Local car dealers and their employees will be affected by General Motors’ decision to kill off the Holden brand in Australia.
Australian Automotive Dealer Association (AADA) says this highlights the need for strong automotive franchising laws.
“There has been a lot of talk about the 600 jobs that will be lost at Holden’s head office. These amount to very little compared to the people employed in Holden dealerships both in regional and metro Australia, a figure which could be as high as 6000,” AADA chief executive James Voortman says.
“As I have spoken to Holden dealers in the past 24 hours, I am struck by how poorly this was all done. It is clear that the local management of Holden were blindsided by a decision made in Detroit.”
The AADA is happy with Holden saying it will put in place “appropriate transition arrangements” provided it is seen.
“Dealers typically own millions of dollars’ worth of vehicle inventory, special tools and equipment, parts and bespoke facilities built to the exacting specification of the manufacturers. On top of that, dealers have often invest in long-term leases, extending to a decade or more of these facilities. We know of dealers who are in the process of spending significant capital in upgrading or building showrooms, an investment demanded of them by Holden. There are also Holden dealerships that have changed hands through a sale process recently.”
The AADA expects this to be taken into consideration when dealers receive their compensation packages.
It questions why dealers were able to invest significant sums of capital to grow a brand that was going to be withdrawn.
“This just highlights the massive power imbalance between multinational vehicle manufacturers and local car dealers. Simply put, Australia needs strong automotive specific franchising laws similar to those in the United States,” Voortman adds.
The AADA represents all Holden dealers and will be writing to the prime minister, requesting a meeting with a delegation of Holden dealers to discuss the effects of this decision on dealers, their employees, and customers.
