GM Canada dealerships not given option to stay open like U.S. operations

The Canadian Press ~ The News
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TORONTO — General Motors dealerships slated for closure in Canada will not be given the same option to remain open that their U.S. counterparts have been offered.

GM Canada spokesman Tony LaRocca said Monday that the decision to reinstate 661 dealerships south of the border has no bearing on the 240 Canadian dealerships that have been closed or are in the process of closing.

He said that’s because the scenarios are entirely different for a number of reasons, including the fact that the Canadian operation never filed for bankruptcy.

“We did a business assessment of each dealership, (whereas in the U.S.) they took a cut at numbers because they were bankrupt and just had to shed, so we’ve already done a very thorough, very diligent assessment of each individual dealer,” he said.

GM executives in the U.S. said Friday that the dealerships — more than half of those seeking to stay with the automaker — will receive letters giving them the option to remain open. GM said it would not have enough time to negotiate with all 1,100 dealerships that appealed the automaker’s decision to close them within a four-month window imposed by the federal government.

As part of its restructuring in the U.S., the automaker had told about 2,000 dealerships it would not renew their franchise agreements once they run out in October 2010.

But the dealerships accused GM of treating them unfairly, and last month Congress passed a law requiring an appeals process for the dealers. Arbitration hearings for the dealers who didn’t get offers but still want to stay with GM will begin later this month.

In Canada, GM had said it intends to eliminate more than one-third of its Canadian dealerships by October 2010 in an attempt to cut costs and streamline its business.

Over 200 of more than 700 dealerships in Canada have already closed.

A class action lawsuit has been launched on behalf of the 215 Canadian General Motors dealerships whose businesses were closed last year.

The lawsuit, which is seeking $750 million in damages, claims GM Canada broke franchise laws by giving its dealers, at most, four business days to respond to a termination package offered by the company.

LaRocca said the process it followed in Canada since May, when it broke the news to dealers, has been different than the course in the U.S.

“(Canadian dealers) had recourse to management review meetings, mediation and arbitration . . . in a process that exists here in Canada that does not exist in the United States,” he said.

Rick Gauthier, president of the Canadian Automobile Dealers Association, called on GM Canada to reinstate some of the 240 dealers Friday in a letter to GMC vice-president of sales and marketing Marc Comeau.

“We view General Motors Corporation’s announcement (in the U.S.) as a recognition that it clearly erred in terminating some of the dealers that it did and in light of this it is inconceivable to us that GMCL (General Motors Canada Ltd.) is immune to similar errors in judgment,” he wrote.

Gauthier said Monday he had not heard back from the company, and he was shocked to hear it was not following the parent company’s decisions, after it had done so since the restructuring began in the fall of 2008.

He said he would give GM Canada “a pass for today,” but added the Canadian company should waste no time in reconsidering its position.

Gauthier added that if all 240 Canadian dealerships close about 12,000 jobs will be lost.

“GM U.S. filed for bankruptcy, which gives them legal protection from any kind of recourse from those dealers and yet they are coming back and saying we need to rethink some of these closures,” he said.

“You would think that GM Canada, who was able to avert bankruptcy thanks in great part to the fact that the General Motors dealers worked with GM — you would think that they would owe those dealers a better hearing, a fairer hearing,” he said.

 

Organizations: General Motors Corporation, GM Canada, Canadian Automobile Dealers Association

Geographic location: United States, Canada, TORONTO GM U.S.

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