Changes await Lee Motors: GM cuts ties with dealership
It's been an interesting couple of years for Lee Motors in Alexandria and changes are coming.
First, the dealership, like thousands of others throughout the country, had to weather a crippling slump in auto sales brought on by high gas prices that spiked to more than $4 a gallon in 2008.
Then it received bad news from General Motors - the struggling auto giant was faced with bankruptcy.
In a letter sent last summer, GM told Lee Motors owner Bumper Lee that it would be severing its ties with his dealership in November 2010. Thirty-seven other dealerships in Minnesota received the same letter.
The Minnesota Auto Dealers Association and National Auto Dealers said it would be working to reverse GM's decision but nothing happened.
GM didn't indicate why the 38 dealerships were singled out, Lee said.
This meant that Lee Motors would no longer be receiving new GM vehicles and its service department wouldn't be able to use GM parts.
"This was a big shock to everybody," said Lee.
Stunned, Lee tried to do something about his predicament. He flew to Washington, D.C. to try to get help from Congress. He visited with local representatives to see if they could do anything to keep the GM-dealership agreements intact.
The process lingered on in limbo for months with no answers or solutions. GM, said Lee, quit communicating with him.
Last Christmas, Congress passed a bill that at least required GM to explain the reasons why certain dealerships would be losing their agreements.
It ended up providing a rating system that Lee said didn't explain much. Lee Motors, for instance, ranked about in the middle with other dealerships yet it was on the list of those being eliminated.
Frustrated, Lee hired a law firm this past January and joined dozens of the other dealerships in Minnesota in suing GM in an effort to retain the franchise agreement through arbitration.
Finally, after another five months passed, Lee heard from GM. It agreed to continue its contract if Lee Motors completed a training, image and capitalization program, which were all doable, Lee said, but there was one more big catch: GM wanted Lee to complete a major facelift in the showroom and exterior of the building, an expense that was estimated to cost $800,000.
And he had to do it soon.
It was the last straw.
"Considering we are in the worst economic climate we've been in for decades, I chose not to do it," Lee said. "From a business perspective, it was just not practical."
So Lee Motors will be severing its ties with GM this fall. Lee emphasized that it will remain a local dealership that customers have trusted since it began back in 1973 but now it will specialize in top quality pre-owned cars and trucks.
Lee Motors will also continue to offer vehicle repair and maintenance, not only for GM vehicles but also for domestic as well as import brands.
This will leave Alexandria with just two new car dealerships - Alexandria Motors and Juettner Motors.
Despite the tough times - since 2007, Lee said 11 used car dealerships have closed in the Alexandria area - Lee is still confident about the future of Lee Motors.
On the plus side, it will no longer have to pay the GM franchise fees it doled out each month to sell its products. Also, Lee Motors typically sells a lot more used vehicles than new ones, Lee added.
He said the dealership shouldn't have to make any major staff adjustments; most of those cutbacks have already happened.
GM's actions in the past couple of years have left Lee feeling deeply disappointed.
"It's a case where GM didn't care - it had no feelings," he said. "Here's a company, that without the U.S. government, would be out of business and it's taking it out on everyone else...All this uncertainty was hard on everybody."
After the GM franchise agreement ends, Lee Motors will focus on the things it does best - satisfying its customers, Lee said.
"We have to reposition ourselves in a way that makes sense and make the best of things," he said.
It's already going in the right direction. This past August was Lee Motors' best month in three years.