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.”
Comments
It is puzzling why GM Canada’s market share has tumbled so badly dropping from a consistent #1 spot to second and even third in recent years. I suspect Canada was far more dependent on Pontiac sales than the US but welcome any other logical explanations.
Not really. GM Canada was forced to get rid of too many dealers in the bankruptcy (with US direction). They have been uncompetitive in several segments pricewise — due, in part, to a reluctance to adjust some pricing to the change in exchange. When the Canadian dollar weakened against the US, GM Canada raised prices to stop the gray market of vehicles going back to the US. When the Canadian dollar strengthened, they didn’t adjust — although they are adjusting when new models come out.
Overall though, it appears that the US is now driving the bus and they think that Canada is just like the US. There used to be unique Canadian vehicles, marketing packages, pricing — hell, GM even owned the rights to the Wrangler name in Canada and used it on their trucks but I think that they gave it up.
Vehicles like the G5 carried a unique Canadian name — Pontiac Pursuit — until the US forced the adoption of one name.
Not sure the Pontiac Idea would be logical but I would have to see the numbers.
We also must keep in mind that the auto market is very small in Canada to start with. It would not take a major decline to drop from one to two. It is big country but most of the people live along the border.
The Pontiac I have is one of 5,000 made but was one of only around 100 sent to Canada. That is a good example of the ratio.
Other factors in play is the growing Asian population in BC that tend to buy more imports of any brand and such.
I also know many dealers have closed in Canada too for GM over the last 15 years. The car mine came from in Toronto is now gone. Ramble into Rumble Is no longer heard under the CN tower.
I would like to see someone dig into this to see just what is in play.
Puzzling eh , lets get simple here ! Canada has faced much higher prices for fuel than the USA for years now and GM lost a lot of sales to the smaller vehicles from the Japanese and Korean manufacturers . Because winter driving here can see lots of winter slush/snow , the CUVs and SUVs , particularly the smaller and midi unibody models more fuel efficient ones are most popular . Hyundai or Kia produce more models , each here , than GM in this market segment . How this affected my local area , one of the wealthiest growth areas in Canada , consider that one of the largest GM dealerships in the province , whose actions speaks volumes . As sales declined years ago , they opened as Nissan dealership at the end of the lot and followed that by opening a Kia and then Subaru dealership . This is one of the oldest and respected dealerships in western Canada . The Nissan one did so well it was relocated to a large former auto dealership site a few blocks away . This dealership did what it needed to do to survive and offer the products that were taking more and more of the market share . In the truck market , which is so big here , GM has fallen to third place behind Chrysler’s Ram and its Jeep products which are also a big growth area for them . GM keeps the blinders on and produces a slew of Cadillacs and Buick cars , and now a broad selection of updated gas guzzling full size frame-on heavy weight SUVS , wonderful . Ford’s Escape is hugely popular here and has been for years , as is the Fusion car. GMs Equinox and Terrain have also done well . I have to mention the Saturn fiasco , it still hurts , dealerships sold a lot of product in this province , people/buyers don’t soon forget this abandonment . GM unfortunately still wants to tell buyers in the marketplace what they want them to buy not what the market is buying and tending to buy for their future purchases . This is old school GM who dominated the marketplace and you bought what they wanted to produce , somethings never change !
You live there, so I won’t doubt your experience, but GM Canada has more CUVs that does GM USA — its not just the Encore, Terrain and Equinox — you left out Chevy Trax and Chevy Orlando. Now, I’ve only seen these CUVs at auto shows, so maybe they are terrible to drive, but it seems GM is giving Canadian some good options (certainly as much as Kia or Hyundai, which you mention) in the hot, more fuel-efficient CUV arena.
There has to be something else going one.
Traxx and Orlando have only been available in Canada , Traxx will appear in the US this fall . It has received limited GM advertising , low stock levels and deplorable sales . . Really who wants to buy vehicles here that the US market doesn’t even get . What kind of confidence in these vehicles does GM have that they won’t carry them in their marketplace ?? Who thought up this brilliant marketing strategy ,” why don’t we test market these potential products in Canada ” ! Imagine an owner driving into the States with an Orlando and having a mechanical problem and wheeling into a local GM dealership where they look at that and say ” What the hell is that ” ? . What kind of resale value can a purchaser look forward to ? Besides limited GM advertising is a dirth of reporting by the automobile magazines almost all of which are produced in the USA .This stupid concept could only come from GM . Look at the Chevy SS, a superb understated design whose popularity is soaring , see the numerous forums devoted to this hot vehicle . It isn’t available in Canada , yet most , if not all advertising and articles in the USA produced mags is read here , which stimulates the buying public to seek these vehicles out , I believe they would get good sales response to this car . Ford sells a lot of rear wheel drive Mustangs here , BMWs etc , but no GM has this policy of telling people what they want them to buy . Do not test market vehicles like this , ever . If you take the latitude of New York and extend that line across the country you will find higher fuel prices and winter driving conditions comparable to where most canadians live , which is 200 to 300 miles from the border . This is North America , fuel prices changed our demand to smaller models that have as much interior space as possible , same as it did to Europe years before . It has immensely changed the USA today where the most popular cars are the Toyota Camry and Corolla and the Honda Accord and the Civic . I don’t think this inflated corporate giant can change its direction , which is scattered all over , to bring a strong focus to deliver what the buyers want in the marketplace with quality components . I hope for the best but expect the worst .
“Imagine an owner driving into the States with an Orlando and having a mechanical problem and wheeling into a local GM dealership where they look at that and say ” What the hell is that ” ?”
They’d fix it. The packaging may be different, but any competent GM mechanic knows that the physical difference are only evident on sheet metal and interior trimming.
You’ve never heard of ‘parts sharing’, have you?
I live in Ontario, Canada. Pontiac often out sold Chevrolet in Canada so losing Pontiac did not help things. Also Saturn was a popular brand as well. Our market in Canada is 1/10th that of the US. So while it’s small it’s not meaningless. Our market is about the size of California’s. There has also been a lot of press about GM reducing production in Canada after the Ontario/Canada bailouts even though today’s GM production is even higher in Canada. It generated a lot of bad press in it’s day and the good news hasn’t made any press here.
The top selling car in Canada is the Honda Civic and the second is the Grand Caravan. GM’s answer the the Grand Caravan was the Traverse/Orlando which have not bode well in Canada. The Cruze does well but the options packages and pricing are messed up compared to the Civic. A base Civic with automatic and air-conditioning is cheaper and much better optioned than an LT Cruze. The Chevrolet Trax was a good move and has sold well in Canada. Verano, Encore and Spark are doing well too.
Also to add GM’s pricing in general is mostly messed up. Many of the vehicles are often (not always) ~20% more expensive than US versions despite only a 5-10% difference in the Canadian-US dollar. I don’t think GM Canada even looks at competitors pricing/options in Canada very well.
For GM to compete well in Canada they need better mid-sized sedans, better options / pricing packaging and a better solution to the Grand Caravan. Maybe a decent MPV? Also more Diesel. Diesel fuel in Canada is typically close in cost to regular gas. A new Equinox / Envision / Terrain should help as well. Too add you should need to opt for a top trim to get heated seats on cars in Canada. Heated seats are standard on near base Elantra’s and Civic’s yet you have to go near the top of the line on a Cruze or Verano to get heated seats. Talk about stupid.
I had a co-worker who bought a new Civic simply because of the heated seats in near base trim. She looked at a Verano but to get heated seats the car would have been priced throught the moon. (She didn’t like the Cruze at all)
Well living near Canada and also knowing some snow back on the other side of the lake I hear a few things from them.
Gas prices have always been an issue but the price of vehicles is much more even not counting exchange rates. GM cars are not cheap there at all.
As for the Orlando going to a dealer on this side that is not an issue as the dealers may not always be the sharpest ones but they would have no issue fixing an Orlando. Much of the mechanicals are no different than the Cruze.
GM did not sell it here as it really did not do well in public clinics here. Also the Nox was doing so well it would have made a tight segment even tighter. I would not be surprised once the new Nox is here the Orlando goes away.
As for no SS up there. Well you folks just don’t sell many cars there being in a small market. Also the limited number coming here will sell with no issues.
As for a competitor for the Grand Caravan well that is going away from what I just read. They will keep the town and Country as they lower the status of Chrysler. Fiat will make Dodge go head to head with Chevy be a value leader and Chrysler looks to be a Buick Challenger. They will not longer target the 300 at Cadillac, BMW and Benz.
SRT will no longer stand alone and be Dodge so no Cuda as some have been saying.
GM likes to load up cars with option packages as that moves profits. We pay them here but over there GM may want to offer more basic packages to help on cost as many of the Asian bases cars over there are not loaded up and many are base models.
If I would have to guess I would say price is the biggest issue there based on what I am told. I would have to see real numbers to see what is going on but that looks to me as key. Canada has always embraced lower priced cars and not always the top optioned models.
Even the many Pontiacs over the years in the past were often discontented Chevy models with some Pontiac mods. We have some of the older models here and few of them are loaded up cars.
Even when it was full on Pontiac models later on the lower mid size cars were much better sellers. Even when the dealers imported many of the parisienne here back when they hated the Lemans based Bonneville they were easy to get because the dealers had a lot of them sitting around.
Even my 85 Pontiac was one of 50 my dealer imported due to a truck strike and the dealers gave them up willingly.
We on this side often think of Canada just being just like us but while they have some things similar there is a different way on many things there and you can not underestimate that. Never ask one about his Z 28 as it is his Zed 28, The deckel on the side says so. Note I spelled Decal as they say it. Same continent different culture.
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