GM to Cut 42% of Canadian Dealers

General Motors of Canada Ltd. is informing 42%, or about 300, of its 700 dealers it will not renew their franchise agreements when they expire in October 2010.

The move follows almost exactly GM’s plans to reduce its U.S. dealer body 42%, which amounts to 2,600 dealerships. GM began the initial process by sending letters to about 1,100 U.S. dealers last Friday, telling them their franchise agreements will not be renewed when they end, also in October 2010.

The auto maker says it will focus its rationalization efforts on “key urban markets in an effort to achieve a viable network configuration all across Canada.”

The goal is to create more competitive dealers that have higher sales volumes.

GM Canada’s 51,334 sales were down 16.7% through April, according to Ward’s data. Its dealers are averaging just over 18 new-vehicle sales a month, or about 220 units per year.

The Canadian Automobile Dealers Assn. says its 3,000 new-vehicle dealers sell an average of 400 units annually.

CADA’s President and CEO Richard Gauthier recently told a Canadian television station he does not expect Chrysler Canada Inc. to close stores because it only has 400 dealerships.

[email protected]