John Isaacson, 48, is CEO of Lee Auto Malls, the largest dealership group in Maine, with nine locations. The family-owned company, which employs about 280 people, holds Toyota, Scion, Honda, Nissan, GMC, Cadillac, Chrysler, Dodge and Jeep franchises.
Lee Auto Malls also operates a buy-here, pay-here used-car business, Lee Credit Co., and a finance company, Lee Credit Express. Last year, Lee Auto Malls expanded that business when it bought a competitor, Credit Now Auto Co., and its finance company, Atlantic Acceptance Co., in Ellsworth, Maine. That brought to 17 the number of used-car stores Lee owns in Maine.
The group sold about 8,000 vehicles in 2009, Isaacson says: 2,500 new; 2,500 at the buy-here, pay-here stores; and 3,000 used vehicles at retail.
The Lee family has operated dealerships in Maine since 1936. Isaacson, not a family member, says the group always has gained business during hard times. He spoke with Staff Reporter Bradford Wernle.
The industry has been through unprecedented turmoil in the past 18 to 24 months. What effect has that had on your business?
In the summer of 2008, when we started to see volumes decreasing across the board at our stores, we made whatever cuts we needed to make then to stay ahead of the decrease in business. We let our people know that as far as we knew, we had made all the cuts we needed to make. We made those announcements in October 2008, whether we're talking about inventory, advertising, 401(k) contributions or whatever. We let them know way upfront so we weren't playing catch-up. We made deep cuts early, and that put us in good terms for profitability in 2009.
As we were budgeting for 2009, we planned for the worst-case scenario. Business was not as bad as we thought, and profits were significantly better than we thought they would be.
When we put our plans together in late 2008, we considered the potential for GM and Chrysler bankruptcies. We planned that both companies would be around at the end of 2009.
We had to make a decision. If we thought either one of them wasn't going to survive, we would have made very different choices in the last part of 2008. We were fortunate.
What opportunities did the downturn create for Lee Auto Malls?
Two things: We had the opportunity to buy one of our biggest competitors. I don't think that opportunity would have come up if the economy hadn't been so bad. We're in the buy-here, pay-here business in addition to the new-car business. Today it's called Lee Credit Now. We took on all their 70 employees, all their locations and all their receivables with their finance company.
The other opportunity was that we took the time to refine our processes of doing things at our various locations in a very, very similar fashion. Tougher times prohibited us from allowing various stores and managers to conduct businesses not using the same processes.
What effect is the Internet having on your business?
We were the first dealer in Maine to have a Web site. This is 15 years ago or so, sometime in the mid-'90s. We've always embraced it as a selling tool, a marketing tool.
In Maine, none of the markets are very big. If you want to do any big volume, you have to sell outside of your market. The Internet has been very helpful to us in doing that.
We also developed a Web site for our parts. We're selling high-performance Mopar parts and Nissan parts literally all over the world through our Web site leeparts.com. We're the second- or third-largest Nismo [Nissan's performance-parts brand] dealer in the country.
What's changing about how you and your customers interact via the Internet?
We're going further and further down the road to a sale online, especially in the buy-here, pay-here business. Instead of having people call us, we're directing people to fill out an application online. That's by far the choice of customers -- to fill out a finance application online. The last thing a customer wants to do is go to a dealership and spend time filling out an application if you're not going to get financed.
Dealers don't like saying "no," and customers don't like hearing "no."
When did you do away with the general managers?
We did that late '80s through early '90s. It became too difficult to run the company as one brand with one philosophy with nine people with different opinions on how to do things. In some cases we had the same franchises in competing markets. The general managers wanted to spend time competing against ourselves instead of the outside competition.
What does the Lee Auto Malls brand mean?
We hope it means a different experience: buying cars from people who are honest and professional. In Maine, it still matters that you're local. The owners' families have been in Maine for 100-plus years. We have very strong ties to our communities. Maine is kind of old-fashioned in that way. You're not considered a native Mainer unless your family has been here 100 years.
Maine is a big state. We have one store that is further from my office than New York City is from my office. When you have to cover that much area, it's really important you have a single brand, a single philosophy. Our motto is "We never forget who's driving." The point of that is the customer is in the driver's seat.
Are you looking to expand Lee Auto Malls?
I would say we're always looking for additional franchises and additional business opportunities. Over the last 74 years, we've done most of our expanding when others want to get out.
What impact have Toyota's unintended-acceleration problems had on your Toyota stores?
We're really only two months into this. For January, our new Toyota volume just about doubled what it was in January 2009. That gives you an idea how slow it was in 2009.
We have a much better team in place now. They'll tell you when they go into the customer lobby, a lot of customers want to bash them around. In most cases, they're satisfied we've answered their questions.
Our fixed-operations business on Toyota has had absolutely record business. We did twice the gross profit in fixed operations. It's all in additional warranty business and fixing recalls. We've had a very profitable January and February with Toyota.
The jury is still out in terms of long-term impact. The concern is that this will expand from being an anti-Toyota situation to an anti-Japanese car phenomenon. And we have both Honda and Nissan. We're vigilant on that. I don't think there's much we can do.
We've been extremely careful not to go out and advertise anything that is anti-Toyota. We have Chrysler and Honda and Nissan. We are not suggesting those customers get out of a Toyota and come buy a Honda or Nissan or whatever.
What are you doing to keep your Chrysler dealerships going while you wait for a generation of new vehicles to arrive?
Our inventories are much smaller than they used to be. That's partially by design. We can't get the products we want because Chrysler has cut back so much. Chrysler is not pushing us at all to take products. We've been able to handle that. That's a dramatic difference to what was going on a year ago when Chrysler management was screaming at us to take cars. They want us to have the right inventory.
Starting this month they've put in some good programs. They're giving dealers objectives, a big cash incentive to hit the stair-step numbers. We're seeing that push activity and really starting to increase the volume again.
How optimistic are you about the new Chrysler products that are coming?
I'm optimistic about the 2011 Grand Cherokee, which we should have in a few months. The rest I really don't know enough about.
What about your Maine Hybrids brand and Web site?
We started that as soon as Toyota and Honda came out with the Prius and Insight. It has been extremely good for us. We're not the largest Toyota dealer in Maine, but for years we've sold more Toyota hybrids than anybody else. It's a grass-roots effort, going to church picnics and stuff. In terms of how we're perceived in certain communities, people who care about the environment, it has put us in a good position with many of those groups.