On a sunny springtime morning just outside of Detroit, Gregory Jackson makes his rounds, strolling past row after row of gleaming automobiles on the lot of his Pontiac/Buick/GMC Truck dealership. A hint of winter still lingers in the air as Jackson walks past a colorful assembly of polished vehicles.
He spots a couple eyeing a shiny Buick LaCrosse parked in a row of sedans. There’s no salesman in sight. A few moments later, he sees another customer pull into the lot and slowly drive past him in search of a parking spot. Jackson has seen enough. Turning toward the large glass windows of the Prestige showroom, the 40-something president and CEO raises his hand, summoning a salesman. Immediately the door flies open and a manager rushes outside. “There are customers over there,” Jackson points out, gesturing toward the first couple. “I want someone to keep his eyes on this lot,” he says to the manager, who quickly complies.
Jackson prides himself on providing his customers with personalized attention, and he doesn’t waver from that fundamental. And the results are showing up in the total earnings of his nine dealerships. Detroit-based Prestige Automotive became the first black-owned auto dealer to surpass $1 billion in sales, making it one of four black-owned companies to ever achieve this. TLC Beatrice International Holdings Inc., World Wide Technology Inc., and CAMAC Holdings Inc. are the other three. .
Prestige saw a 39% increase in sales revenues, which was aided by revenues generated from a newly opened location as well as increased fleet sales. Some 60% of Prestige’s sales are fleet transactions. This firmly ensconces Prestige Automotive in the No. 1 spot — the pole position — on the BE AUTO DEALER 100 list. Profit margins on fleet sales are not as high as they are in other areas, but Prestige generated $20 million from its service department business, most of it coming from retail car sales. The business manages to produce the lion’s share of its profits from repair services and retail sales, which produce profits of 3% to 5% on sales. Also, the sheer volume of fleet transactions, which include sales, car rentals, and leasing companies, makes the deals worthwhile.
In an industry where perception is everything, the Prestige showroom has a warm and inviting feel to it. Soft lighting highlights the cars and relaxes customers. This Prestige dealership is a far cry from the drab lots with strands of multicolored, plastic flags flapping in the breeze, and handwritten “sale” posters hung on the gate. Even the waiting area in the service department has two small tables with toys on them — a godsend for customers waiting with impatient children. The showroom has a library with magazines and brochures, free coffee, and a computer for customers who want to surf the Internet while they wait.
In recognition of the company reaching its $1 billion milestone and achieving sales growth despite a lackluster business climate, BLACK ENTERPRISE has named Prestige Automotive the 2005 Auto Dealer of the Year. Jackson is not resting on his laurels, though. He is currently reviewing about five new deals and intends to expand the size of his impressive empire by adding two additional dealerships this year, one of which is already in the final architectural phase. To capitalize on America’s trend of buying foreign, Jackson is going international and completing a Mercedes-Benz location in suburban Detroit. “We’re very proud to offer a fine European brand such as Mercedes-Benz within the Prestige family,” he says.
But for black auto dealers who struggled to hold their own amid weak sales, last year’s tenuous market turned into a correction cycle that weeded out lesser players. “Last year, sales were either down or flat for most minority dealers. It was a year that really tested everyone, and tested them from the standpoint that you could no longer be in business and just hope for the best, you had to truely make the best of it,” says Jackson, who is president of the General Motors Minority Dealers Association.
GMMDA Executive Director Marjorie Staten says the decline in the number of black auto dealers came about because a number of black dealers did not run their dealerships efficiently, while others received offers they couldn’t refuse — in many cases, selling to nonminority dealers.” Of its 7,500 dealerships, 109 are owned by African Americans. As American automakers lose ground to their Asian rivals, more African American dealers are going after imports. General Motors is struggling with poor car sales in North America. With the once-dominant U.S. market share of the world’s largest automaker eroded to 25.4%, it’s hard to tally the exact effect this has on GM minority dealers.
MAINTAINING A COMPETITIVE EDGE
It is no coincidence that dealerships are trying to improve their reputations with customers at a time when vying for car buyer’s attention is especially intense. So what competitive advantage does Prestige have over its peers? “Greg Jackson is the advantage that Prestige Automotive has over other dealerships,” says Rick Wagoner, GM chairman and chief executive officer. “Greg recognizes that an integral part of running a successful business requires a commitment to his customers and their complete satisfaction, and being an active member of the community in which the dealership operates.”
As a member of the GM Minority Dealers Advisory Council, Jackson has been instrumental in helping to bring dealer issues and ideas to the GM board. He says minority dealers should give auto manufacturers more than a “social” reason to do business with them. “We must show them we can be financially profitable, create market share for them, and earn customer satisfaction. Years ago, it was all social. In today’s landscape, it is socio-economic. It is about money,” says Jackson.
Despite some gains and some troubling losses in the industry, Jackson thinks things are looking good for black-owned dealers. “Progress still does not seem to be coming as quickly as it could or as it should. African American dealers and all minority dealers have to be students of the game,” explains Jackson. He says minority dealers need to understand the importance of evaluating industry statistics and analyzing the financials that come out of each department daily as well as monthly.
THERE’S ALWAYS ROOM FOR GROWTH
The future for Prestige Automotive looks positive. Jackson has made a profit at every one of his stores. “But there are some small kinks in the armor that I would like to see us iron out,” he says. Although some of Prestige’s locations are not pulling in as much profit as others, overall, Jackson has been able to successfully leverage his cost expense and sustain revenue targets to keep his business afloat during tough times.
Jackson’s holding group, Jackson Automotive Management, operates the Prestige Automotive dealerships. In addition to the Ypsilanti, Michigan-based Prestige Pontiac/Buick/GMC Truck dealership — where his operating office is located — Jackson owns eight other retail sites. His five dealerships in Michigan are Prestige Chevrolet in Flushing, Prestige
Pontiac in Mt. Morris, North Country Ford in Clare, Courtesy Lincoln Mercury in Lansing, and Campus Ford in Okemos. His three Jacksonville, Florida, dealerships are Saturn of the Avenues, Saturn of Orange Park, and Saturn of Regency.To prepare for sustained growth and manage the company, Jackson sent eight team members to the National Automobile Dealers Association’s training program to assist in their development as general managers and future owners. To turbo-charge additional expense control and profitability, Jackson formed an internal “20 Group” for all Prestige locations. This is a core group of about 20 individuals who analyze each other’s operational figures and then share thoughts about their strengths and weaknesses. It’
s a self-help way for internal management to support one another.
The goal is to advance the company to an even higher level of efficiency. Prestige’s training budget will also be tripled to train staff and produce growth-generating customer satisfaction.
AN ENTREPRENEUR FROM DAY ONE
The billion-dollar dealer has come a long way since Aug. 2, 1993 — the day he purchased his first dealership with $150,000 of his life savings. Once Jackson took control of the dealership, he was able to increase sales and double profits in the first year. Jackson recalls how significant that was. “It woke a lot of people up to the fact that we were serious about being in this business,” he recalls. The success of his first dealership provided the necessary capital to secure his next one. Since then, all of Prestige Automotive’s dealerships have been financed internally from the profits of the corporation. In 1995, Jackson’s Prestige Pontiac Oldsmobile in Mt. Morris had $23.8 million in sales and made BE’s list of the top 100 black-owned car dealerships in the U.S. In 2004, Prestige ranked No. 1 on BE AUTO DEALER 100 list with $766.5 million in sales.
“I’ve been in the automotive business for 16 years, but I’ve been an entrepreneur for 24 years,” says Jackson, a Detroit native whose experience in retail sales laid the groundwork for his automotive ventures. “I owned and operated a Kastleton Cookie Company, which manufactured fresh-baked and wholesale frozen cookie dough for institutional use in school systems, prisons, and hospitals. I never really made any money in that business, but I learned some valuable lessons that helped propel me in the automobile business.”
Jackson received a master’s degree in finance and marketing from Atlanta University’s Graduate School of Business where he met his wife, Jacki. They got married in 1982, and she eventually joined her husband at Prestige as executive vice president of corporate strategies and business development. “My experience in commercial lending was very good for both of us because I got to see how people made money,” says Jacki, a former vice president for First of America National Bank.
CREATING A SUCCESSION PLAN
Looking ahead, the biggest challenge for Prestige Automotive will be how to respond to the uncertainties of consumer tastes and the changing economy. Diversifying into more car brands is Jackson’s answer to making Prestige more resilient to changing consumer preferences. “We want to have something for everybody, which, from a strategy standpoint, allows us to float better long-term,” he explains.
The key to Prestige’s growth in the past has been its ability to develop a strong, capable management team from within the company. Jackson is guiding Prestige through a stabilization period — strengthening its management team as well as preparing younger family members to be future leaders of the company. “I have several nieces and nephews, in addition to my children, who have expressed an interest in the business and are already working here in some capacity. They are all college students right now,” says Jackson. “I’m hoping that four or five of them actually decide to come into the business.” Jackson is already grooming his daughter, Anika, 20, and his son, Gregory Jr., 16, to assume leadership roles in the company with the ultimate goal of succeeding him in the big chair.
Passing on control of the business to his children makes sense to Jackson. It’s part of his continuing efforts to manage the company’s growth while training the next generation of its leaders. “A lot of my efforts are geared around how I prepare my daughter and son,” he says. “I see my nieces and nephews as future dealers, future chief financial officers, and future vice presidents. But they all will have to earn it.” Jackson is resolute about getting young family members more involved in his operations. He knows that under his direction, they’ll have what it takes to see Prestige Automotive to the next level.