General Motors of Canada said it will inform its dealerships of which ones it will close as part of a plan to slash its dealer network by nearly half, one of the steps necessary to qualify for long-term government aid.
GM, which is restructuring ahead of a June 1 deadline to qualify for a US and Canadian government rescue package, said it has identified which dealers' sales and service agreements will not be renewed following their expiration in October 2010. GM has about 700 dealerships and retailers across Canada.
"Due to the unique aspects of our Canadian dealer network, we have focused our network rationalisation efforts on key urban markets in an effort to achieve a viable network configuration all across Canada," the company said in a statement.
"The end result in Canada will be a more competitive dealer network with higher volumes." GM Canada first announced its plan to cut about 300 dealerships, or about 42 percent of its network, on April 27. The Canadian Automobile Dealers Association said GM's dealers employ 33,000 to 34,000 people, so depending on which dealerships go and which stay, 12,000 to 15,000 jobs are at risk.
Typically, GM dealerships are divided into three main brand networks: Pontiac/Buick; Chevrolet/Cadillac; and Saturn/Saab. GM has announced that the Pontiac brand will be dropped. A spokeswoman for Chrysler Canada, which has also had to rely on government support to survive the downturn in the auto sector, said the company has no plans to cut back on its roughly 450 dealers, which sell the Chrysler, Jeep, and Dodge brands.
Another cost-cutting measure GM must have in place by June 1 to qualify for long-term government aid is a new labour agreement with the Canadian Auto Workers union. Ottawa had set a deadline of May 15 for the two sides to reach a deal to substantially reduce labour costs, but the deadline came and went and the bargaining continues.
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