TORONTO (CP) -- After suffering through at least three consecutive months of horrendous sales, some General Motors dealerships have seen a noticeable improvement this month.
But auto dealers say consumer confidence is still at historical lows, and their trade association is calling on the government to do more to stimulate sales.
John Carmichael, chairman and chief executive of City Buick Pontiac Cadillac Ltd. in Toronto, says his sales were off by a "very, very painful" 25 to 35 percent in December, January and February compared with the year-earlier months.
"Now March has the appearance of being a bit stronger, and it looks like there's a bit of a rebound happening that is encouraging," Carmichael said in an interview.
Sam Alaimo, president of Roy Foss Chevrolet in Woodbridge, Ont., said he has also seen an improvement. With traffic in his Toronto-area showroom up 25 percent in March compared to February, he expects to sell more cars this month than he did a year ago.
But Alaimo said consumer caution is still apparent. March sales seem to be concentrated on what he called "core vehicles" such as small SUVs and small sedans like the Equinox and the Cobalt.
"From a profitability standpoint it doesn't really do a lot, but at least it's action," Alaimo said.
Canadian sales for March will be released by the automakers next week but according to figures compiled by DesRosiers Automotive Consultants, the number of passenger cars of all makes and models sold in Canada in January and February were down about 30 percent from the same months in 2008.
So a marginal uptick in sales isn't going to be enough for many car dealers, who have been struggling to keep their businesses running amid dropping consumer confidence and tight credit markets that make it difficult for potential buyers to borrow money.
Auto industry analyst Dennis DesRosiers has predicted that the number of new-car dealership will shrink by about 500 over the next five years, from about 3,000 currently in Canada.
GM and Chrysler, the two troubled automakers that are asking governments in both the U.S. and Canada to provide them with emergency loans, have asked their dealers to share the pain.
Chrysler has cut dealers' profits and downloaded the cost of filling up a new vehicle with gasoline, moves that represent millions of dollars worth of sacrifices for the company's 450 dealers in Canada.
And GM has said it will reduce the number of its Canadian dealerships by about a third, from 700 to between 450 and 500, by 2014.
Both Carmichael and Alaimo acknowledged they think GM has too many dealerships, particularly in big urban centers like Toronto, and said they would be willing to consider consolidation if necessary.
"In a city like Toronto, there are far too many dealers for the amount of sales that are taking place, and so the dealers here are really in difficulty, fighting to be profitable or to stay alive," Carmichael said, adding that consolidation is "the right thing to do."
"There's no pot of gold at the end of this rainbow," he said.
"We've got to be reasonable and we've got to be understanding that this is a difficult time. I just hope that between the government and the manufacturers, they'll find a solution that does the right thing for the dealers that have to be closed and consolidated."
And Alaimo said he sees potential benefits from Ottawa's promise in the last federal budget, which takes effect April 1, to buy up to $12 billion in securities backed in part by loans and leases on vehicles. But Alaimo said the program needs to happen immediately.
"I think they're targeting sometime in May to do that, but in the meantime, a lot of consumers are walking into showrooms, buying cars, but not being able to take them home because they can't get the credit," Alaimo said.
Michael Hatch, chief economist for the Canadian Automobile Dealers Association, said dealers are already doing their fair share for the automakers.
"Dealers are forced to share the pain just by virtue of the fact that there is a great deal of decreased demand out there," Hatch said.
"They're having to carry greater financing costs, they're having to slash their prices in order to try to get people back into their showrooms, they've seen their cost of credit go up and their sales go down, so it's not an easy time for anybody right now."
Hatch said the government needs to do more to stimulate sales, including a vehicle scrappage program like that already in place in Germany under which consumers are given 2,500 euros -- more than C$4,000 -- to trade in their old cars.