GM Canada says 245 dealerships getting axed
Published Wednesday, May 20, 2009 6:28PM EDT
Last Updated Friday, May 18, 2012 10:56PM EDT
General Motors is shutting down nearly two-fifths of its dealerships across Canada, mostly in key urban areas, at the cost of thousands of jobs.
A GM spokesperson said letters were sent Wednesday to 245 of 709 dealerships in Canada informing them that their sales-and-service relationships will be ending.
He did not name specific dealerships that will be closed, but said the majority are located in major cities. Further consolidation by the end of 2010 is expected to push the number of closed dealerships even higher.
Roughly 33,000 Canadians are employed at GM dealerships.
GM said Wednesday the move was being done in an effort to create a "more competitive dealer network."
The company said the cutbacks were part of its "more aggressive operating plan" brought on by heavy pressure from the federal and Ontario governments.
GM said it plans to focus on key urban markets and that it wants to close the dealerships "in an orderly, cost-effective and customer-friendly way."
The company is hoping the result will be "a more competitive dealer network with higher volumes, while continuing to maintain the strongest and broadest dealer network in the country."
The dealerships had been due to receive letters detailing their status by the end of the month but GM moved the date up to today.
Last Friday, the company announced plans to close 1,100 of its 6,000 dealerships in the United States by late next year. That's in addition to 500 dealerships that market the Saturn, Hummer and Saab subsidiaries, which GM plans to phase out or sell.
The U.S. dealerships that were selected for closure had failed tests of both sales and profitability. Those stores were told they would not have their franchises renewed when they expired, many of them in October 2010. Many are expected to close shop this year.
About 400 of the U.S. dealers sold fewer than 35 vehicles a year.
The company hopes to get its U.S. franchises down to between 3,600 and 4,000 dealers by next year, GM vice president Mark LaNeve said last week.
The reports of the Canadian dealership closures come as GM and the Canadian Auto Workers hash out a new cost savings plan that would ensure the struggling automaker receive funding from the federal and Ontario governments.
Industry Minister Tony Clement has given the two sides until May 31 to strike a deal.
"We have to move to a place where General Motors is going to be cost-competitive in Canada," he said on Wednesday. "If were going to maintain our percentage of production, and maintain the number of products that are assembled and manufactured in Canada, we have to be cost-competitive."
With a report by CTV's Paul Bliss