Tuesday, 23rd March 2021
Ben Hindmarsh – Principal Consultant
In the aftermath of General Motors-Holden’s (GM) shock departure last year, the Australian Government and Federal Parliament are now taking welcome action to better protect local new car dealers.
The SAS Group has been helping dealers to have their voices heard.
A Senate Committee report tabled in Federal Parliament last week revealed what Aussie new car dealers have been strongly voicing – a severe power imbalance exists in their relationship with franchised multi-national car manufacturers. The bi-partisan Committee Report shone a light on how this imbalance can be abused through GM’s ruthless termination of local Holden dealerships, with no warning and limited recourse.
GM terminated 185 dealers operating more than 200 outlets that employed up to 9,000 people. Many had just finished multi-million-dollar upgrades to their facilities, while others had only just purchased a Holden business months prior to the termination. Inadequate compensation was offered with no scope to negotiate.
This had a serious impact on jobs and local communities. Automotive dealerships are a mainstay of our local suburbs and communities. Largely made up of family businesses, new car dealerships are big contributors in their communities by investing in local jobs, apprenticeships, local events and sporting clubs. In fact, Aussie dealerships employ some 60,000 people, including around 4,000 apprentices, and contribute more than $12 billion into our national economy.
The release of the Senate Report follows welcome landmark reforms announced by the Prime Minister a week earlier that aim to address this imbalance through common sense measures that give greater protections to local new car dealers. These include a mandatory set of best practice principles and increased penalties of up to $10 million under the Franchising Code that will go a long way towards establishing a fair and reasonable standard to commercial relations.
The government reforms, driven by Small Business Minister, Senator the Hon. Michaelia Cash, pick up on the issues raised throughout the Senate Committee inquiry and meet the intent of much of the Final Report’s recommendations.
These are big steps forward for car dealers, and big steps towards a fair and reasonable playing field.
The Australian Automotive Dealers Association (AADA), the peak representative of Aussie franchised new car dealers, has been a consistently strong, vocal and successful advocate for these reforms. Both through the Senate Committee and with Government, their advocacy articulated the compelling case for change. For the SAS Group, it has been a privilege to work with the AADA on such an important issue.
Ultimately, the true success of these reforms will be in their implementation. But the signs from Government are positive with Minister Cash publicly stating her desire to continue working closely with the AADA to deliver these reforms.
Holden may be gone but its legacy will be protecting our local car dealers to make sure this power imbalance cannot happen again.