On 27 February 2020, the Senate referred the announcement by General Motors (GM) on 17 February 2020 to withdraw the Holden brand and operations from Australia to the Education and Employment References Committee (the committee) for inquiry and report by the first sitting day in May 2020. The committee was to give particular reference to:
the impacts of that decision on:
the Holden dealership network (small and medium sized businesses and family enterprises, and their employees),
the Holden research and development facilities, and
owners of Holden vehicles (including service and repair);
the role of the Franchise Code and the Government's proposed dealership amendments to the Franchise Code;
Government or other policy settings on manufacturing, research and development, business support and transition, and employee support; and
On 23 March 2020, the Senate granted the committee an extension of time to report until 12 November 2020. On 8 October 2020, the Senate granted a further extension of time to report until 10 December 2020. The committee sought a further extension of time to report until 18 March 2021, which the Senate granted on 3 December 2020.
Scope of the inquiry
During the course of the inquiry, GM significantly wound down their operations in Australia with all affected employees departing the company by the end of 2020. General Motors Holden's (GM Holden) remaining research and development facilities in Australia were integrated into GM's global operations, decommissioned, or sold to other automotive manufacturers.
Many Holden car dealers felt that they were treated unfairly during the withdrawal process and voiced these concerns to the committee. Stakeholders also raised concerns that GM's departure could set a precedent for how other manufacturers could exit the Australian market, rationalise their dealership networks or change their distribution models in the future. Indeed, during the course of the inquiry, Mercedes-Benz Australia/Pacific and Honda Australia progressed plans to change their distribution models in Australia and some affected dealers shared their experiences with the committee.
Accordingly, the committee resolved on 7 October 2020 to investigate the regulation of the relationship between car manufacturers and car dealership models in Australia, including:
practices employed by manufacturers in their commercial relations with dealers, with specific focus on:
investment required and tenure provided
termination and compensation practices
behaviour around warranty claims and Australian Consumer Law
unfair terms in contracts
goodwill and data ownership;
existing legislative, regulatory and self-regulatory arrangements;
current and proposed government policy;
dispute resolution systems and penalties for breaches of the Franchising Code of Conduct;
current and proposed business models in selling vehicles;
legislative, regulatory and self-regulatory arrangements found in international markets; and
the imposition of restraints of trade on car dealers from car manufacturers.
Conduct of the inquiry
In accordance with its usual practice, the committee advertised the inquiry on its website and wrote to relevant stakeholders and other interested parties inviting them to make written submissions by 20 March 2020. The committee subsequently extended the deadline for submissions to 25 June 2020.
Following the committee's decision to refocus the inquiry on 7 October 2020, the committee invited further submissions from relevant stakeholders by 30 October 2020.
The committee received 77 submissions (of which 47 were confidential), as well as additional information and answers to questions taken on notice, which are listed at Appendix 1.
The committee held four public hearings:
Canberra – Monday, 3 August 2020;
Canberra – Thursday, 19 November 2020;
Canberra – Tuesday, 24 November 2020; and
Canberra – Friday, 5 February 2021.
A list of witnesses that appeared at these hearings is available at Appendix 2.
Links to public submissions, Hansard transcripts of evidence and other information published by the committee for this inquiry are available on the committee's website.
Acknowledgement and references
The committee thanks those individuals and organisations who contributed to this inquiry by preparing written submissions and giving evidence at public hearings.
References in this report to the Hansard transcripts for the public hearings are to the proof Hansard. Page numbers may vary between proof and official Hansard transcripts.
Structure of this report
Consistent with the refocusing of the inquiry, this report primarily considers the impact of GM Holden's decision to cease distributing cars, the broader relationships between car manufacturers and dealers, and the adequacy of the current regulatory regime upon those relationships.
This report comprises five chapters, including this introductory chapter, with the remaining chapters set out as follows:
Chapter 2: provides background information on the Australian automotive retail industry, including proposed business models for selling vehicles.
Chapter 3: looks at GM Holden's exit from the Australian market and the impact of the withdrawal on Holden car dealers and consumers.
Chapter 4: examines issues raised by stakeholders in relation to the regulation of the relationship between car manufacturers and car dealers in Australia.
Chapter 5: considers recent changes to the governance and regulatory arrangements for the Australian automotive industry and the need for further reforms in the sector.