Problems For Lunenberg Car Dealer Beyond Repair
Apple Valley Ford declares bankruptcy
In early 2006, Connecticut resident Anne Lavoie invested her life savings in a Ford dealership in Lunenburg, but just two years later, Apple Valley Ford has filed for bankruptcy.
To Lavoie, and some others in the industry, her situation reflects bad business practices by Ford Motor Co. But other observers say it is simply the result of entering the business at the wrong time.
Lavoie was no stranger to the car industry when she opened Apple Valley. She started working with cars at 17 years old and had 20 years of experience at other Ford dealerships. At two of them, she had been a minority owner. And she was so dedicated to Ford that she says even today that she "bleeds blue."
When Lavoie bought the franchise, she said, officials at Ford assured her it was a viable operation and gave her the financing to get off the ground. She cashed out her 401(k) and invested $1.5 million of her own money in the store.
Then, the auto market hit hard times. Before she had even begun getting the dealership off the ground, the business started failing. Ford demanded that she recapitalize, but she had no money left to use - something she said Ford knew from the beginning. In May, she said, Ford officials told her that, in hindsight, they shouldn't have given her a loan to start with.
"If they were forthright in telling me what was going on, I never would have invested in this venture," Lavoie said. "I feel that they put me in a position to fail."
Anne Lavoie.Media Speculation
Automotive News, an industry publication, has chronicled Lavoie's story in several articles. Last May, it told of the long hours she put into making a go of the dealership, sleeping on a futon at the business several nights a week instead of driving home to Simsbury, Conn.
After Lavoie lost her franchise, the magazine ran an editorial complaining that Ford's behavior in her case reflected bad treatment of its dealers.
Tom Cleary, owner of another Ford dealership located nearby, Townsend Sales & Service Inc., said he thinks some of Automotive News' complaints about Ford are not well founded. He said he is not personally familiar with the situation at Apple Valley, but he has found Ford to be a good company to do business with.
"They're doing what they need to do to survive in a tough environment," he said. "And they are not alienating the dealers that are out there doing their job."
He said Ford has been particularly helpful in providing new consulting services to its franchise owners in recent years.
Still, Cleary said he thinks Lavoie had a difficult task set out for her in running a brand new dealership in the current economic climate. He said things are particularly hard for Ford dealers like him because pickup trucks, which account for 60 to 70 percent of his sales, are less and less in demand as the bad housing market leaves building contractors with little work to do.
"I couldn't imagine starting from scratch in this economy," he said.
A Ford spokeswoman, Marisa Bradley, disputes the timing of the dealership downsizing.
She said it wasn't until the third quarter of 2007 that the company, at the request of dealers worried about overcrowded markets, began buying out dealers on a voluntary basis.
So far, she said, Ford has closed about 400 dealerships through the program. At the time Lavoie opened her store, Bradley said, the dealership reduction was not even on the horizon.
As for the specifics of Lavoie's story, Bradley said she does not have enough information to discuss the issues.
Michael Nault, owner of D&G Auto Body Supply in Fitchburg, one of the businesses that Apple Valley ended up owing money, said some of Lavoie's problems may have been the result of her own mistakes. He said his company worked with her in setting up a body shop at the dealership, but she didn't follow through on suggestions he believes would have helped her make money.
For instance, Nault said, he and his employees had suggested Apple Valley get on a list of shops that insurance companies recommend to car owners who have been in accidents, but the company never did it.
Lavoie said she did her best to get on the list but was not able to.
"You've got to pay people to do that," she said. "I tried to get on the list, but if you don't know somebody who's in the know..."
Nault said that even if Lavoie had not encountered the problems she did, it might not have made the auto body shop successful.
He said it can be difficult to build up a base of customers, and most dealerships have gotten out of that line of business, finding that it can't make them enough money.
Jeffrey Chandler, general manager of Colonial West Chevrolet in Fitchburg, another of Apple Valley's creditors, said he doesn't know if Lavoie could have done anything to save the business.
"I don't think it was her ability as much as it was the times that were going on," he said. "I don't know if she had a fair shot."
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