GM dealers in the Toronto area are suing General Motors of Canada Ltd. and its parent company General Motors Co. for inadequate financial support, despite collecting millions of dollars from Canadian tax payers.
The 17 dealers, some of which are large operators with a long-standing relationship with the company, claim they are struggling to make a profit due to slow sales and a significant decline in market share.
The market share, or portion of the market controlled by GM, has fallen drastically since 2008 from 12.5 per cent to an all-time low of 5.63 per cent. This has created hardships for the dealers, primarily in the Greater Toronto Area where it is very expensive to operate a business.
In 2009, Canadian and Ontario governments contributed 10 billion dollars in a joint effort with the United States to bail out General Motors from bankruptcy. The Greater Toronto Area dealers claim that none of that money was reinvested in Canada as all of the funds were directed to the U.S.
The dealers want $400 million in damages. The Greater Toronto Area is the third largest market in North America, and without this support, the dealers say their business is not likely to survive in the long run.
“The claims are without merit and we intend to defend them vigorously,” said Adria MacKenzie, the spokeswoman for GM Canada. She had no further comment as that issue is now being investigated by the courts.
The lawsuit was filed last week with the Ontario Superior Court of Justice.
GM closed many of its Canadian dealers as part of its reorganization strategy in light of the bankruptcy. They also discontinued brands such as Pontiac, Saturn and Ion, some of which were big sellers in the Canadian market. This drove customers away, and the dealers are yet to see a return.
