GM dealers launch suit to stay in business

They are seeking $1.5-million each from GM, an injunction that prevents the company from terminating their dealer sales and service agreements and an unspecified amount of compensation for losses of profit, good will, business opportunities and market share.

The Globe and Mail
November 27, 2009

GM dealers launch suit to stay in business
Auto maker faces lawsuit from dealerships seeking to overturn termination notices; 'It has ben the family livelihood for 54 years'
Greg Keenan

GMRobertSlessor.jpg

Robert Slessor invested $3.5-million in Robert Slessor Pontiac Buick Inc. in 2002-03 to upgrade the dealership and maintain the standards required by GM. In October of 2010, it will cease to exist. For The Globe and Mail

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Twelve General Motors of Canada Ltd. dealers – one of whom represents a family that sold GM vehicles for more than 100 years – have launched a lawsuit against the auto maker in a bid to keep their dealerships open.

The dealers are among about 240 who were sent termination notices by GM in May as its parent company was approaching Chapter 11 bankruptcy protection in the United States. The auto company is making announced massive cuts to its dealer network as part of a strategy to get rid of four of the eight brands it operated in the U.S. and Canadian markets.

The elimination of several hundred dealerships and tens of thousands of jobs in the two countries underlines how the most severe crisis to batter the auto industry since the Great Depression of the 1930s has spread its tentacles into even tiny communities.

In the town of Paisley, Ont., with a population of 750, six churches, a curling club and an arena, Bud Rier Chevrolet Ltd. has been operating since 1975. Gary Rier, son of founder Bud Rier, employs about 15 people and spent about $250,000 starting last year to upgrade the operation to meet GM's requirements.

In Stouffville, Ont., northeast of Toronto, Duncan Giles employs 19 people at Giles Chevrolet Ltd. The family has been selling GM vehicles in Ontario since 1902.

The court filing outlines a brief history of those dealerships and the other 10 outlets, many of which were in their second or third generation and most of which spent big money – in some cases, a few million dollars – to upgrade their dealerships before they received their termination notices.

They are seeking $1.5-million each from GM, an injunction that prevents the company from terminating their dealer sales and service agreements and an unspecified amount of compensation for losses of profit, good will, business opportunities and market share.

Robert Slessor, whose father started a GM store in 1955 in Grimbsy, Ont., near Hamilton, invested $3.5-million in Robert Slessor Pontiac Buick Inc., in 2002-2003 to upgrade the dealership and maintain the standards required by GM.

“It was my intention to carry it forward into the third generation by all means,” the 53-year-old Mr. Slessor said Thursday. “It has been the family livelihood for 54 years.” He has a daughter working in the business and two teenaged sons.

He said he was offered $532,000 by GM in May to cover severance costs for his 43 employees plus the cost of inventory.

“To the knowledge of GM, in every case, after payment of employee severance and other necessary close-down costs, the sum offered by GM provided no compensation at all to the plaintiffs,” the 12 dealers said in a statement of claim filed in the Ontario Superior Court of Justice. The accusations have not been proved in court. GM would not comment.

GM eliminated its Pontiac division and put its Saturn, Saab and Hummer brands up for sale. But since the termination notices went out to Canadian dealers in May, deals to sell Saturn and Saab have collapsed.

Saturn will be shut down and the future of Saab is in doubt, which means about 16 Canadian dealers who hoped to continue under Saab's new owners are examining other options.

Industry analysts spent years criticizing GM for having far too many brands and an excessive number of dealers in the United States and Canada.

For years in many communities, Pontiac-Buick-GMC outlets were kilometres away from – or next door to – Chevrolet-Oldsmobile-Cadillac dealerships selling virtually the same cars with a different badge.

The average number of sales per GM dealer slid to 497 last year from 547 a year earlier, well off the pace set by Toyota Canada Inc., whose dealers sold an average of 875 vehicles.

http://www.theglobeandmail.com/report-on-business/gm-canada-dealers-sue-to-stay-open/article1379197/


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