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General Motors’ (GM) deadline to its Dealers to sign up for its compensation offer has arrived today and many Australian businesses have been left with no choice but to reluctantly accept the unfavourable terms put to them.

GM flat out refused a Federal Government request to extend the deadline and refused to participate in arbitration with its Dealers.

“Over the past four months, 184 Holden Dealers have remained united in their opposition to the grossly inadequate offer of compensation from GM. Ultimately, GM’s complete unwillingness to negotiate and the prospect of a costly and lengthy court battle has had the desired effect,” said AADA CEO James Voortman.

“GM has annual revenues of $200 billion and the prospect of fighting them in court was just not an option for many of the dumped Holden Dealers,” he said.

“GM’s actions saw both sides of politics combine to launch a Senate Inquiry, it has led to the ACCC pressuring them into mediation and has drawn pleas from Federal Ministers for them to negotiate in good faith,” Mr Voortman said.

“At every turn, GM has thumbed its nose at local Dealers, the Australian Government and by extension the Australian public, the same public which provided the company with more than $2 billion in taxpayer funded assistance,” he said.

“This has set a dangerous precedent and Australia urgently needs to strengthen its Automotive franchising regulations to protect local businesses against the heavy-handed behaviour of some car Manufacturers,” he said.

“If we do not act this will happen again. The choice is clear, do we want laws which ensure local Australian Dealers are treated fairly or do we want laws that allow offshore Fortune 100 car companies to treat these local businesses and their employees with disdain,” Mr Voortman said.

“AADA will continue to advocate for urgent changes to automotive franchising regulations, but we will also try and ensure that GM is called to account in the coming Senate Inquiry,” he said.

“GM’s Senior Management needs to front up to the Senate Inquiry and answer a range of questions, such as when they first knew that Holden would be withdrawn, why they mislead Dealers and consumers about their commitment to Australia, why they refused fair compensation to Dealers and the details of its new General Motors Specialty Vehicles business,” Mr Voortman said.

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The AADA commends Minister Cash, Minister Andrews and Senator McGrath on their call for General Motors (GM) Holden to act in good faith in its treatment of Holden Dealers.

The Morrison Government has rightly taken a keen interest in what so far, has been appalling behaviour by GM and the management team it has put in place to handle the closure of Holden in Australia.

“We are pleased the Government has maintained an active interest in this case since the shock announcement by GM in February that it was closing the brand and breaching its Dealer Agreements by terminating them early,” AADA CEO James Voortman said.

“It is evident that the Government is concerned by the fact that despite years of Government support for Holden and financial assistance of over $2 billion by Australian taxpayers, GM has elected to dump and run, abandoning 185 Holden Dealers and thousands of their staff,” Mr Voortman said.

“Holden Dealers have invested a lot of money and employed tens of thousands of Australians over decades, just to be part of the Holden network,” he said.

“GM Holden has a debt to pay to these businesses and the Government recognise and understand this. The ball is in their court, it’s time for GM to take action, do the right thing and compensate Dealers fairly,” Mr Voortman said.

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The AADA welcomes the Australian Government’s call for General Motors Holden to act in good faith towards their Australian Dealers.

“Minister Andrews and Minister Cash have made it crystal clear that they expect GM Holden to negotiate in good faith with their Dealers,” said AADA CEO James Voortman.

“We urge GM to conduct their withdrawal from Australia in a way that fairly compensates the Dealers who built up the brand over decades,” he said.

“You have to say enough is enough. GM Holden’s treatment of its Dealer network since its announced withdrawal has drawn criticism from both sites of Australian politics, resulted in the establishment of a Senate inquiry and led to an intervention from the ACCC,” Mr Voortman said.

“Time is running out for these Holden Dealers and I would urge GM to take seriously this statement from our Government,” he said.

“The way in which GM is allowed to depart Australia will set the benchmark for other multinational car manufacturers and strong regulations should be adopted to stop these companies from treating Australian businesses poorly,” he said.

The AADA has been campaigning hard for a minimum set of protections for new car Dealers. A strong set of Dealer specific regulations would stop companies like GM from being able to dump and run, leaving hundreds of Australian Dealers, with billions invested in the brand, to fend for themselves.

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New ABS data released today shows record falls of 37.8 per cent in the value of loan commitments for road vehicles in April.

“These figures reflect the plunge in new car sales that occurred in April but it also demonstrates the tighter credit environment for so many customers looking to purchase a car,” Australian Automotive Dealer Association CEO James Voortman said.

“The industry has experienced two of its worst months on record due to the effects of the pandemic and much of that is low consumer confidence but there is also a more systemic issue with access to credit brought on by the banking royal commission,” said Mr Voortman.

“People who would usually present no concerns to finance companies are getting denied credit to buy cars. We need to get credit flowing in this economy and review our responsible lending laws which have simply gone too far,” he said.

“We are hopeful that sales will pick up in June which is traditionally a strong month, but beyond that it is critical for our industry that credit is freed up to bring customers back to the showrooms,” he said.

New car sales have been falling for 26 months in a row and sales figures in April and May saw some of the biggest declines on record due to the effects of the COVID-19 pandemic.

New car Dealers are located in cities and country towns across Australia, where they employ around 60,000 people and are responsible for more than $55 billion in sales.

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The industry body representing new car Dealers has welcomed the extension of the expanded instant asset write-off until the end of the year.

“This is very welcome news for car Dealers and we hope that this will help our industry recover from the significant downturn we have experienced in new car sales,” AADA CEO James Voortman said.

“I would like to congratulate the Government on this announcement which will encourage businesses to invest during a time in which our economy will need it,” he said.

“I would urge eligible businesses looking to invest in a vehicle to do so before the end of the financial year as there are some very good deals to be had,” Mr Voortman said.

“While this is very welcome news, we will continue to call on the Government to remove the car limit of $57,581 which applies to the instant asset write-off. There is no justification for a car limit. There are no limits on other goods and we’ll be asking the Government to review this,” he said.

The AADA has been calling for the extension of the instant asset write-off along with a number of other measures to help the industry through this difficult time.

New car sales have been falling for 26 months in a row and sales figures in April and May saw some of the biggest declines on record due to the effects of the COVID-19 pandemic.

New car Dealers are located in cities and country towns across Australia, where they employ around 60,000 people and are responsible for more than $55 billion in sales.

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New car sales figures continue to plunge to record lows as the month of May represents the 26^th month of falling sales amid a significant credit crunch.

Less than 60,000 cars were sold in the month representing a fall of more than 35 per cent over the same period last year, the biggest decline in May on record.

“The effects of the pandemic has taken its toll on Australia’s Dealers, and these businesses in cities and regional towns across the country are doing it tough,” AADA CEO James Voortman said.

“Usually May and June are our best months as we head into the end of the financial year. All I can say is thank goodness for the JobKeeper program which has saved so many jobs during these tough times,” he said.

“The biggest issue constraining the recovery in our industry is access to credit for consumers. So many people who would usually present no concerns to finance companies are getting denied credit to buy new cars. We need to get credit flowing in this economy and review our responsible lending laws which have simply gone too far,” he said.

“It is now clear that the Government should consider a stimulus for the sale of new cars. So many other countries are currently providing consumers with incentives to buy new cars which are safer, cleaner and more efficient than the cars they replace on our roads,” he said.

“The effect of today’s figures and the broader 26-month downturn should not be underestimated. Passenger cars are Australia’s third biggest import; dealerships employ nearly 60,000 people and the wider automotive industry employs more than 300,000 people,” Mr Voortman said.

“New car Dealers are so important to local economies, through the employment they provide, the many local businesses they use as suppliers, the advertising they undertake in local news, the sporting teams they sponsor and the billions they contribute to tax for Federal and State Governments,” he said.

The AADA has developed a number of measures for the Government to consider to assist the automotive industry in its recovery.

 

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The industry body representing new car Dealers acknowledges new automotive franchising regulations but has urged the Government to move urgently to address unresolved issues which allow offshore car Manufacturers to squeeze local Dealers.

“These regulations which begin today are a good first step, but given recent developments with General Motors’ termination of 185 Holden Dealers, it is clear we have to go further,” AADA CEO James Voortman said.

“The real announcement today is the Government’s commitment to work towards developing an industry standard for compensation and also address the issue of tenure in Dealer Agreements,” he said.

“These are very important issues and they need to go beyond yet another roundtable and result in action,” he said.

“An industry standard for compensation must establish a fair and reasonable framework for those car Manufacturers who are looking to exit the country, rationalise their Dealer networks or change their distribution model,” he said.

“Dealers commit significant investments in capital, and many have formed decades-long partnerships with Manufacturers. They deserve fair and reasonable compensation when these agreements are ended prematurely and unexpectedly,” said Mr Voortman.

“It’s also important that we address security of tenure and consideration of a reasonable minimum term for Dealer Agreements, something the ACCC addressed in its 2017 market study,” he said.

“Taking on a new car franchise is an incredibly costly exercise and profit margins are very slim. Dealers deserve to be given agreements which are long enough to enable them to recover investments. Currently there are Dealers on one-year agreements which is just manifestly inadequate,” he said.

“It is important that the Government moves to put stronger protections in place as soon as possible. The industry is in a state of change and Manufacturers are actively considering changes to how they distribute products. They naturally have the right to do so, but it’s important that any changes are fair and transparent for affected Dealers,” said Mr Voortman.

“We need to encourage investment and to ensure that local car Dealers have the confidence to hire people and undertake the economic activity needed to support the many small and medium businesses that do work with car Dealers especially in those communities recovering from drought and bushfires as well as coronavirus,” he said.

New car Dealers are located in cities and country towns across Australia, where they employ around 60,000 people and are responsible for more than $55 billion in sales.

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The industry body representing new car Dealers has called on the Government to focus on renewing our vehicle fleet as new data shows the age of our fleet is falling further behind the rest of the world.

The ABS Motor Vehicle Census shows the average age of passenger vehicles has now reached double figures and is 10.1 years. The average age of light commercial vehicles also rose and now sits at 10.6 years.

“We need to work towards lowering the age of our cars and getting newer cars on our roads which are safer, cleaner and more efficient than the older cars they replace,” AADA CEO James Voortman said.

“This data shows that over the last five years both our passenger car and light commercial vehicle fleets have been getting older,” he said.

“Amid the pandemic, there is evidence that many people are nervous about using public transport and are considering purchasing a car. There is an opportunity for Government to help those people into a newer car and in the process support an industry which is struggling,” said Mr Voortman.

“The Government should design policies which assist in renewing the fleet. For example, the instant asset write off has helped, but can be made more effective. The scheme currently applies a limit of $57,581 on cars. There is no rationale for this limit and many businesses that may have taken advantage of this initiative have been left frustrated and confused,” he said.

“COVID-19 has also seen many consumers struggling to get credit as individuals utilising JobKeeper are being treated as high risk by credit providers and being denied credit. It is going to be difficult for this industry to recover if credit is frozen and there is an opportunity to provide a guarantee and exemption from responsible lending laws similar to that which has been provided to SMEs,” he said.

“Unfortunately governments, both federal and state have done very little to incentivise newer cars in recent years and taxes such as import tariffs, the luxury car tax and vehicle stamp duty have only inflated the prices of new cars,” said Mr Voortman.

“In other parts of the world governments are currently developing significant stimulus packages for their automotive industries in recognition of the sector’s economic importance, but also as a way of lowering the age of their vehicle fleets and achieving the associated benefits of a younger fleet,” he said.

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