If A.V. Fleming, executive director of the Ford Minority Dealer Assn. had a wish list it would be comprised of two parts.
First, Fleming would provide minority dealers, who bought their stores through auto makers' dealer development programs, with enough capital to quickly buy out manufacturers' shares in their dealerships.
Second, he would seek a downward adjustment of the good will that minority dealers are paying.
Called blue sky and based on future financial earning, some industry observers believe minority dealers paid too much for the name and reputation of dealerships they purchased. The assumption was that the name of a dealership would attract customers.
However, recent hard times have changed that equation, especially for domestic brands.
As consumers flock to other makes, mostly foreign, it means that domestic dealerships are no longer worth their original purchase price.
“Some (minority) dealers could find themselves upside down,” Fleming says. “The dealership is not worth what they owe on it.”
And Fleming says dealers who purchased their stores using private equity need working capital. Both Marjorie Staten, executive director of General Motors Minority Dealer Assn. and Damon Lester, president of the National Assn. of Minority Automobile Dealers, cite working capital as a major need of minority dealers.
Staten says minority dealers lack financial history in their communities. In other words they are not descendants of dealers who have built up long-term ties with financial institutions.
As a result, many minority dealers are under-capitalized and do not have the “legacy wealth that many majority dealers have to leverage and sustain the losses they are currently experiencing in their dealerships,” she says.
The Chrysler Minority Dealer Assn. (CMDA) has been working for three years on its faith-based Partners Program.
The organization has entered marketing and sales initiatives with at least five national organizations — the Progressive National Baptist Convention, 1,000 Churches, Church of God in Christ, the African Methodist Episcopal Zion and Kappa Alpha Psi Fraternity, Inc.
Together they have a membership of 9 million mostly African American consumers.
The way it works is that members of those organizations can get a coupon that gives them a $500 discount on a new Chrysler, Dodge or Jeep vehicle.
Once that coupon is redeemed, Chrysler's minority dealers have agreed to contribute $100 back to the patronizing customer's organization.
The program, “won't solve all the problems but it's a step in the right direction,” says Jesse Greathouse, chairman of CMDA's Partners Program and principal of Crossroad Chrysler Jeep in Oklahoma City, OK.
In local markets some CMDA dealerships have relationships with local churches that are not affiliated with the faith-based national associations. They too can participate in the coupon program.