Holden recently sent its letter saying it wanted to set the record straight on the progress of its negotiations but the letter only served to create more debate with serious allegations by the Holden dealer council that it contained many “falsehoods”, “mischaracterisations of the truth” and “reckless assertions”.
For details of Holden’s letter see here:
The dealer council said in its response to the GM Holden letter: “We believe the letter was designed to convince Australia’s leaders that all appears headed to a reasonable settlement on mutually agreeable terms.
“This is regrettably not the case, and we are quite certain you can tell that this is full of falsehoods and is clearly self-serving and typical of how GM treats both the government and public.
“We are instead purely focused on a reasonable outcome for the many people and families that depend on Australian Holden dealerships for their livelihood,” the dealer council said.
In an attachment to the letter the dealers revealed that far from Holden achieving “a mutually agreed settlement”, Holden was refusing to speak to HWL Ebsworth Lawyers (HWLE), the law firm appointed by the dealers to act for them in the settlement negotiations.
“This is an intentional tactic to force dealers to accept whatever offer is put to them by Holden without having the benefit of HWLE negotiating a better outcome on their behalf,” the dealer letter said.
Here is the Australian Holden Dealer Council letter to Senators plus the attachment to the letter:
An open letter to Members of The Australian Senate
Although the entire Australian community has been so obviously focused on the recent COVID-19 threat, the Australian Holden Dealer Council nonetheless felt it had no choice but to correct the record concerning a curiously timed and contentious letter you would have received this week from GM Holden.
In that letter, it purports to reflect the enactment of a meaningful and reasonable engagement process with us regarding a mutually agreed settlement in response to their surprise removal of the Holden brand from the Australian market.
We regard such assertions as a total mischaracterisation. We believe the letter was designed to convince Australia’s leaders that all appears headed to a reasonable settlement on mutually agreeable terms.
This is regrettably not the case, and we are quite certain you can tell that this is full of falsehoods and is clearly self-serving and typical of how GM treats both the government and public.
We do not wish to respond to GM Holden’s correspondence line by line in this overview page, as we do not consider it a reasonable use of your time in recognition of the current challenges. We are instead purely focused on a reasonable outcome for the many people and families that depend on Australian Holden Dealerships for their livelihood.
Nonetheless, the Australian Holden dealer people, jobs and families still need your help throughout this difficult time by ensuring:
- a) You are aware that our primary focus is on the coronavirus and its impact on our community, but we felt we had no choice but to also communicate directly with you to ensure you were not of a view that somehow things look headed to a positive settlement between Australian Holden dealers and GM Holden – they do not;
- b) We still need your support going forward in calling upon GM Holden to engage with us in a reasonable, respectful and consistent manner whenever that may be possible outside of your community responsibilities concerning the pandemic.
Again, we find it regrettable that GM Holden chose this week to correspond with you concerning these issues.
We do not intend to be a distraction from the very important work you and others are currently undertaking on behalf of our community. We do, however, have responsibilities to the approximately 9,366 people that work within Holden dealer’s businesses, and of those the 7,978 that are directly involved in the Holden business within those sites. If we are not defending their futures with you and your colleagues in the Federal Parliament, no one is.
We sincerely appreciate your support and also wish to convey our support to you personally in a very difficult and trying time for our country.
If you do have further particular interest, over the page, we have identified a number of what we believe have been reckless assertions or mischaracterisations of the truth in GM Holden’s letter.
Here is the attachment to the dealer council letter to Senators:
The Holden dealers have appointed HWL Ebsworth Lawyers (HWLE) to act for them in speaking with Holden.
Holden is refusing to meet with HWLE. This is an intentional tactic to force dealers to accept whatever offer is put to them by Holden without having the benefit of HWLE negotiating a
better outcome on their behalf.
Holden say they continue to deliver a commitment to treat stakeholders fairly.
Their offers have the potential to send many Holden businesses into financial ruin and do not meet on any level, a test of fair and reasonable.
Holden claims to be undertaking a professional and respectful wind down.
Holden are providing a half A4 page of paper with a couple of numbers – no detailed explanation of how the compensation was calculated, no guidelines regarding unamortized capital expenditure claims, no inclusion of consequential losses – removal of signage, redundancies and in some cases loss of HSV dealerships.
An arbitrary application of whether a dealer is a sole holden dealer site – some are offered extra money, some are not.
The extra money when offered, is only on one years sales, the most recent, and worst since 1951.
A draft Holden Service Operations Agreement (HSO) is being emailed after the meeting, so it cannot be discussed at the time. Holden say there is a policies and procedures document that informs how the HSO is to be performed, but that is not available.
Some dealers have been advised if they don’t accept the offer they will be left on the existing agreement – with no cars to sell – until that expires in 2022 and then, no HSO. This amounts to unfair and coercive tactics.
Holden is finishing up the majority of its own employees by the end of June. There will be little to no support for dealers who are left on the existing agreement.
Holden says 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.
Dealers expect the attrition of this customer base to be similar to a rule of 72 fall.
Holden says dealers are being offered a compensation package that takes into account the financial impact on their business of the loss of new vehicle sales, as well as unamortized capital investment and signage.
This is not true, at all. KPMG confirm the offers fall very significantly short of such a figure.
Holden say the compensation formula was designed to be favourable to dealers by looking back three years to 2017 when Holden sales and the overall industry were stronger. Holden is basing their compensation on 2019 – Holden’s lowest sales volume since 1950 – not 2017 sales on which dealers entered the agreement, or 2017 targets on which dealers based assumptions, which were significantly higher than the unit numbers being applied in their formula.
Holden say ‘Any assertion that all dealers have received our offer and rejected it is false’
The AHDC is not aware of any dealer that intends to accept their offer.
Holden say ‘Many dealers who have received the offer are now constructively working through the process.’
The dealers are simply working through what the offer means in terms of capex compensation to inform themselves of the gap.
Holden say ‘Only ten per cent of Holden dealers are solely dependent on the Holden franchise for their income.’
If you eliminate dealers’ other investments at other dealership sites or, outside the industry, you may get to their 10%. But that means that many dealers who have a detached Holden site
but own another dealership are not being correctly compensated.
Holden say ‘Over a long period of time, dealers have responded to an increasingly fragmented market and have diversified risk by taking on other brands.’
4 dealers can prove that Holden has consistently disallowed applications for multi-franchise and has caused immense loss through their unconscionable acts over the past fifteen years.
Holden says many employees will be redeployed.
Dealers cannot simply invent jobs for people.
Holden says service staff will be retained.
Dealers expect a high attrition in numbers over a short term based on historical movement of customers to alternate servicing once a car is several years old, or a used car.
Holden says they will continue to honour all commitments given to consumers at the time of purchase, including the 7-year free service commitment. They say this service commitment is funded by Holden.
This is not true. Dealers agreed to forego a significant percent of margin to fund this and, as customers drop out of the cycle, dealers do not get a refund.
We regret, the above is simply a ‘snapshot’ of the inaccuracies Holden has served to the readers of their letter.
By John Mellor