AS YET another brand finds the headwinds of the hugely crowded Australian car market too fierce, all eyes will be on Infiniti as it leaves its dealers in the lurch.

This is the second time that Infiniti has withdrawn from the Australian car market.

The question of making sure dealers who invested in the brand are not out of pocket due to the sudden decision not to proceed with Infiniti in Australia is not just a matter of justice to the dealers concerned, it comes at a very inopportune time for such an event.

The fact is that this year – from now – sees the critical discussions and negotiations taking place over a proposed automotive franchise code and it would not be a good look if Infiniti (actually Nissan) was not only to pull the plug on its franchise investors but do so in a manner that patently punishes its dealers for having faith in the brand.

It is therefore important for Nissan to ensure that the Infiniti departure is done in such a way to prevent the closure from becoming a cause celebre in the franchise code discussions.

While there are just five dealers involved, the principle of fairness remains and, in any event, just five makes the question of generosity easier for Nissan to handle.

GoAutoNews Premium has been told that one of the five has just written the cheques for $1.5 million in dealership facilities and all the others will have invested serious skin in the franchise.

If there is a lesson from the move to withdraw Infiniti – which will not be the last brand to close in Australia, watch this space – it is that car retailers should really think twice before taking on new franchises that insist on very strict premises rules before the brand has proven itself in the market.

Indeed, this could potentially be one feature of the franchise code.

Meanwhile, if Nissan is looking for a model departure then it needs look no further than Opel’s premature departure from Australia in 2013.

Australia’s 22 Opel dealers heaped praised Opel Australia management for their handling of compensation claims following the premature closing down of the brand within just a year of launch.

Dealers, who were outraged that their investments were being trashed just a year into sales of the brand, were gearing up for a major class action.

Many dealers’ claims amounted to between $2 million and $3 million each, including investments in new dealership premises exclusively designed for Opel at Opel’s insistence.

But Opel dealers contacted by GoAuto at the time praised the company and its then managing director Bill Mott. The company offered an estimated $40 million or more to its dealer group as compensation.

One dealer said: “I think the way it was resolved is unprecedented. There is no other car company that would have done what they did. But I think if they had not done it that way they would have been facing a class action. I think they knew that.

“Having said that, a message needs to be flagged to all manufacturers that this was a disgrace and that it should never happen again,” he said.

The various settlements included covering trading losses made in getting sales momentum for the brand, handing over the service tools and spare parts at no cost, allowing dealers to hand back cars to clear their floorplan finance accounts for Opel stock and generous compensation of premises costs which covered most or all of the cost of the buildings, furniture, signage and fittings.

Dealers were also offered stock still held by Opel at an average trading bonus of $7000 a car although not all dealers participated in that offer.

Holden dealers who were not awarded the Opel franchise were encouraged to take on the parts and service support for Opel car owners.

Dealers said at the time that the process was handled “delicately” and was “consultative”.

But they described the pullout after such a short time as a “disaster that would trash the Opel brand for years to come and make it harder for Holden dealers to sell Opel-sourced products in the future”.

One dealer said of the settlement: “I think it is important to send a really clear message that the reason it did not turn to mush is because of the way it was handled.

“But I can tell you that there were very strong moves to take class action and others need to realise that if it happens again – and you would hope that this would never ever happen again – that the franchise will face a very strong backlash from its dealers.

“The message must be that you cannot just walk away.”

Comment by John Mellor