Car Dealers Get The News On Closures

In stark contrast to the handling of dealer closings in the U. S., where General Motors published the names of companies whose franchises weren’t to be renewed, General Motors of Canada announced that it would close 240 dealers by 2010, but left it up to dealers to break the news to their communities.

According to reports, GM says its goal is to reduce its dealer network here by 42% through closures, mergers, and acquisitions. This means that in addition to the closures of which GM has already informed dealers, another 60 dealers could be subject to changes.

GM has said that the focus of cuts has been urban markets such as Toronto and Vancouver, where the “overdealering” issue has been noted for some time.

The announcement, made in late May, came on the heels of similar announcements in the U. S.

South of the border, GM informed some 1,100 dealers that their franchise agreements weren’t going to be renewed.

That announcement followed similar news from Chrysler in the U. S., which said it will drop 768 dealers from its network.

However, Canadians were cautioned not to make too many assumptions about the Canadian dealer situation based solely on the U. S. experience.

“With regards to Chrysler, it is not expected that they will have anything near what they have done in the U. S.,” Canadian Automobile Dealers Association president and CEO Richard Gauthier told CTV’s Canada AM co-host Beverly Thomson. “I think what a lot of people tend to forget,” he continued, “is that we have not been as overdealered in Canada as they have been in the United States.”

Despite some reports that Chrysler would close anywhere between 25% and half of its dealer network in Canada, Gauthier went on to say that Chrysler, which has approximately 400 dealers in Canada versus some 3,500 in the U. S., had not indicated any firm plans regarding changes to the dealer network in Canada.

“We have a very different kind of network in Canada,” he added. “That’s the kind of thing that manufacturers, as they negotiate with the Canadian government, need to keep in mind.

“There will have to be some rationalization for sure. But let’s be sure we don’t go overboard and arbitrarily cut dealers just because they are doing it in the U. S.”

While initial talk of dealer network changes equated the loss of franchised dealers with business closures, a different picture is emerging.

Many dealers are vowing to stay open. One example has Robinson Pontiac Buick in Guelph, Ont., looking to continue in different form. It will lose its right to operate as a GM dealership at the end of this year after more than four decades, but will stay open as a used-car store or join another automaker, according to management.

Calgary’s Stampede GMC Pontiac Buick is also looking to continue as a changed business.

“Stampede GMC, after October 2010, will not be continuing with GM based on the information we have now,” Glen Bridarolli, the dealership’s general manager, told the Calgary Herald. “The only thing that’s really changed for us, honestly, is that we don’t sell General Motors cars anymore, as of next October.”

The dealership has had a transition plan in place for a year, he said, and was talking to other manufacturers.

No employees will be laid off at this time, and Bridarolli said in fact he’s hiring for the dealership’s Springbank bodyshop business and used vehicle sales centre.

“What we look like today won’t be the same in two years, but there will be sales jobs, there will be technical staff jobs, there will be administrative jobs, and we have every intention of moving forward,” he said.