In light of the dramatic drop in sales and market share, a group of seventeen dealers in the Greater Toronto Area (GTA) are suing General Motors of Canada Ltd. (GMCL) and its parent, General Motors, for ignoring their pleas for financial assistance. Included in the lawsuit are some of the biggest and oldest GM dealerships in Canada, with some having relationships going back to the 1920s.
The suit alleges that GMCL and General Motors have failed to offer the same financial help available to U.S. dealers. A statement of claim filed in Ontario Superior Court last week stated that GM has provided millions of dollars for the U.S. market through support programs, while Toronto dealers’ market share continues to decline.
GTA General Motors dealers have sold on average 531 vehicles for 2013. Compare that to the 1,194 sold by Honda Canada Inc. dealers and it’s easy to see that there is a problem in the Great White North. Between 2008-13, GMCL’s market share in the GTA has plunged by more than 50 percent, hitting a low of 5.6 percent last year.
According to the claim, “General Motors responded to the problems faced by its American dealers by extending financial support and assistance, in accordance to its obligations to them, but GM and GMCL withheld similar support from Canadian dealers during a continuing decline in their market share.”
GMCL demands that the dealers spend up to $10 million to redevelop their stores to meet image standards set by the head office in Oshawa, Ontario. Therefore, the claim states that the decision to withhold financial support threatens the long-term future for the Toronto dealers.
The lawsuit also claims that none of the $10 billion contribution by the Canadian and Ontario governments – made during the Chapter 11 bankruptcy protection in 2009 – went to aid the Canadian dealers despite guarantees to overhaul General Motors’ network in Canada.
This is the fourth type of legal action against GMCL by groups of current or former GM dealers. GMCL spokeswoman Adria MacKenzie states that “the claims are without merit and we intend to defend them vigorously.”