unwillingness to negotiate and the prospect of a costly and lengthy court battle has had the desired effect.

“GM has annual revenues of $200 billion and the prospect of fighting them in court was just not an option for many of the dumped Holden dealers.”

Both sides of politics combined to launch the Senate inquiry which also saw the Australian Competitions and Consumers Commission (ACCC) also pressuring GM into mediation. It  has also drawn pleas from federal ministers for them to negotiate in good faith.

“At every turn, GM has thumbed its nose at local dealers, the Australian government and by extension the Australian public, the same public which provided the company with more than $2 billion in taxpayer funded assistance,” Mr Voortman said.

“This has set a dangerous precedent and Australia urgently needs to strengthen its automotive franchising regulations to protect local businesses against the heavy-handed behaviour of some car manufacturers.

“If we do not act this will happen again. The choice is clear, do we want laws which ensure local Australian dealers are treated fairly or do we want laws that allow offshore Fortune 100 car companies to treat these local businesses and their employees with disdain.”

Mr Voortman said the AADA will continue to advocate for urgent changes to automotive franchising regulations.

“We will also try and ensure that GM is called to account in the coming Senate inquiry,” he said.

The AADA submission is highly recommended reading. It spells out the way GM Holden has gone about its departure and the issues the departure has created for all dealers and can be downloaded via the AADA website aada.com.au

By John Mellor