Losing GM franchise leaves long-time car dealer devastated

“You’ve got to try to keep your mental abilities because it just absolutely drives you crazy,” he says. “You wake up every night at three in the morning and say this is not happening. But it is happening.”

The Record
January 15, 2011

Losing GM franchise leaves long-time car dealer devastated
Chuck Howitt

General_Motors_Gary_Stockie.jpeg

Gary Stockie stands in the empty showroom of what was once a bustling car dealership. He closed the doors of the Kitchener business in December, 19 months after General Motors told him he no longer would be able to sell GM vehicles. Record staff

KITCHENER — Gary Stockie rustles through the papers on his cluttered desk and fishes out a Christmas card from a colleague.

“May your worst day in 2011 be better than your best day in 2010,” he reads aloud with an ironic laugh.

Over and over, the former owner of Stockie Chevrolet keeps searching for words to describe his shock, disappointment and anger at losing his franchise with General Motors.

But one word keeps coming up time and again: devastation.

“It’s devastating to walk in here and see nothing,” he says of his 43,000-square-foot dealership on Ottawa Street North near King Street in Kitchener. “Going through it is just devastation every day of your life.”

Snow blows across the gaping expanse of asphalt and footsteps echo through the cavernous showroom of a facility once packed with cars and bustling with sales staff and mechanics.

Apart from his son, Adam, tapping away on a computer in a downstairs office, the only activity in the abandoned building takes place in a large second floor office overlooking the parking lot where new Malibus and Silverados once sparkled in the sun.

There the embattled 58-year-old car dealer, jeans and a baseball cap replacing suit and tie, pores over the tattered remnants of a 34-year career selling cars for General Motors, trying to find some logic in a turn of events that makes no sense to him.

Stockie got the shock of his life back in May 2009 when word came that his dealership — along with more than 200 others across Canada — was being closed by GM by the end of that year as the automaker battled to streamline costs and avoid bankruptcy during the worst recession since the 1930s.

The beleaguered car dealer tried to carry on selling used vehicles and then new cars when he picked up a Mitsubishi franchise last June.

But Mitsubishi’s smaller market share in Canada was not enough to sustain the huge carrying costs of a dealership with 18 service bays and a staff that once approached 70 people. He was forced to close his doors permanently in December.

“The day we closed on the 17th of December, mechanics were looking at the walls and crying, guys from parts just broke down. Our receptionist, she just freaked out. The tears were rolling big time,” he says.

Denial, anger, bargaining and depression. He’s working his way through four of the five stages of grief. But acceptance? No way. He’s vowing to fight.

While putting the 1.3-hectare site and building on the market, he’s pinning his hopes on a $750-million class action lawsuit launched on behalf of more than 200 former GM dealers across Canada in February 2010, alleging that GM breached franchise laws.

The suit involves dealers who signed “wind-down” agreements with GM in return for compensation packages based on the number of cars they sold in the previous year, he says.

The agreements had to be signed within six days of the cancellation notice, dealers were told, or GM might have to file for bankruptcy protection and they would get nothing, Stockie says. “It was like they had a gun to your head.”

A second smaller group of 18 dealers, including Robinson Pontiac in Guelph, refused to sign the wind-down agreements and launched their own class action lawsuit with GM. The case was recently settled out of court with some, including Robinson, winning back their GM franchises.

That’s one of the many things that sticks in Stockie’s craw. “They’re the guys that today have come out a winner,” he says.

Meanwhile, the dealers who did what GM wanted and signed the agreements got penalized, he says. “It’s brutal, absolutely brutal.”

While the lawsuit involving the larger group is in the name of Trillium Motor World, a Toronto dealership, it was spearheaded by a group of 12 dealers across the country, including Stockie, who suffered some of the biggest financial losses, he says.

A motion to certify the lawsuit as a class action was heard in December in the Ontario Superior Court of Justice in Toronto. The judge has not yet released his decision.

Ironically, it was GM’s idea that Stockie come to Kitchener in the first place, he says.

He had owned a Chevrolet dealership in Stratford since 1993. In 2006, GM started pressuring Stockie and other dealers across Canada to renovate their dealerships.

But he says there was no way he was going to spend $4 million to $5 million doing that unless he could buy out the other GM dealership in Stratford — Stratford Motor Products, a Pontiac-Buick outlet — and put all the GM brands under one roof.

But GM said no to that idea, he says.

Six months later, the automaker came back with a new proposal. Bill Stedelbauer was looking to retire and sell his GM dealership in Kitchener. GM suggested Stockie sell his franchise to Stratford Motor Products and purchase Stedelbauer Motors, he says.

The idea made sense. A resident of Waterloo, he could come back to the community to work and eventually pass on ownership to his two sons, Gary and Adam, who were working for him.

“We ended up buying everything (land and building) and we paid a lot of money for it,” he says. “I said: ‘What the heck. It’s for the next 30 or 40 years’.”

Not only did he meet all of GM’s sales targets after coming to Kitchener in March 2008, his sales went up and were among the best in an area including Waterloo Region and Hamilton, he says.

“We’re here a little over a year and they give us a letter saying we’re out of business. Unbelievable.”

Away on vacation when the word came down, he went straight to GM Canada headquarters in Oshawa as soon as he got home. He was told that his timing on the move wasn’t good, his location wasn’t right, and that the provincial and federal governments, which gave GM up to $10 billion in bailout funds, forced the company to cut back, he says.

“They tried every angle,” he says. “But the government came right out and said they didn’t force anybody to do it. They just said come up with a plan.”

At the same time, he’s angry at the province and Ottawa for providing bailout funds, then allowing GM to close one-third of its dealerships across the country. In the U.S., Congress passed a law requiring an appeals process for the disenfranchised dealers.

The irony of GM’s cost-cutting move is that dealers pay for everything up front, he says. “At the end the day, the dealer doesn’t cost General Motors a nickel. The more cars you sell, the better it is for the company.”

GM would have been better off to let the dealers work it out among themselves, Stockie says.

“They could have gone to the dealers and said, ‘OK we’ve got too many dealers across the country. You buy out this guy, you buy out this guy, and let the dealers make their own decisions.’ ”

Jason Easton, manager of corporate communications with GM Canada, said the automaker evaluated each dealership using “a very comprehensive set of criteria,” including profitability, volume of sales and number of dealerships in the area, prior to implementing its restructuring plans.

“In Canada, we had a very good set of dealerships. The decisions (on franchise reductions) here were very difficult,” he said in an interview.

Most GM dealers in Canada have agreed for years that the network was over-supplied, Easton said. “We were not selling a competitive volume of vehicles when you looked at other automakers like Toyota and Honda.”

The notion that dealers don’t cost GM anything is “somewhat correct,” he said, but the dealership reduction was not about cost-cutting. With the smaller network, GM dealers are more profitable and better able to reinvest in their facilities, pay staff and retain talent, he said.

He denied that GM was pressured by government to reduce its dealer network. Letting the dealers decide among themselves who should close would have been too difficult and time-consuming, he said.

“We had one chance to get this right.”

Stockie figures he’s lost $5 million over the last two years because of the franchise termination. Although GM compensated him for the cars he sold in 2008, it didn’t take back any of the inventory on the lot or $500,000 in parts in the shop, he says.

He started reducing his staff of about 70 and winding down operations, but couldn’t let everyone go immediately because of severance obligations and the fact many had been there a long time, some more than 40 years. By the time he closed for good, about 25 people were left.

When all this is over, he’d still like to get back into the business. Selling cars is something he has done since 1973. “It’s in your blood.”

Every time he sees or hears a GM ad on TV or radio, he cringes.

“You’ve got to try to keep your mental abilities because it just absolutely drives you crazy,” he says. “You wake up every night at three in the morning and say this is not happening. But it is happening.”

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