Holden fallout continues with questions raised about GMSV deal

Holden dealers are still unhappy with their compensation offer from General Motors.

Holden will not go quietly into the night.

Any hope General Motors had of smoothly closing the long-serving brand have vanished as its plans continue to get more complicated. This week it emerged that dealers are still unhappy with their compensation offers and now a possible investigation into plans to establish General Motors Special Vehicles (GMSV).

According to a report in The Sydney Morning Herald, Senator Deborah O’Neill has written to the chairman of the Australian Securities and Investments Commission (ASIC), James Shipton, asking for an investigation into the American company’s plans for its GMSV. Senator O’Neill is reportedly concerned about “a potential phoenixing situation” – a business practice that typically involves taking the key assets from one company and transferring them to a new entity that does largely the same business; it can be illegal in certain circumstances.

COMMENT: Why Holden couldn’t be saved

Senator O’Neill is apparently concerned that GMSV could involve GM Holden directors while Holden still has on-going liabilities to its dealer network. She also questioned GMSV business model of selling GM models in Australia is “almost identical to GM Holden.”

GMSV is expected to be a partnership with Holden Special Vehicles (HSV) to offer selected GM models – such as the Chevrolet Silverado pick-ups it current converts in Melbourne – through its current dealer network.

There is no word yet if ASIC will formally investigate General Motors and Holden based on the Senator’s letter.

Holden’s departure from Australia is proving difficult for General Motors

It comes the same week GM and the Australian Holden Dealers’ Council (AHDC) had their latest public spat over compensation. The two sides have been locked in dispute since GM announced plans to shutter Holden in February.

The dealers have repeatedly rejected GM’s offer of $1500 per vehicle, instead claiming they are owed $6110 per car. The two sides have exchanged legal letters this week but Holden issued a statement to publicly defend itself against the dealer claims.

The statement read, in part: “We steadfastly maintain that our offer of compensation to Holden dealers for the loss of new car sales business is fair, reasonable and indeed generous, as confirmed by the analysis by PricewaterhouseCoopers. In 2019 dealers lost on average $605 per new car sold, and only made $351 per new car over the 2017-2109 period. GM Holden is offering $1500 per vehicle based on 2019 sales and has not adjusted this for the severe deterioration of industry sales.”

Holden has also offered additional compensation to dealers who invested in new or upgraded showrooms, at the company’s request, and offered five-year contracts to continue servicing Holden models after the brand has formally closed.

Holden says it remains open to negotiating with the AHDC until June 30.

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