In a 1200-word letter which has been shown to GoAutoNews Premium, the interim chairman and managing director of GM Holden, Kristian Aquilina, said he was writing to MPs to update them on its progress in the wind-down of GM Holden operations in Australia.
But far from clearing up the current state of play between dealers and GM Holden, the letter has a number of points of contention where it does not spell out the full story to parliamentarians and where it makes claims that are at odds with the facts as those representing dealers in their negotiations understand them.
One point of contention involves ongoing service.
In all Holden discussions of service post exit, Holden says that dealers will be offered the opportunity to continue to operate Holden service centres.
For example, the letter says: “As part of our transition offer, all Holden dealers are given the opportunity to continue to maintain an extensive customer base to service Holden vehicles and provide spare parts and accessories.”
What MPs were not told is that dealers are not automatically going to continue to service their customers’ cars as Holden service centres. Dealers have been saying that their understanding is that Holden is offering new service agreements as part of the settlement process. If they do not sign those agreements then they will not be able to participate in the ongoing service business as a Holden service centre.
Dealers say that in the process of negotiations for fair compensation, this gives GM unfair leverage over the dealers to settle on GM’s terms and that all current Holden dealers should be automatically appointed service dealers in order to keep faith with the service customers’ base.
Dealers additionally point out that it is only a five-year service agreement (whereas GM says that it will be covering Holden owners for service and parts for 10 years).
GM has also inserted a clause that allows it to appoint anyone as a Holden service dealer, opening the way to GM authorising independent repairers or service franchise chains to service Holdens. This would dilute the pool of 1.6 million service opportunities available to the current Holden dealers.
Another point of contention is the assertion in the letter that the settlement process is proceeding well.
The letter says: “Holden’s dealer transition managers have met with over three-quarters of our 185 dealers in Australia over the past three weeks, with meetings scheduled for the remaining dealers. Any assertion that all dealers have received our offer and rejected it is false. Many dealers who have received the offer are now constructively working through the process.
“Initial meetings outline the framework for the transition arrangements, the broad terms of the vehicle service and parts offer, and how the relevant dealer compensation payment has been calculated. Dealers require time to consider their position but we are already well down the path to reach a mutually acceptable outcome with several dealers in Australia and New Zealand.
“Some dealers have presently indicated they intend to decline our offer, which is their right.
“Some dealers have indicated they wish to receive additional compensation and have enlisted the support of third parties such as accountants, lawyers and journalists to advance their case,” the letter said.
But GoAutoNews Premium understands that a group which has been formed to represent dealers in their efforts to improve the offers GM makes to them, and is negotiating on their behalf, has all 185 Holden dealers signed on.
In the area of dealers taking on additional brands to spread risk, the GM letter says: “Ninety per cent of Holden dealers today are multi-franchise, with Holden representing on average across the network approximately 29 per cent of their new-vehicle sales. Over a long period of time, dealers have responded to an increasingly fragmented market and have diversified risk by taking on other brands. This practice intensified as Holden sales declined.”
What the letter does not say is that under Holden dealer agreements, dealers, on pain of losing their Holden franchise, had to get Holden’s permission to take on another brand, thus giving Holden the power to stop dealers taking on other franchises.
The problem with Holden’s assertion that its dealers have been diversifying is that dealers have been complaining for years, and more so since the announcement to close the Elizabeth plant, that Holden was vetoing their plans to take on other franchises and most dealers will have the correspondence confirming that.
The letter also makes the assertion that the number of people whose jobs in dealerships are at risk is not as great as made out in the media.
The letter says: “With the vast majority of Holden dealers selling other brands, as well as having used-vehicle sales operations, redeployment of dealership staff is likely to occur in many cases, either at their same dealership location or other sites. With most dealers also likely to continue as authorised Holden Service Operations, this will mean retention of their service staff and apprentices.
“In 2019, dealers collectively reported to Holden that there were 400 new sales consultants, 157 new sales managers, 49 fleet sales consultants and 40 fleet managers, dedicated to the Holden brand across the whole network of 185 dealers. This is far less than numbers which have circulated in some media articles.
“There may be some impact on jobs at dealers but not anywhere near the exaggerated numbers we have seen reported in the media.
“We regret this additional impact to some dealership employees and anticipate that dealers will utilise a portion of their compensation packages to do the right thing for their employees, just as Holden is doing for its employees,” the letter says.
Aside from somehow appearing to shift the blame for job losses from Holden to the Holden dealers, Holden appears to be putting great stock in dealers being able to move people into other dealerships. But in dealerland the reality is somewhat different.
Dealers are experiencing their 24th month of sales decline. Most dealers in Australia are losing money and they have been battening down the hatches in ALL their franchises.
To suggest there is room in other brands for Holden employees is a real stretch; even more so now that we face the challenges of coronavirus.
By John Mellor