The U.S. Auto Industry’s Unfinished Business

The GM Renaissance Center along Detroit's International Riverfront. Detroit was the epicenter of the black-owned auto industry.

One of the bright spots in our nation’s economic recovery has been the comeback of the American auto industry. Less than five years ago, the near collapse of the industry was the principal contributor, along with the home mortgage crisis, to the Great Recession—forcing two of Detroit’s Big Three  automakers, Chrysler and General Motors, to resort to government-backed bankruptcy. Vehicle sales in the U.S. hit rock bottom in 2009, the year of the government’s $85 billion bailout, at only 10.5 million.

Now, those days are fading in the rearview mirror like a horrible highway pileup. At the beginning of this year, analysts forecast yet another robust sales year, after vehicle sales totaling 14.5 million last year—a 13% increase from 2011. The Detroit Three, with GM and Chrysler out of bankruptcy, accounted for 6.5 million of U.S. vehicle sales in 2012, up 8% from the previous year. The comeback of the U.S. auto industry, if not complete, is well on its way.

However, there is unfinished business: When will the recovery reach the ranks of African American-owned auto dealerships devastated by the Great Recession and near collapse of the domestic auto industry? For two decades, beginning in 1988, Black Enterprise ranked the nation’s 100 largest black-owned auto dealerships as part of our annual report on black business. That all changed in 2008, when hundreds of dealerships, a disproportionate number of them black-owned, were shut down by auto manufacturers.

As a result, our 2009 listing of the largest black-owned dealerships was reduced to 75. The following year, it was reduced to just the top 60, where the list has since remained.
The loss of black-owned dealerships over the past five years has struck a blow to our nation’s economy and meant lost jobs for African Americans. According to the Economic Policy Institute, a nonprofit Washington, D.C.-based think tank, 11 months after the recession began in December 2007, there were 19,000 fewer African Americans employed in the auto industry.

To boost employment as well as entrepreneurial opportunities for African Americans, automotive manufacturers and the rest of the auto industry must make it a priority to rebuild the ranks of black-owned auto dealerships. This starts with recruiting qualified candidates for ownership and providing the necessary training, development, and financing to help rebuild the pipeline of African Americans ready, willing, and able to own, operate, and build profitable dealerships. And unlike before our most recent recession, this effort should not be shouldered by the Detroit Three alone; all automakers, foreign or domestic, that have a significant U.S. market presence (especially among black consumers) need to step up to the plate and work with groups such as the National Association of Minority Automobile Dealers to create more opportunities for African Americans to own and operate dealerships.

The comeback of the American auto industry is a healthy and welcome development for our nation’s economy, with strong indications of continuing in 2013 and beyond. However, until the way is made clear for more African Americans to own dealerships, at least in proportion to their representation before the recession, the recovery of the auto industry is far from complete.

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