GM Canada plans to cut 40% of its dealer network

GM Canada began notifying dealerships Wednesday of its plans to reduce its network by 40 per cent as it works to have a restructuring plan ready by the end of the month to secure aid from the U.S. and Canadian governments.

GM said it began notifying those of its 709 Canadian dealers that will not have their sales and service agreements renewed when they expire in October 2010.

A company spokesman said 245 dealers are being told they are being let go, with more consolidation and attrition to come.

Michael Hatch, the chief economist at the Canadian Automobile Dealers Association, estimated 10,000 jobs could be affected by the dealer closures.

"The economic implications, of course, are huge," Hatch said.

GM Canada said in late March it would reduce its dealer count from 709 to between 395 and 425 by the end of 2010.

"Due to the unique aspects of our Canadian dealer network, we have focused our network rationalization efforts on key urban markets in an effort to achieve a viable network configuration all across Canada," the company said in a press release.

"The end result in Canada will be a more competitive dealer network with higher volumes, while continuing to maintain the strongest and broadest dealer network in the country better equipped to serve GM customers."

As part of its restructuring, GM has said it plans to abandon its Pontiac brand and sell the Saab, Saturn and Hummer brands.

Last week, GM started informing about 1,100 of its U.S. dealerships that they were being dropped.