GM speaks out against Holden accusations
Wednesday, 6 May 2020
General Motors has denied accusations that it knew it was going to axe Holden as far back as 2015.
In a press release, the American automotive giant also defended its offer to dealers of AU$1500 per vehicle as part of its Transition Support Programme, negotiated by law firm HWL Ebsworth (HWLE) on behalf of dealers.
“The HWLE proposal made a number of inaccurate claims, assumptions and costs allocations. It also made baseless allegations of unconscionable and misleading conduct which are plainly wrong and unsupported by fact or law. These allegations are categorically rejected by GM Holden,” said the company today.
“These claims are based on a bizarre and illogical argument that GM has secretly planned to shut down Holden since at least 2015, but made various significant investments in programs, plans and strategies to support and promote Holden in order to mislead dealers into thinking that there was no secret plan to shut down Holden.
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“It defies logic to believe that GM intended to close Holden while investing heavily in new or updated right hand drive (RHD) models for the Australian market including Equinox and Acadia, launched new here in 2017 and 2018 respectively, and significantly updated Trailblazer, Trax and Colorado models introduced across a similar period.'
GM added that launches of mobility business Maven, its captive finance company Holden Financial Services and investing in right-hand drive versions of the Corvette support its case.
“Investments such as these cannot by any logic be held to be the actions of a company that allegedly intended to close through that time.”
Regarding the vehicle compensation, GM says it landed on the AU$1500 figure after using three fiscal years, 2017-2019, including sales of 'highly profitable Commodore units that were produced in Australia. It includes all facets of new vehicle profitability and amounts to AU$1500 per car.'
Interesting angle, since the Aussie new car sales figures, released monthly, showed the Commodore as a bit of a sales nightmare.
HWLE countered GM's offer with AU$6110, though GM says the PricewaterhouseCoopers (PwC) analysis of HWLE’s modelling for such amount identified a number of inaccurate assumptions and cost allocations.
“For example, it omitted to factor in dealers’ opportunity to continue the service, repair, warranty and parts activities. Aftersales is typically one of the most profitable parts of a dealer’s business representing on average up to 115 per cent of a dealer’s total net profit in 2019.
“GM Holden is committed to maintaining an Aftersales operation in Australia for at least 10 years to provide warranty, service and parts to Holden customers.
“The HWLE proposal was also wrongly based on 7.7 years of compensation when there is approximately 2.5 years remaining on the current agreement. After the wind-down of Holden new vehicle sales, dealers can continue to service and repair vehicles through to the end of the current agreement.
“PwC, after making appropriate corrections and adjustments, concluded that an appropriate range of compensation is actually AU$350-1409 per vehicle.
“GM Holden’s offer also includes compensation for un-recouped Holden facility investments. These are valued independently and dealt with separately in addition to the compensation offered using the formula discussed above.”
If dealers accept GM's offer, they will be allowed to continue as Holden authorised service operations beyond the current agreement.