in spite of his track record in the industry and capital resources to invest in the dealership.
"I had a hard time because the [imports] were not interested in putting any African American dealers in business, and they’re still not interested," says Farr. "None of the foreign auto companies have any kind of [Minority Dealer Development] program that even comes close to the domestics."
THE WAY THEY WERE
During the late 1960s, in the wake of the civil rights legislation that swept the country, the Big Three formally began their Minority Dealer Development (MDD) programs to "assist qualified minority candidates" in receiving dealerships. (Most of the dealers on our be auto dealer 100 list are graduates of these two-year programs, which combine both classroom instruction and on-the-job training.) Once a dealership became available, manufacturers provided financing for applicants who needed it.
Though far from perfect, these programs raised the number of domestic African American dealers from around 30 at the end of the 1970s to 480 at the end of 1998 (see "Running on Empty," Newspoints, November 1998).
In the meantime, import car makers were slowly setting up sales divisions and factories in the U.S. Until 1973, however, American consumers were still devoted to the Big Three. Then the country was hit by an oil embargo, and the shortage created a demand for smaller, more fuel-efficient Japanese cars. The U.S. was hit by another oil shortage in 1979. By 1982, the Japanese captured about 20% of the U.S. automotive industry.
By the 1980s, with oil supplies replenished, a bustling economy and a burgeoning Buppie and Yuppie middle class, came an increased demand for luxury car brands. Nameplates like Mercedes-Benz and BMW became the status symbols of choice. But it was easier for an African American to buy a luxury car than to own a luxury car dealership.
Chandler B. Lee of Classic Pontiac-Buick-GMC in Hicksville, New York (No. 88 on the be auto dealer 100 list with $25.5 million in gross sales), discovered that firsthand when, in 1986, he took over a domestic dealership with two imports — Mercedes-Benz and Toyota — in Southern Pines, North Carolina.
"Toyota exercised their right of first refusal, while Mercedes-Benz told me they wanted to discontinue my service contract," says the now 46-year-old dealer, who then had over 10 years’ experience in the auto industry as an engineer for GM.
Car companies usually screen their dealer candidates on the basis of four criteria: sufficient capital, extensive experience managing a dealership, commitment to customer satisfaction and a willingness to invest long term in the community where the dealership is located. If a candidate is not up to snuff, the company can exercise its "right of first refusal" and deny the applicant a dealership. Conversely, it can give them the green light and issue a letter of intent to purchase a dealer-owned store.
Despite the service contract Lee had with