The Supreme Court of Victoria has ruled US car giant General Motors didn’t breach its agreement with Australian dealers when it axed the Holden brand five years ago.
In February 2020, Holden announced it would cease operations in Australia at the end of that year, leaving its network of almost 200 dealers with one fewer brand to sell – or with none at all.
GM offered compensation to dealers – reported to be the equivalent of $1500 for every car sold in 2019, as well as for showroom upgrades – which some, but not all, accepted.
This resulted in 11 dealers who didn’t take the compensation package escalating their dispute with GM to Victoria’s Supreme Court, alleging they had entered into contracts in 2018 to receive new Holden vehicles for five years.
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However, the court today ruled GM didn’t breach its dealer agreement, a result which has now been described as “a massive blow” by the peak industry body for car dealers in Australia.
“Today will come as a massive blow to those Dealers who have gone through the exhausting and emotional process of taking on a giant multinational car company,” said Australian Automotive Dealer Association (AADA) CEO James Voortman.
“The legal argument successfully put forward by GM that they had no obligation under the Dealer Agreement to supply cars to their retailers is incredibly disappointing and sets a dangerous precedent for the automotive industry.
“These dealers upheld their end of the bargain. They invested in facilities, employed staff and dedicated their talents to selling Holden vehicles in the communities in which they operate because they were led to believe that the Holden brand was set to stay in Australia for the long haul.
“The way in which Holden pressured its Dealers into accepting compensation offers resulted in rebukes by Commonwealth Ministers, a censure by the Australian Parliament and criticism from the competition watchdog.
“This highlights the importance of the franchising protections announced by the Government earlier this week and it is critical that we achieve bi-partisan support and enact these measures as soon as possible.
“There also needs to be a conversation about how franchisees access justice. Large companies are only too happy [to] go through a court process which is costly and can take years to get an outcome.”
GM Australia & New Zealand gave CarExpert a simple response when contacted for comment.
“We welcome the decision,” the company said in a statement.
Earlier this week, the federal government announced it had extended the protections laid out in the Unfair Contract Terms and Unfair Trading Practice to automotive dealerships.
This has been tied in with a two-year, $7.1 million investment for the Australian Competition and Consumer Commission (ACCC) to better enforce the Franchising Code of Conduct, a new version of which comes into effect on April 1.
While Holden is no longer a brand available in new car showrooms, GM retains a presence in Australia.
Its General Motors Specialty Vehicles (GMSV) operation continues to sell the Chevrolet Silverado and Corvette, and it’s due to begin deliveries of the Cadillac Lyriq electric SUV and the GMC Yukon large SUV later this year.
Despite Holden being shuttered at the start of 2021, the brand continued to compete in the Australian Supercars Championship until the end of 2022, before most teams switched to the Chevrolet Camaro in 2023 – despite the fact it hasn’t been officially sold locally since 2020.
