Desperate in Detroit

Black dealerships retune their businesses as consumer demands change

continue to be a priority as well,” says Edward T. Welburn Jr., GM’s vice president of Global Design. “GM is living each day as a global company, linking 11 design and engineering centers, giving us an opportunity to surface fresh ideas on every project.”

An auto dealership must be at least 51% black-owned and have been fully operational for the previous calendar year.

If there is light at the end of GM’s tunnel, it would be welcome news for the company’s minority dealers. The No. 1 automaker had 344 minority-owned dealerships at the end of 2006, down from 359 in 2005, which was a difficult year for some black auto dealers. That year, approximately 20 African American dealerships either chose to exit the business or were terminated by GM. The picture is beginning to look less grim. “GM started thinking out of the box, and some of our members who were in a loss position or maybe in line to lose their dealerships were given opportunities to restructure or strengthen their dealership with some support from GM,” says Marjorie Staten, executive director of the GM Minority Dealer Association.

Chrysler: Bent But Not Broken
Chrysler Group fared the best of the Big Three, holding onto its 13% market share, whereas Ford and GM both lost ground. Despite this, DaimlerChrysler AG, the German parent company, is soliciting acquisition bids for the U.S. automaker.
No Chrysler Group dealers on last year’s auto dealer list went out of business, reports Jesse Greathouse, president of the DaimlerChrysler Minority Dealer Association. Of Chrysler Group’s 3,800 dealers, roughly 150 are ethnic minorities, 65 of them African American. With a smaller dealer network than Ford or GM, Chrysler Group store owners penetrate fewer layers of management to get heard in Detroit. “We can pretty much get to speak and
have all our concerns dealt with on a person-to-person basis,” says Greathouse. “We don’t seem to have some of the same communication challenges that the other domestic groups have with their manufacturers.”

Toyota Gains Ground
Toyota managed to experience the greatest gains while keeping its incentive spending in check. According to Toprak, Toyota enjoys very strong demand in the critical markets on the West and East coasts, and in Southern California, Southern Florida, New York, and surrounding states. Aiding the Japanese manufacturer’s cause is a full spectrum of vehicles–from the economical Yaris with its $12,000 price tag to the $60,000-plus Lexus LS 07.

This was good news for black auto dealers. In fact, no BE-listed Toyota or Lexus dealers went out of business in 2006, says Perry Watson III, president of the Toyota-Lexus Minority Dealer Association and owner of Indiana-based Lexus of Mishawaka (No. 74 on the BE AUTO DEALER 100 list with $33.2 million in sales). “Anybody who has Toyota or Lexus had a far better year than the industry.” Out of 233 Lexus and about 1,245 Toyota dealerships nationwide, 97 are minority-owned and 33 are African American-owned. The company had a net gain of four black dealers last year, and Watson expects one more black

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