Inside Automotive with Jim Fitzpatrick, powered by CBT News

Minnesota Auto Trends and Dealer Advocacy with Scott Lambert

• Jim Fitzpatrick • Season 1 • Episode 52

Share episode

Minnesota’s auto market is entering a period of reset, and Scott Lambert, president of the Minnesota Automobile Dealers Association, joins Inside Automotive to break down the forces shaping dealerships statewide. Lambert explains how soft economic conditions—driven in part by agriculture headwinds and rising tariffs—are influencing vehicle demand and affordability. He also details ongoing legal and legislative challenges, including enforcement of Minnesota’s third-party time guide law and negotiations with manufacturers over warranty reimbursement. The conversation explores how parts theft and fraud continue to impact dealer operations, as well as why EV adoption in cold-weather markets like Minnesota remains uneven. Looking ahead, Lambert outlines MADA’s priorities for 2026, including modernizing title and registration systems and maintaining a firm advocacy posture to protect franchise dealers as the market evolves.

Discussion topics include:

  • Economic and agriculture-related pressures on vehicle demand
  • Warranty reimbursement and manufacturer compliance challenges
  • Parts theft, fraud, and dealer cost exposure
  • EV and hybrid adoption trends in cold-climate markets
  • Legislative priorities and dealer advocacy heading into 2026

Inside Automotive with Jim Fitzpatrick is powered by CBT News, your go-to source for the latest news, trends, and insights in retail automotive. Subscribe for more interviews with top industry leaders, dealership innovators, and experts shaping the future of automotive.

For more content, visit CBTNews.com and follow us on your favorite podcast platform.

Jim Fitzpatrick:

As we wrap up the year, we're taking a closer look at the issues shaping Minnesota car dealers from new legislation to the shifting EV landscape. Joining us now with an end-of-the-year update is Scott Lambert, the president of the Minnesota Automobile Dealers Association. Scott, thank you so much for joining us on the show today.

SPEAKER_00:

Good to be here, Jim. Good to see you again.

Jim Fitzpatrick:

Sure. So first and foremost, um, are you snowed in there in Minnesota? Or uh everyone thinks right away it's it's it's it's snowmagedting up there.

SPEAKER_00:

Yeah, we well, we had not as bad as it is in the northeast today, but we're uh we've had about five inches over the weekend, and we're gonna have a white Christmas.

Jim Fitzpatrick:

Nice, very nice. That's great. That's great. So let's uh let's start with the big picture uh look. How do you characterize the overall car market in Minnesota and and uh and the broader you know, Midwest, uh what's happening right now in the Midwest in terms of the auto market?

SPEAKER_00:

Yeah, the market right now is soft, and there's just no getting around that. And we're still a very agricultural state, and it drives a lot of our industry. Uh, and with uh farm prices being a little bit depressed for corn and soybeans and the sugar beets, uh, which a lot of people don't think about, but sugar beets are a huge industry in Minnesota, but it was it was a little too wet for sugar beets. Okay, and so the crop didn't come in the way people had anticipated or hoped that it would. And what that means is then that farmers are not coming in buying their new pickup trucks, yeah. And you know, they're hanging on to their cash. Yeah, and that kind of trickles through the economy. We can just kind of see that people are businesses are hanging on to their cash, and that makes consumers just a little, a little more hesitant, maybe. Sure. Business is soft right now.

Jim Fitzpatrick:

Okay.

SPEAKER_00:

Not not terrible. We're not in a crisis, but it's not great.

Jim Fitzpatrick:

Okay, okay. Um, and in terms of the tariffs, is that hitting the farmers especially hard there in Minnesota as well?

SPEAKER_00:

Yeah, tariffs uh the the tariff wars have been especially hard, especially on soybean uh farmers.

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

Uh I know that the administration is aware of that, and there are efforts to correct that, but yes, it is it has had an impact on the farm economy.

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

Even though it hasn't really had an impact on car pricing uh really at all.

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

Uh, but it has an impact on the farm economy, and that trickles through everything else.

Jim Fitzpatrick:

Of course, of course, yeah. It looks like the manufacturers, you know, absorbed some of that in you know this past year. Uh, I don't know that they're gonna continue to do that going into 2026. What's your take on that?

SPEAKER_00:

Well, I think affordability of vehicles is becoming an issue.

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

And you know, we put on an auto show every year, and every year I wander around and I look at the price of these vehicles, these pickup trucks, and it doesn't have to be a luxury vehicle to be, you know, 70, 80, 90,000. And you do wonder what's the limit? At what point can people keep buying new cars at those kind of prices?

unknown:

Yeah.

SPEAKER_00:

So I've I've always wondered about it. I think it's starting to creep into the the narrative, the dialogue a bit right now, and uh, and I think that's gonna be an issue going forward.

Jim Fitzpatrick:

Yeah, for sure. And uh, you know, that the tariffs are still one of those uh thorns in uh not just the OEM side, but the dealer side as well, in terms of parts and and everything else that you know that it just is. Right, right.

SPEAKER_00:

And that's that's true. Tariffs have not affected car pricing, yeah, but it does affect parts, the availability of parts, the price of parts. That's what the dealers tell us.

Jim Fitzpatrick:

Right, right, for sure. So one of the big uh biggest issues that uh this year for the Minnesota uh has been the Minnesota third-party time guide law. Tell us about that, where that stands.

SPEAKER_00:

Well, we were one of the first states to adopt a third-party time guide uh over the strong objection of the manufacturers.

SPEAKER_02:

Yeah.

SPEAKER_00:

Uh but the dealers were sort of at their wit's end. I mean, they just were not getting properly reimbursed with the warranty work they were doing. And so we pressed ahead with it. We we worked with the labor unions in Minnesota uh to get this done uh and partnered with them. Uh, I think we have a good strong law. The problem then was getting manufacturers to comply with Minnesota law, even though we gave them extra time. We are currently in federal court with Volkswagen uh over there, uh, their insistence that the law does not apply to them. Uh, and I can't really discuss that much further. Uh, we've been in negotiations with a couple other manufacturers. Some of the manufacturers, for the most part, manufacturers are in compliance, but we passed this law three years ago. And it's taken three years to get the bulk of the uh manufacturers to agree to comply with Minnesota law. We had to get our attorney general involved. It's been uh it's been uh an effort. I I've I've never passed a law. Passing the law was hard enough. Yeah, but I've never passed anything that was so hard to get the manufacturers to comply with.

Jim Fitzpatrick:

Yeah, that that is it is amazing. It seems like there's no teeth in these these laws around the country. And uh to your point, to get the OEMs to comply is just uh a whole nother, you know, a whole nother story.

SPEAKER_00:

Yeah, we've never contemplated a penalty section in any franchise law we've ever done. Uh we we usually work these things out and make sure the law is workable. And I think we had a workable law. They just didn't want to do it.

SPEAKER_02:

Yeah.

SPEAKER_00:

And uh and I think if if we pursued anything again, we would probably put some teeth in the penalties for non-compliance.

Jim Fitzpatrick:

Yeah, for sure. You're gonna have to. Um, it seems as though VW doesn't think they've got to adhere to the laws in many areas of their business operations. That's true. No, they they why do they think they're in this special box when it comes to the U.S. laws and franchising and everything else?

SPEAKER_00:

Yeah, I don't know. They sit there in Germany and and think they can pick and choose which laws they want to be involved with. Of course, we're having the big scout uh debate with them right now. We're on we're on the edge of that. Um, we're what we're watching that. My our dealers are very concerned. I've got a bunch of BW dealers who would love to sell their product.

Jim Fitzpatrick:

Of course.

SPEAKER_00:

But for some reason, they feel that they can compete with their own dealers.

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

And uh, you know, we've got uh the the Automotive Alliance has not has been on record this year, is not being in favor of the franchise system.

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

So we're we're kind of battling that. Uh all it that kind of affects the whole political ecosystem in our relationship with our manufacturers.

Jim Fitzpatrick:

And it's been a it's been a tense year. Sure, sure, no question. And when they wrote that letter and it was uh it made obviously headlines here in automotive news and everywhere else, it was like, what where did that come from? You know, all of a sudden we're you know, we're now fighting this this other association representing the manufacturers, and uh it looks like the things are getting worse, not getting better to you know, to to squash this whole thing, you know? It's crazy.

SPEAKER_00:

We we could get a lot done together, yeah, uh, if they want. But if they want to fight with us, you know, I think all my colleagues around the country are up for that as well. Yeah, it's it's sort of choose your path.

SPEAKER_02:

Sure.

SPEAKER_00:

Uh if manufacturers want to uh try and fight the franchise system, we're we're game for that. It's still the best entrepreneurial uh distribution system of product ever invented. It's very adaptable, it's no cost to the manufacturers, uh, and it takes care of their customers uh extremely well. So no question. Uh they always think they they are smarter than everybody else, but they're not. They're they're great at building cars. Uh, we're great at selling cars. I think we should all understand our own lanes.

Jim Fitzpatrick:

That's right. That's right. So Minnesota has been uh leading the charge on catalytic converter theft legislation at the uh federal level. Where do things stand on that?

SPEAKER_00:

Uh yeah, so our our legislators, uh Senator Amy Klobishar and uh our uh congressman Betty McCullum have been leads on this. This has been a huge problem in Minnesota. Uh and it's a fairly simple bill. Uh, you know, it's it's uh it's illegal for you, Jim, to tamper with your own catalytic converter. It is not illegal. It's a federal crime for you to tamper with your own catalytic converter. But if you if you go over and steal your neighbor's catalytic converter, that's not a federal crime. So we're trying to make that federal crime. It's fairly simple.

Jim Fitzpatrick:

Yeah, that's a no-brainer.

SPEAKER_00:

And we're trying, yeah, right. And so and we're trying to put a uh uh identifiable mark on on the on the on the product. So so when you catch somebody with a trailer load full of catalytic converters, they can be traced.

SPEAKER_02:

Yeah.

SPEAKER_00:

And we see this all the time in wheel and tire theft that manufacturers who mark their wheels and tires, those tires and wheels don't get stolen. Yeah, uh, the ones who do not mark them, they get stolen off the dealer's lots.

Jim Fitzpatrick:

Yeah, you're right.

SPEAKER_00:

And so this is a fairly simple thing to do. But again, the manufacturers, we're not asking them to put fin numbers on the on the uh on the catalytic converters. We've looked at their manufacturing process, we've heard what they've said. I think they make a good argument, yeah, but they still have opposed this whole concept. And and it just doesn't make sense. They've gotten in the way. They've caused it's causing millions of dollars every year in damage and theft and uh fraud. And uh, we need to get this done. Manufacturers need to understand that there's a uh a kind of a common sense solution to this and uh work with us on this. This is another example of something. We get a lot, we could get a lot done if they would agree to partner with us. But they they have not done that so far.

Jim Fitzpatrick:

You wonder what what their argument would be for such a you know bill to be passed. I mean, it it it's it sounds to me like uh to your point a no-brainer and an easy bill to pass, but uh I can't imagine what the other side is is what would the problem be with that, you know.

SPEAKER_00:

They what they tell us is that they don't want one more uh item that they have to keep track of. It's a cost issue uh to them. And but they already mark dozens of parts with with VIN numbers and and other markings, and this is one more that people you know are actively stealing, that you can cut off the car in just a few seconds, really. Yeah, so it's it's a it's a it's a defined need, and the need has been defined by the criminal element that's doing it. Yeah, so I don't understand their cost argument. I think it would cost us all a lot less if these things were not being uh stolen uh as readily as they are.

Jim Fitzpatrick:

That's right. This year also brought us uh the the demise of the tax incentive for EVs. And uh where where does your state where does it stand on EVs? What we're we're um I I know you got a lot of farms out there, and that you know, EVs weren't very popular among the farming community, but um where where does that stand today? What and and then the follow-up's gonna be what do you think manufacturers need to do in order to get the EV sales and service more sustainable?

SPEAKER_00:

Yeah, well, uh there's a big reset going on in the whole EV market. Um, again, with our auto show, our auto show is coming up in January, and we we have previously had huge um uh electric vehicle neighborhoods sponsored by our local uh utility um and packed with electric vehicle. Uh there's hardly anything in that space right now. We're we're having a heck of a time filling it.

Jim Fitzpatrick:

Wow.

SPEAKER_00:

Um, there's just a big reset going on with electric vehicles. Yeah, and I think there was the numbers will show there was a surge in sales at the end of September uh as the tax credits were winding up.

Jim Fitzpatrick:

That's right.

SPEAKER_00:

But it's it's gotten quieter, and and the the sales never really got above five percent in Minnesota. Okay. And what is growing is interest in hybrids.

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

And and but but the environmental community never liked hybrids.

SPEAKER_02:

Yeah.

SPEAKER_00:

So uh so they were not part of any mandate. Now we were part of the California uh mandate, part of the California emission system.

Jim Fitzpatrick:

Yep.

SPEAKER_00:

Uh, but fortunately, uh cooler heads have finally prevailed, and that whole system has been wiped out. There is no more California mandate or waiver. California doesn't have its own emission system. So it was, I will just say the word stupid for one country to have two emission systems was was boneheaded. Oh, yeah. There's no other words for it.

Jim Fitzpatrick:

That's right.

SPEAKER_00:

Uh so now now one country, the America, has uh one emission system. That's the way it should be. Yeah now we can still make more efficient uh emission systems, and and if people want to buy uh electric vehicles, we're happy to sell those to them.

SPEAKER_02:

Yeah.

SPEAKER_00:

But you know, it's this is a cold state. It's uh it's gonna be seven below tomorrow. And and electric vehicles do not uh operate uh very efficiently in in cold, cold climates. We don't all live in Southern California, right? So uh most electric vehicles are gonna lose 40 percent of their uh battery capacity. That means their range is gonna be limited. Right. And uh it's hard to live in Minnesota, especially when there's vast uh uh distances to cover. It's it's one thing if you're if you're traveling a few miles to work, but a lot of people jump in their pickups and travel great distances either for work or for fun. You know, they they they they throw on their snowmobile trailer or their or their ice fishing house. And with electric vehicles, especially in the cold weather, there's no towing capacity.

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

So so there's all these things that made it a hard sell in Minnesota. And and our politicians just we had a heck of a time uh convincing anybody that this didn't practically work. So I I think the reset is probably overdue and a good thing, and the market will find its place. I don't think the electric vehicle is going away, the technology is too impressive. Sure. But but it's gonna find its kind of its own organic spot in the marketplace.

Jim Fitzpatrick:

Right. As as it should as it should. I mean, rather than the government dictating, you know, the the EV market out there and telling consumers by a certain day that it's gotta be, you know, you've got to be driving an EV. And that's crazy. I mean, it's a it's a free market system. Let build the EVs if you want to, and then let the consumers buy them at whatever rate they're gonna buy them at, right?

SPEAKER_00:

Yeah, it's hard to mandate what consumers are gonna buy.

Jim Fitzpatrick:

Right.

SPEAKER_00:

Consumers will buy what consumers want to buy.

Jim Fitzpatrick:

Right. Right.

SPEAKER_00:

No doubt. There's just no changing that.

Jim Fitzpatrick:

Yeah, yeah, no question about it. As you look uh toward the next year, uh 2026, what will be the association's uh what's on your to-do list? What's the what are the top priorities you want to get done next year?

SPEAKER_00:

Well, uh, you know, it's kind of parochial, but we're looking at title and registration changes for our state system, trying to advance uh that as best we can. And I think every state in the country is sort of creeping up towards electronic titles and and lien release, electronic lien releases and that sort of thing. There's a lot of discussion and that whole uh that whole ecosystem of uh titling. Every state's got their own law. Uh and ours is uh, you know, we're kind of out of the 1950s finally, but we're we're trying to modernize that and and move forward with that. So that'll be that'll occupy a lot of our political capital. Uh, and we'll um uh we'll see what else we need to do with the manufacturers. Depends on how the manufacturers want to play. If they want to play with us, great, let's get a lot done. If they want to try and make life hard for the dealers, we will we will address that as aggressively as we ever do.

Jim Fitzpatrick:

Scott Lambert, the president of the Minnesota Automobile Dealers Association. Thank you so much for joining us on the show and providing an update.

SPEAKER_00:

Thank you, Jim. Good to see you again.

Jim Fitzpatrick:

You too. Thanks for watching Inside Automotive with Jim Fitzpatrick.