Ellis Chev ‘lives another day’

GM Canada plans to make major cuts in its dealer network as part of a restructuring plan to secure aid from U.S. and Canadian governments.

The manufacturer sent out emails today to 245 dealers—about 40 per cent of the 709 GM dealers in Canada—letting them know their sales and service agreements would not be renewed when they expire in October, 2010.

The emails were sent before a 3 p.m. deadline today, and the atmosphere at Ellis Chevrolet has been strained for several days. “It was on edge today for everybody,” said general manager Kevin Ellis, whose relief was apparent once the deadline had passed. “We get to live another day.”

He added that his father, company founder Richard Ellis, found the wait for GM’s announcement particularly worrisome. “Dad said he could not have lived another day.”

Ellis Chev employs two dozen workers and has annual sales of around $7 million, and the impact of its closure on the area would be huge, said Ellis. As well as the direct impact, there are suppliers and other spinoff effects that would have multiplied the economic damage.

Among the dealers who were notified by GM were several that are friends of the Ellis family, including one who opened his dealership about the same time as Richard Ellis and who struggled through a number of previous economic downturns, including one when interest rates reached 20 per cent.

While this crisis has passed, the manufacturer is reportedly not finished with its cuts. In late March, the manufacturer said it would reduce the number of its dealers from 709 to between 395 and 425 by the end of 2010.

An official at the Canadian Automobile Dealers Association has estimated 10,000 jobs could be affected by the dealer closures. "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."

GM plans to abandon its Pontiac brand and sell the Saab, Saturn and Hummer brands.

In the U.S., the company has been informing about 1,100 of its dealerships that they are being dropped.