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(Sean Gallup/2008 Getty Images)
(Sean Gallup/2008 Getty Images)

Car dealers keeping the heat on GM Canada Add to ...

The Canadian Automobile Dealers Association (CADA) is maintaining pressure on General Motors of Canada Ltd. to follow its parent company and reinstate some of the 240 Canadian dealerships that are being closed as a result of the auto maker's move to eliminate four of its eight brands.

The dealer organization urged GM Canada yesterday to set up a joint forum with CADA to review how it reached decisions last year to send termination notices to more than one-third of its Canadian dealers.

"If, as you contend, the process was fair, objective and supported by the data necessary to arrive at each and every decision, then the proposed exercise will only serve to corroborate your stance," CADA president Rick Gauthier said in a letter to Marc Comeau, GM Canada's vice-president of sales and marketing.

The auto maker has so far refused to reinstate any of its dealers, despite a decision last month by parent company General Motors Co. to allow 661 of 2,000 terminated U.S. dealers to reopen.

Mr. Gauthier and Mr. Comeau have been debating the issue in correspondence with each other as GM Canada defends itself against two lawsuits filed by dealers who were told last May that their services were no longer required.

One of those suits was filed by 19 dealers who did not sign wind-down agreements during the six days GM Canada gave them last May to decide whether to stay open and oppose the decisions or sign agreements that provided some compensation and included a clause saying they gave up the right to sue.

But another group of dealers who did sign the agreements have filed a class-action suit against GM Canada and law firm Cassels Brock & Blackwell LLP.

Lawyers for GM Canada argued in Ontario Superior Court last week that the suit by the 19 dealers who did not sign wind-down agreements should be dismissed and sent instead to an industry-dealer arbitration system called the National Automobile Dealer Arbitration Program. The company also argued that each dealer's termination should be heard individually by the court, if the court decided to hear the case and not send it to arbitration.

Mr. Comeau said in a court filing that up until April 27, 2009, GM Canada was preparing for a future that involved Buick, Cadillac, Chevrolet and GMC, with Pontiac retained as a niche brand. But a restructuring plan by General Motors Corp. that contained that plan was rejected by the U.S. and Canadian governments, Mr. Comeau said, which meant the company had to come up with more drastic measures that affected its dealers, workers and debt holders.

"GM Canada wanted to keep the Pontiac brand," he said during an examination for discovery.

But he added that he did not try to determine why the parent company made the decision to change its portfolio by eliminating Pontiac and attempting to sell off its Hummer, Saab and Saturn brands, which led to an acceleration in the consolidation of the Canadian dealer network.

"It would not have been even on my radar screen to attempt to understand the decision that was made," Mr. Comeau said. "Our job is to execute the decisions."

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