Running On Empty

Glance quickly at the numbers and you’d assume minority auto dealers were in cruise control. Why be concerned when the top black auto dealers garnered over $5.55 billion in revenues last year? But dig a little deeper and you’ll find that creating a successful black auto dealership is still an uphill drive.

The “Big Three,” General Motors, Chrysler and Ford, all have Minority Dealership Development (MDD) Programs in place. Yet many black auto dealers who complete these programs complain they are often “awarded” dealerships with poor track records in undesirable locations. And for newly minted dealers without the support systems that more established dealers enjoy, a poor location is often the kiss of death.

Last year, a disappointing number of the Big Three’s black dealerships were deemed unprofitable and many were subsequently closed. Fifty percent of Ford’s black dealerships failed to turn a profit in 1997, with GM and Chrysler reporting 45% and 20%, respectively. The numbers grew so alarming that early last year the Rev. Jesse Jackson and a coalition of black auto dealers called for GM to place a moratorium on closing unprofitable black dealerships while its MDD program was reevaluated. GM complied with the request.

The final report, issued this past June, made 215 recommendations for GM to make the program more effective for minority dealers. Whether GM actually follows through on any of the suggestions remains to be seen. But both Chrysler and Ford will have to follow GM’s lead by acknowledging a problem exists before more black auto dealers find themselves running on empty.