General Motors of Canada Ltd. has reached an out-of-court settlement with a group of 21 dissident dealers that will allow 13 of them to remain open under the company’s restructuring plan while the other store owners receive additional compensation for closing.
GM confirmed Tuesday the automaker had resolved the group’s high-profile lawsuit that claimed the auto giant breached franchise laws by arbitrarily withdrawing their option to renew multi-year contracts during the company’s financial crisis in 2009.
However GM and members of the dealers group said they could not disclose key terms of the settlement because of confidentiality agreements.
Tony LaRocca, GM’s director of communications, added he could not even reveal which dealers would continue operations beyond Oct.31 when the company had originally planned to end their franchise agreements.
However some dealers and industry sources disclosed the identity of the 11 continuing retailers including Giles Chevrolet in Stouffville, Niagara Motors in Niagara-on-the-Lake, Robinson Pontiac Buick GMC in Guelph and Dave Hitchcock Chevrolet in Essex near Windsor.
“There are a number of dealers who have been retained,” said Cindy Robinson, dealer principal for Robinson Pontiac Buick GMC. “We’re pleased to be one of them under this settlement.”
Some surviving dealers including Robinson will drop the Pontiac name as part of the company’s phase out of the brand and operate as Buick GMC stores.
GM had announced in 2009 that it would cut its dealership network in Canada by 40 per cent or about 240 retailers to reduce costs under a survival plan which included $10.6 billion in aid from the federal and Ontario governments.
But members of the dealers’ group rejected “wind down agreements” which offered them between $200,000 and about $1.5 million depending on sales. About 85 per cent of the affected dealer network accepted the terms despite complaints the compensation wouldn’t cover severance and closing costs.
