GM Canada gives dealerships notice of cuts

Wed May 20, 2009 6:30pm EDT
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By John McCrank

TORONTO (Reuters) - General Motors of Canada informed its dealerships on Wednesday 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 U.S. 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 rationalization 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 spokesman Stew Low told Reuters the automaker also notified those dealerships that it planned to keep open.

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.   Continued...

<p>A Canadian flag flies from the window of a General Motors vehicle at a car dealership in Toronto December 12, 2008. REUTERS/Mike Cassese</p>