General Motors of Canada Ltd. has rejected calls to follow its parent company's example and voluntarily reinstate dealers who were terminated when the auto maker restructured its operations last year, saying courts and arbitrators should rule on demands by some dealers that their businesses be restored.
"We cannot rewrite history," Marc Comeau, GM Canada's vice-president of sales and marketing, said in a letter to Canadian Automobile Dealers Association (CADA) president Rick Gauthier and the company's remaining Canadian dealers.
That answer to Mr. Gauthier's recommendation did not sit well with the head of the dealers' group and could escalate the tension between CADA and GM Canada, whose U.S. parent agreed last week to reinstate 661 of about 2,000 dealers who were terminated.
"That's not a satisfactory response," Mr. Gauthier said yesterday, adding that the group is assessing what further actions to take.
GM Canada is already embroiled in two lawsuits over the dealer restructuring. One is a class-action suit by dealers who signed wind-down agreements last year; the other is a court action by 20 dealers across the country who did not sign the agreements and are seeking compensation and restoration.
CADA has asked its 3,000 members nationally to contribute to a special fund to help cover legal costs for the 20 GM dealers.
Alexandre Saillant, who signed a wind-down agreement when his family's Pontiac-Buick-GMC-Cadillac-Hummer dealership in Quebec City was terminated last year, said he plans to launch a separate lawsuit.
"We were - most of the time - the most profitable dealership in the province of Quebec," Mr. Saillant said. "We were a flagship for GM." The dealership is now selling Mazdas.
Mr. Comeau said the company's distribution network in Canada is different than the U.S. setup.
"To suggest that we reinstate all the dealers that were offered a wind-down agreement is not practical and, with respect, it would condemn both GM Canada and its dealers to an uncompetitive distribution network," he wrote.
The company was able to avoid going into restructuring under the Companies' Creditors Arrangement Act in Canada in part because of agreements with "a sufficient number of dealers," Mr. Comeau wrote.
General Motors Corp. slid into Chapter 11 bankruptcy protection in the United States and was bailed out with about $60-billion (U.S.) of taxpayer money from the U.S., Canadian and Ontario governments.
The original viability plan for GM Canada included a modest cut in its 700-plus dealership network, Mr. Comeau wrote, but that plan was rejected by the federal and Ontario governments.
Documents filed in one of the GM Canada dealership lawsuits, however, include a letter from Ontario Premier Dalton McGuinty saying that neither Ontario nor Ottawa ordered the auto maker to slash its dealership network in Canada during negotiations on the $10.5-billion provided by those governments for the bailout.
GM has applied to the Ontario Superior Court to rule on each of the 20 terminations involved in that action individually, or dismiss it and send each case to a dealer-auto maker arbitration system called the National Automobile Dealer Arbitration Plan.