THE recent Supreme Court of Victoria ruling in Beecham Motors Pty Ltd v General Motors Holden Australia NSC Pty Ltd should send shockwaves through the Australian automotive retail sector. 

While General Motors may view this legal victory as vindication, the judgment represents a serious blow to franchise new car dealers and sets a concerning precedent for the balance of power between Original Equipment Manufacturers (OEMs) and their franchised dealers.The heart of the case was GM’s decision in early 2020 to retire the Holden brand – years before the expiry of its five-year dealer agreements set to run until December 2022. 

Dealers, who had made significant capital investments based on these contracts, argued that GM had breached an implied obligation to supply Holden vehicles throughout the term. 

The court, however, disagreed. Justice Lisa Nichols found no such obligation existed, either express or implied, and that Holden had merely committed to “endeavour” to supply vehicles—not guarantee it.

A precedent that erodes franchise certainty

Without wanting to pass judgement on the decision of the Holden case or any other case, this ruling has real-world consequences that stretch beyond Holden. 

It effectively tells all franchise car dealers in Australia that OEMs can retain broad discretionary control over supply—and that the significant financial commitments and exclusivity obligations dealers make will not necessarily be met with reciprocal responsibilities from the manufacturer.

Justice Nichols noted that while the “availability of cars for retail sale is at the centre of the parties’ relationship,” the agreement did not confer “a general right on the dealer to sell Holden branded cars from dealership premises.” 

OEMs, therefore, can reduce, restrict or cease vehicle supply with limited contractual exposure. For existing and future franchisees, this strikes at the core of commercial certainty.

Unintended consequences: the rise of retailer independence

This decision may have inadvertently given rise to an ironic result. 

If manufacturers are no longer bound to supply product or sustain the brand, and the courts do not enforce the commercial expectations traditionally associated with franchising, then why should dealers continue to uphold exclusive obligations to OEMs? – Steve Bragg, Pitcher Partners

For decades, dealers have accepted strict controls on their operations—including extravagant facility CI requirements, brand exclusivity, onerous service standards, and unachievable performance targets—on the assumption that OEMs would provide product and support for the agreed term. 

If that is no longer legally enforceable, we may see a wave of resistance from dealers against exclusive arrangements.

Dealers may begin diversifying the brands they represent in solis premises, embracing parallel import options, or building multi-branded, independent retail operations that better serve their commercial interests. 

The ruling effectively reduces OEM leverage and incentivises dealers to reassess their obligations—particularly around exclusivity and capital investment.

A Catalyst for Franchise Reform

The implications of this ruling are wide ranging. 

OEMs face the risk of losing the loyalty of their dealer networks, especially in regional areas where trusted local businesses act as vital community employers underpinning their local economies. 

By eroding mutual obligation, the ruling weakens the franchising model that has underpinned Australian automotive retail for many decades.

More broadly, this judgment underscores the urgent need for legislative reform to better protect franchisees. 

Industry bodies (AADA and the state based MTAs) have and continue to advocate for clearer minimum supply obligations, enforceable investment protections, and stronger dispute resolution frameworks.

Read more:

Supreme Court finds in favour of Holden

If these reforms are not legislated, we risk creating an environment where OEMs can dictate terms with minimal regard for the financial viability of their partners.

Final Thoughts

GM’s legal win may seem like a clean victory (from their perspective), but it comes at a reputational and strategic cost. 

Dealers will rightly feel exposed, unsupported, and at risk of carrying all the commercial downside with limited recourse. 

If this decision is the new benchmark for franchise relationships in Australia, then the traditional OEM-dealer model may soon be headed for significant transformation.

It’s time for dealers to take stock, re-evaluate their risk exposure, and consider new business models that place their businesses—not the OEM brands—at the centre of the value chain.