HOLDEN’S 185 Australian dealers have run out of patience in their stalled negotiations for a compensation settlement with GM Holden (see separate story) and have written to global chief Mary Barra saying that she could be required to give evidence in a planned trial in Australia for which legal funding is currently being arranged.

In an email to Ms Barra, which GoAutoNews Premium has seen, the dealers have said it is their intention to use Section 1782 of the United States Code which requires US citizens to assist foreign tribunals and litigants before such tribunals to give testimony, or a statement or produce documents for use in a foreign proceeding.

The letter says that dealers will be seeking depositions from Ms Barra and other senior GM executives “regarding the extent of the concealment” from Holden dealers of “GM and GM Holden’s plans to wind down sales, design and engineering operations in Australian and New Zealand and retire the Holden brand”.

The letter warns that GM must retain all corporate records in regard to the action.

GM Holden has consistently denied any wrongdoing and maintains that its offers to dealers are fair.

In the letter to Ms Barra, the dealers allege that GM and GM Holden have contravened the Australian Consumer Law (ACL) and ASIC Act by consistently making representations to dealers who were entering into dealer agreements that Holden was in the market for the long term and “by their silence” failed to disclose there was a risk Holden would close down in Australia.

The letter says that Holden dealers relied on public assurances and that they incurred liabilities in the expectation of renewing dealer agreements to recoup investments that had been made whilst others relied on these assurances to buy Holden dealerships. It alleges that, during that time, GM and GM Holden “were aware that there was a risk” that GM was going to retire the Holden brand in Australia.

The letter outlines numerous statements by various top Holden managers over time about the long-term future of Holden in Australia which it says encouraged dealers to continue to invest in the Holden brand at a time when someone or some people in GM knew these statements were not correct and failed to alert dealers.

September 2016: “Holden will introduce four new SUVs by 2018. That puts us in a great position in the fastest-growing segment of the market. With the new Colorado ute on sale from this week, Holden has begun its promise to launch five new vehicles over the next five months to accelerate our showroom revolution.

“The vehicles we’ve revealed reinforce our commitment to introduce the finest global vehicles for Australian customers. The Acadia will be sourced from the US, the Astra from Europe, and the Barina, Trax and Trailblazer from Asia. Holden is in a unique position where we can provide our customers with the best of the best from around the GM world.”

October 2016: Holden is “committed to maintaining the car-maker’s 230-strong dealer network, despite the brand’s declining market share. There are no plans to reduce the number of sales and service outlets around the country. We are comfortable with the network that we have got. You look at dealers and they are well dispersed around the country and one of the strengths we have is that dealer network.”

December 2017: “Our future is very bright. We’ve got some really good friends in Detroit.”

April 2018: “We have great backing from GM, as demonstrated by the product portfolio today and into the future. Like any business transformation, we get some things right and some wrong. It’s important we continue to stay nimble and be able to course correct when required.”

April 2019: “The launch of Holden Financial Services reflects General Motors’ confidence in the future of Holden. Many Holden dealers and customers have consistently told us that they would like the choice of a captive finance company as they consider finance options for a new vehicle purchase. We are delighted to now be able to offer Holden Financial Services, backed by the strength and global footprint of GM Financial.”

February 2019, at a GM Holden dealer conference: “I’m looking directly at you. Believe me, it’s not going to happen. There is no plan (to change distribution). I did not join the company to close Holden.”

The letter goes on to allege that “Holden and GM knew (GoAuto Note: but not necessarily those who made the representations) that the representations were false, misleading or deceptive or likely to mislead and deceive”.

The letter said, among other things, that as far back as 2009, when GM went into Chapter 11 bankruptcy, GM was considering selling or closing Holden’s business, that GM Holden and GM would have known that the future viability of GM Holden’s business in Australia was in question once Holden ceased manufacturing and that GM and GM Holden “have known for a considerable period of time that GM was considering exiting the right-hand drive market which would result in GM Holden’s business being unviable”.

The letter goes on to allege that “the five-year term of the dealer agreement is unconscionable”, given that (among other things):

• Dealers are never given an opportunity to negotiate the term of the dealer agreement.
• GM Holden encourages or acquiesces in the sale of dealerships for significant amounts of money by allowing dealer agreements to be assigned and granting the new dealer a fresh term to justify the investment (rather than allowing the new dealer to operate the balance of the assigned term of the dealer agreement).
• Holden requires or encourages dealers to make significant capital expenditure in their dealership facilities.
• GM and GM Holden know that a dealer cannot recoup its investment within the five-year term of the dealer agreement let alone for a lesser period.

By John Mellor