From Automotive Parts to Retail to Service

From Automotive Parts to Retail to Service

0130_bus-aeneas-williamsIn 2008, new car sales slumped dramatically and the National Automobile Dealers Association said that by the end of 2008 alone 900 dealerships out of 19,700 were expected to close, with a loss of almost 50,000 jobs.

However, one Honda dealership in particular survived last year’s fallout, albeit without its former owner. Former National Football League Pro Bowl player Aeneas Williams sold his Monroe, Louisiana Honda dealership — the last of four he bought in 2001 and 2002 — to Butch Carter, owner of the Carter Group, in December.

“The drop in sales was symptomatic of an overall problem,” says Williams, who is now the pastor at the Spirit of the Lord Family Church in St. Louis. He attempted to manage his dealership from afar in Missouri. “This experience has taught me that was not the best way to do it. It worked out best to relinquish and sell the dealerships and give someone else an opportunity that would be more hands-on and deeper involved.”

Black-owned auto dealers like Carter Group are fighting an uphill battle in the current economy. Some 150 to 200 minority dealers were among the roughly 800 U.S. auto stores that closed last year, Damon Lester, the president of the National Association of Minority Automobile Dealers, recently told USA Today.

While some dealerships have only started to falter over the last year or two due to high gas prices and less access to credit for consumers, Williams says that sales at his Toyota dealership, which he sold to the Carter Group in May, had suffered even before the current credit crunch began. Sales at Aeneas Williams Auto Group, which was No. 60 on the 2002 BE 100s auto dealer list, slipped from $71 million in 2002 to $41 million in 2007. By 2008, Williams Auto Group was no longer a BE 100s company.

The Honda deal must still be approved by the Japanese auto maker, which should announce its decision by June. Carter Group, which also controls and distributes patents for automotive parts manufacturers, has extensive plans in mind. The company wants to convert the old dealerships into tire and service centers and build new dealerships on land it has acquired near the old dealerships.

“I think this market for dealerships will go through a two-year period of immense shrinkage. People are going to hold onto their vehicles a lot longer and the tire and service centers will have a chance to be very lucrative,” says Carter, who plans to continue supplying parts to GM.

At face value turning the dealerships into service centers makes a lot of sense, says John Schmitt, senior economist at the Center for Economic and Policy Research, a non-profit research center based in Washington, D.C. “[Carter] is reading where the market is going to be two to five to ten years down the line and not where it is now. Where it is now, almost no investment makes sense. This is a moment where people who have deep pockets can profit.