A Senate committee has called on Australia’s competition watchdog to fast-track its investigation into General Motors’ decision to kill off the iconic Holden brand and its “disappointing” treatment of local car dealers.
The committee report, released on Thursday evening, follows a year-long inquiry into the circumstances surrounding the February 2020 decision to end the Holden brand’s 160-year association with Australia.
The Senate report found General Motors had failed to treat local dealers with respect.
“While acknowledging and respecting the right of private companies to make their own decisions, the committee condemns as un-Australian the actions of GM in the lead-up, during and following the shutting down of Holden,” it states. “The committee censures GM for their treatment of Holden dealers, employees and their families.”
The committee recommended a new set of rules to govern what happens when a car manufacturer decides to pull a brand from a market – leaving dealers in the lurch.
It also recommended that “the Australian Competition and Consumer Commission expedite its investigations into the behaviour and actions of GM Holden”.
The Holden decision meant 185 dealers across the country were locked into franchise agreements for a brand of vehicle that was no longer being made, leaving them financially vulnerable.
Senators were told the power imbalance between global car giants and dealers meant many later felt compelled to accept low-ball offers of compensation.
James Voortman, chief executive officer of the Australian Automotive Dealer Association, welcomed the report’s findings saying it was “comprehensive.”
“It’s a long time coming,” Voortman said.
“Everyone came together, the government, the opposition, to ensure dealers are protected in a fast-changing industry. What’s really encouraging is that the Morrison government has already announced it will be putting together reforms.”
Some of the recommendations have already been picked up by the federal government. It announced last Friday a series of reforms to laws around franchise arrangements that would see large fines for global car companies whose actions damaged local dealers.
The focus of the upper house inquiry morphed over time to look at the relationship between car manufacturers and dealers more broadly. That’s seen as particularly relevant as the market changes with the introduction of electric vehicles.
While the decision to stop making Holden vehicles was unique, the report states “structural change” in the global automotive industry and Australia’s unique car market is seeing other car brands change how they sell vehicles.
In many cases, there is a move away from traditional models where the dealer owns the cars and takes the risk of selling them, to “agency models”, where the dealer delivers the car to the client.
“You only need to look at what’s happening in the market at the moment, you’ve got Honda that’s moving from a traditional dealership model to agency,” Voortman said.
“Mercedes is doing it too, as are other manufacturers in Europe with their electric vehicles. There is no doubt though that companies like Tesla are causing other manufacturers to ask whether they need to adjust their models.”
Behyad Jafari, the chief executive of the Electric Vehicle Council, said the agency model was “probably the most exciting thing happening within the automotive space at the moment”.
Jafari said the report’s recommendations – if adopted – would stop the most egregious behaviour by global car companies as they begin to phase out their internal combustion vehicles and reinvent their business models.
“A lot of car companies start their business model with their EV options but new technology sees them think about new ways of doing things – which feeds into a conversation about the future of mobility,” Jafari said.
“The reality for these car manufacturers is that they’re looking at potential competition like Amazon and Apple – tech and retail giants. It’s no longer BMW versus Mercedes or Ford versus Holden. Anyone could come and disrupt the business model.”