Politics

Senate inquiry to report on Holden loss

A Senate committee is set to hand down its findings on the impact of Holden’s departure from Australia and also on the broader relationship between car manufacturers and their dealers.

The education and employment references committee has been examining the impacts of Holden’s loss on its employees, dealers and car owners following the decision by US parent company General Motors to retire the brand at the end of last year.

Its terms of reference were expanded to include wider questions over how dealers are treated across the sector, prompting submissions outlining the “profound power imbalance” that exists between the producers and the people who sell their vehicles.

During the hearings, Australian Automobile Dealer Association chief executive James Voortman told the inquiry the problem was highlighted by GM’s decision to close down the Holden brand.

Despite most dealers eventually agreeing on terms, a number were upset at the level of compensation offered by GM.

“The franchising code of conduct and its weak dispute resolution mechanisms were no match for the Detroit-based Fortune 500 company,” Mr Voortman said at the time.

“Unfortunately, this issue goes beyond the actions of one brand.

“The relationship between manufacturers and dealers is characterised by a profound imbalance in power.”

The Senate report is expected to address those issues in its report due on Thursday, but its findings were pre-empted by the federal government last week when it announced major changes to franchising regulations in the auto sector.

Under the changes, car manufacturers face fines of up to $10 million for unilaterally changing contracts with dealers, providing insufficient compensation or reneging on warranties.

Prime Minister Scott Morrison compared his motoring plan to a news media bargaining code recently imposed on Facebook and Google.

“We expect big multinational companies to deal with Australian companies fairly and to do the right thing,” he said.

“They’re not allowed to come and ride roughshod and justify it on the changes to their business models for decisions taken in other parts of the world.”

In respect to Holden, some of the most damning testimony to the Senate committee came from former senior company executive John Crennan who said GM’s tactics were both “disrespectful and hurtful” and a “king hit” to dealers, owners and fans.

Mr Crennan, who also headed up Holden Special Vehicles and the Holden Racing Team, said no one could deny GM the right to exit the Australian market if it was no longer profitable.

“But I believe all stakeholders, past and present are certainly entitled to question what appears to be, to use a football term, a king hit behind play,” he said.

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