REVscene Automotive Forum - B.C. General Motors dealers in peril as GM Canada chops franchise contracts

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Managers at a handful of B.C.’s General Motors dealerships breathed a sigh of relief Wednesday afternoon after being told they wouldn’t be shut down as part of the automaker’s restructuring.

But others remained silent on their future, saying they either don’t know if they will remain open or can’t comment now.

“Everyone was a little bit worried; you never really know,” said Aaron Powell, general manager of Brown’s Chevrolet in Dawson Creek, which will stay open. “We’re happy. They let us know we’re still in good standing.”

Up to 310 GM dealerships across Canada — and up to half of the dealerships in B.C. —are anticipated to close by October 2010 as part of the company’s restructuring.

The company said it would notify 200 of those dealerships Wednesday, but an industry analyst said he heard 245 letters were sent out.

“It’s shocking,” Dennis DesRosiers, president of DesRosiers Automotive Consultants, said in an interview. “We’ve never seen this anywhere in the world.”

In Victoria, Saturn Saab received notice from GM that it has two options: to wait and see whether GM sells off the Saturn portion of its business or terminate its sales and service agreement with the company, said Dave Wheaton, of the Edmonton-based Wheaton Group.

He said he has heard there is strong interest in the company. No decision has been made for the Victoria dealership, Wheaton said, adding he had not heard from GM about other brands by mid-afternoon Wednesday.

Moray Keith, president of the Dueck Auto Group, which was spared from closure, confirmed Wednesday that GM is planning to spin off its 70 Saturn dealerships across the country and is offering buyouts to those who want to get out now. He said Dueck Vancouver’s dealership will keep its Saturn franchise, but added there will be Chevrolet and Pontiac dealerships cancelled across the province.

But he said he expects only three or four dealerships will be closed in Vancouver, noting people here like their small SUVs, as they are fuel-efficient.

“The rationalization of this whole project is good; it’s going to make the dealers stronger,” Keith said.

Blair Qualey, president and CEO of the New Car Dealers Association of B.C., agreed the anticipated closure of up to half of B.C.’s GM dealerships will mean stronger dealerships, as well as longer drives for servicing, several dealers changing hands and less advertising revenue for the struggling media industry.

“We’re in a new world,” Qualey said in an interview Wednesday. “It’s painful now, but the manufacturers and dealer network will be stronger. Those that remain will be in a good position.”

Qualey also said he believes many closed GM dealerships in the province will switch to selling other automobile brands.

“If a GM dealer doesn’t sell GM cars, they could conceivably take on another franchise. Many of them have been planning for this for some time. Others may sell off the dealership and retire.

“And the dealers have already been reducing expenditures on advertising. Until the economy improves, that will continue.”

Qualey said he believes under-performing dealerships in urban areas of B.C. will be primarily affected by the closures.

While there has not been any confirmation on the numbers for B.C., he anticipates up to half of the existing 60 GM dealerships could close.

DesRosiers also said the closures will hit urban areas like Vancouver more than rural or suburban areas.

But he also said he believes B.C. will not be affected as much as the rest of the country, because a number of GM dealerships have already closed in the past several years. “B.C. has the lowest of GM’s market share in the country. It [GM] will be less impacted, because they’re in such bad shape [there] already.”

Of the dealers scheduled to close, he expects about 100 will change brands, 100 will close outright and another 50 to 100 will become used-vehicle superstores. Several will also fight the closures in court, he predicted.

However, he added: “The net job loss will be less than the total workers displaced. If it [becomes another dealership], they’ll have to hire.” There are about 40 employees at each of B.C.’s auto dealerships.

GM Canada has decided not to release either the names or numbers of dealerships closing in B.C., and DesRosiers said he did not have any information about the B.C. closures.

But calls to dealerships around B.C. found about eight confirming they would stay open. These included Carter Chevrolet on the North Shore, Carter Pontiac Buick GMC Chevrolet Cadillac in Burnaby, Don Folk Chevrolet in Kelowna and Smith Chevrolet Cadillac in Kamloops.

At Jenner Chevrolet Corvette on the Island Highway, it was business as usual, said Fred Jenner, who had not received a letter Wednesday. He said dealerships knew GM was making a cut in numbers, but the speed of its announcement likely caught some people by surprise.

Meanwhile, Dennison Chevrolet in Richmond and Barnes Wheaton Pontiac Buick GMC in Coquitlam and Surrey refused to comment, with one manager referring reporters to GM’s B.C. zone manager Bob Dosanjh.

Dosanjh wouldn’t divulge any information Wednesday night, saying the dealerships are associated with a lot of other parties and operators and it is up to them to break the news.

“At this point I have to keep that list confidential,” he said. “This is a very sensitive matter.”

Last week, GM Canada’s Detroit-based parent company told about 1,100 U.S. dealers they would also be shut down.

ksinoski@vancouversun.com

bmorton@vancouversun.com

With files from Canwest News Service

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