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GM Canada won't reinstate dealers

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GM Canada won't reinstate dealers

Franchisors suing automaker over 'unfair' closures


General Motors of Canada is refusing to follow its U.S. parent company's lead by reinstating dealers who were terminated when the automaker filed for bankruptcy protection last year.

"To suggest that we reinstate all the dealers that were offered a wind-down agreement is not practical, and, with respect, it would condemn both GM Canada and its dealers to an uncompetitive distribution network," Marc Comeau, GM's vice-president of sales and marketing, wrote in a March 9 letter to the Canadian Automobile Dealers Association.

Comeau was responding to a March 5 letter from association president Rick Gauthier that said the parent company's decision to reinstate more than 600 of 2,000 terminated dealerships was "a recognition that reinstatement is not only possible, but the appropriate action."

But Comeau said reversing its decision "would be a gross disservice to the remaining approximately 450 Canadian dealers which are now well positioned to be competitive.

"Rick, we cannot rewrite history, no matter how painful it was for you and all of us, nor can we allow ourselves to be saddled with uncompetitive practices," Comeau wrote. He said the courts or the arbitrators should rule on demands by some dealers that their businesses be restored.

Gauthier said Friday that the association was considering other options, although he would not elaborate.

"Marc Comeau's letter clearly is a disappointment, but that doesn't close the chapter on this issue. That is the line in the sand that General Motors of Canada has chosen to draw, so we'll have to see where we go from there," he said.

Last May GM said it would close 240 dealerships to restructure.

GM is currently facing a lawsuit by 20 dealers across the country, including Dave Hitchcock Chevrolet Ltd. in Essex, Ont., and Lanoue Chevrolet Inc. in Tilbury, Ont., who claim that GM ended their franchise agreements in a "high-handed, oppressive and patently unfair" manner.

The group is also seeking a court injunction to stop GM from eliminating the dealers from the GM network and terminating their contracts with the automaker.

Court documents indicate the dealers want a permanent injunction prohibiting their termination along with $1.5 million in punitive damages each and unspecified compensatory damages.

Read more: http://www.calgaryherald.com/news/Canada+reinstate+dealers/2678318/story.html#ixzz0iCTjEe8Y

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It doesn't make sense to reinstate all those dealers anyway.

In 2008, in the greater Calgary area there were fifteen GM Dealers for a little over 1.1 Million people. That seems like a somewhat ridiculous number. Now there are nine which seems like a more normal number.

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