General Motors “exploited” its dealers in the closure of the Holden brand in Australia, a Senate inquiry has been told.
The Australia Automotive Dealer Association told the inquiry on Monday that in the months leading up to the closure announcement in February, GM had recklessly allowed dealers to continue with costly upgrades to their facilities.
The association chief executive, James Voortman, said the company had then refused to negotiate fairly to provide dealers with proper compensation.
“GM seem to be a law unto themselves and are the epitome of a large powerful offshore multinational using its position of power to exploit the smaller businesses it deals with,” Voortman said in an opening statement on Monday.
“They have set a very dangerous precedent and in the process, they have emboldened other vehicle manufacturers to exploit the imbalance in power that exists between them and their dealers.”
Voortman said for some time his association had been calling for stronger regulatory measures to govern the relations between Australian dealers and offshore manufacturers.
He said the Holden example was further proof that the franchising code of conduct remained “impotent and grossly inadequate” in protecting dealer interests.
“I cannot overemphasise the level of urgency with which such regulations need to be put in place and in particular we need a better system to resolve disputes, with a system of binding arbitration when mediation fails,” he said.
As part of Holden’s departure from Australia and with 1.6m of the brand’s vehicles still on Australian roads, GM has committed to honouring all recalls and warranties and to making spare parts available for at least 10 years.
But Voortman said GM should demonstrate what money it had set aside to honour its commitments.
“GM does not have a good track record in this area,” he said.
However, in a written submission to the inquiry, the Australian Automotive Aftermarket Association said GM’s departure would not have a marked effect on owners.
“The Australian auto aftermarket will be able to source parts, provide regular service and repair these vehicles,” it said. “This is a situation that is unique to Holden.
“Unlike every other brand on Australian roads, Holden ensures repair and service information is available on fair and reasonable commercial terms to the 23,000 independent auto repair workshops in Australia.”
On Monday the industry minister, Karen Andrews, announced the government had deregistered Holden from its automative transformation scheme, which will mean it is cut off from more than $1m in reimbursement for research and capital spending.
“I, like most Australians, was extremely disappointed at GM Holden’s decision to walk away from our country, their local workers and loyal dealers,” Andrews said in a statement.
“Australian taxpayers have given this multinational company more than $2bn in financial assistance over recent years, and it still decided without consultation to wind up the Holden brand in Australia.”
The inquiry is continuing.