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Local businesses to suffer from Holden axing

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
19 February 2020 2 minute readShare
Holden

Holden’s axing is sighted to hurt local businesses, with the Australian Automotive Dealer Association urging the government to enact strong automotive franchising laws.

With General Motors announcing on Monday that Holden is shutting its doors to Australia and New Zealand by the end of the year, leaving 600 unemployed, the AADA has now warned that the number of affected jobs could actually be as high as 6,000 once Holden dealerships are taken into account.  

“There has been a lot of talk about the 600 jobs that will be lost at Holden’s head office. These amount to very little compared to the people employed in Holden dealerships both in regional and metro Australia, a figure which could be as high as 6,000,” said AADA CEO James Voortman.

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“As I have spoken to Holden dealers in the past 24 hours, I am struck by how poorly this was all done. It is clear that the local management of Holden were blindsided by a decision made in Detroit.”

While the AADA has welcomed Holden’s announced “transition arrangements” for dealers, it has demanded to see the fine print, warning that Australia’s “impotent and ineffective franchising laws” leave dealers exposed when it comes to end-of-term arrangements.

 

This, Mr Voortman warned, is especially true in this case which is a complete withdrawal from the Australian market, directly affecting around 200 dealers.

“Dealers typically own millions of dollars’ worth of vehicle inventory, special tools and equipment, parts and bespoke facilities built to the exacting specification of the manufacturers. On top of that, dealers have often invested in long-term leases, extending to a decade or more for these facilities,” the CEO said.

“We know of dealers who are in the process of spending significant capital in upgrading or building showrooms, an investment demanded of them by Holden. There are also Holden dealerships that have changed hands through a sale process recently.”

He noted that the AADA expects that these investments will be taken into consideration by Holden when they make compensation-related decision.

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“It is hard to believe that a global Fortune 500 company such as General Motors did not anticipate this decision, and questions need to be asked as to why dealers were allowed to invest significant sums of capital in recent times to grow a brand that was going to be withdrawn,” he said.

“Simply put, Australia needs strong automotive-specific franchising laws similar to those in the United States.”

The AADA has also said that it will be writing to the Prime Minister to request a meeting with a delegation of Holden dealers to discuss the effects of this decision.

‘Luxury car tax to blame’

In a separate release, the Australian Taxpayers’ Alliance has demanded to know why Treasurer Josh Frydenberg opposes cutting a “failed” protectionistic tax, the luxury car tax, which it opined has “harmed farmers and individual Australians alike”.

“It is time we drive the luxury car tax out of Australia,” said ATA policy director Emilie Dye. “Holden has reached the end of its road, making an unfair tax more pointless.

“It appears Frydenberg doesn’t want to lose a chunk of government revenue he could spend supporting his favourite sports teams. It isn’t the government’s job to pick winners and losers and yet they keep favouring certain businesses and groups over others.”

Ms Dye explained that rather than competing against other vehicles to create better, more affordable products, car companies “grabbed their blankies and lobbied the government to get rid of their mean competitors”.

“As is standard for sloppy taxes, the government failed to tie the luxury car tax to inflation. So as the buying power of a set dollar amount inevitably decreases, the luxury car tax metamorphoses into a ‘kind-of-nice’ car tax and eventually into just a car tax,” she said.

“Most people think of Porsches, not Kenworths, when politicians talk about the luxury car tax. Senator Matt Canavan nailed it when he said, at the very least, Australia needs an exemption for farmers. Too often, pollies forget the impact of legislation on people living in regional Australia.”

Local businesses to suffer from Holden axing
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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