For the first time ever, industry conditions force us not to name an Auto Dealer of the Year. With the exception of financial services, no other industry has been harder hit by the economic downturn than automotive. For U.S. manufacturers (which hold the lion’s share of African American-owned dealerships), it has been a harrowing year that could well culminate with the bankruptcy of at least one of the former Big Three.
According to ratings agency Standard & Poor’s, vehicle sales in the fourth quarter of 2008 were the lowest in 25 years—a trend that continued into the first quarter of 2009. S&P also projects that sales will drop by 21% this year as American manufacturers continue to lose market share to imports.
These pressures have resulted in substantial sales declines for the vast majority of black-owned automotive dealerships. At press time, it was still not known how General Motors would restructure itself, or if Chrysler would merge with Italian carmaker Fiat, but the damage to auto dealers resulted in fewer franchises qualifying for black enterprise’s annual rankings: Our editors could rank only 75 dealers versus 100 in previous years. Moreover, for the first time in the 21 years that be has produced a separate listing of auto dealerships, we could not designate, based on sales performance or industry innovation, one franchise as Auto Dealer of the Year.
The automotive industry will endure, of course. Collectively, be auto dealers produced more than $6.34 billion in revenues and employed 8,925. But the majority of dealerships—which have long been an avenue to building wealth, fostering entrepreneurship, and creating jobs in the African American community—continue to struggle with the worst industry fundamentals ever. Only government policy, manufacturer initiatives, and entrepreneurial ingenuity can secure the future of this segment of the be 100s companies.