In its original restructuring plan GM announced it will reduce its 6,200 dealers to around 4,600 by 2010Enlarge Photo
In all about 300 dealers will be shuttered. Like their far more numerous American counterparts, the axed Canadian dealers will have until the expiry of their franchise agreements in October 2010 to liquidate inventory and other holdings.
The dealership cuts were explained as a necessary reduction, focused largely on over-saturated urban markets like Toronto.
"Due to the unique aspects of our Canadian dealer network, we have focused our network rationalization efforts on key urban markets in an effort to achieve a viable network configuration all across Canada. The end result in Canada will be a more competitive dealer network with higher volumes, while continuing to maintain the strongest and broadest dealer network in the country better equipped to serve GM customers," the Canadian arm of the company said in a statement.
Toronto alone currently has 34 dealerships, a number that's far too high according to Montreal GM dealer Paul Lamoureaux, who also predicted Vancouver would be hit hard by the closures. "Closing all these dealerships is bound to hurt sales," he told Bloomberg. "You can't think people are going to travel 50km (30mi) to buy a new car."
The Canadian closures are part of GM's overall plan to get its capacity - both in terms of production and sales - back in line with demand. The question remains if it will be enough to ward off the ever more likely scenario of a structured bankruptcy, especially with the June 1 deadline posed by the Obama administration looming near.