Holden Dealers Threaten Lawsuit Over GM Killing Brand
For almost 200 Holden dealerships in Australia, the news that GM was killing the brand was a shock. The seminal Australian company had existed in one form or another since 1856. Now, Holden dealers are threatening a lawsuit over GM killing the brand. They say GM was “deceptive” and acted with “unconscionable” conduct in the weeks leading up to the announcement. This in spite of GM wanting showroom upgrades and promising long term commitments to the brand.
The dealer’s law firm threatens a lawsuit if dispute can’t be resolved
The law firm HBL Ebsworth working on behalf of the dealers says GM knew “for a considerable period of time that it was considering exiting the right-hand-drive market which would result in…Holden business being unviable.” It is also asking that all internal records pertaining to Holden-related decisions be preserved because “if the dispute cannot be resolved legal proceedings will be commenced in Australia against Holden and General Motors.”
GM doesn’t comment on pending litigation while commenting, “Holden does not comment on actual or threatened litigation. Holden strongly disagrees that it has acted improperly. Holden believes the compensation offer to its dealers is fair.” One thing to keep in mind is that GM in the past decade or so has shed half-a-dozen brands. It has plenty of experience in killing off dealerships as well. So while this could be a move to get a better dealership package there is plenty of precedence for killing off Holden.
The suit alleges GM knew it would kill the brand but kept those plans from dealers
The lawsuit further adds that General Motors and Holden “consistently made representations to dealers to the effect that Holden was staying in the Australian market in the long term and would continue to sell motor vehicles” and “by their silence, they failed to disclose a risk that … Holden would cease its operations in Australia.”
GM based dealer compensation of $1,500 average per car per a set period. But accounting firm KPMG says dealers should actually be paid $6,100 per car sold over a similar period. KPMG also states New Zealand Holden dealers are to receive about $2,500 more than its Holden counterparts.
GM says only 650 people will be affected while dealers estimate 9,000
There is also a huge disparity between how many affected people are involved between the dealership and GM estimates. Holden dealers say the number is over 9,000 while GM says 650. Of those 650 GM says most will be absorbed by other dealerships.
Once the announcement of Holden being dropped there was a rush on dealerships to snap up the last of the Holdens. As a result, most dealers are almost completely sold out of vehicles. Only a very limited supply of colors and options remain.
While Holden supplies were expected to last until December dealers will run out by June
GM initially said that dealers would have vehicles mostly up to the end of 2020. Now most dealers say they won’t have any cars left by June.
Holden was the last of three vehicle manufacturers in Australia. Both Toyota and Ford assembled vehicles there for decades. Ford, building vehicles there for 91 years stopped manufacturing there in 2013. Toyota stopped building there in 2017. Both Ford and Holden had development facilities there, too.