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NAMAD chief: Loans should help ‘disadvantaged’ dealers

Any direct federal loan package for the auto industry should include $500 million earmarked to help “disadvantaged” auto dealers, says the head of the nation’s largest minority dealer group.

Desmond Roberts, chairman of the National Association of Minority Automobile Dealers, says his group has been urging members of Congress for most of the summer to provide $500 million in direct loans and loan guarantees to help minority dealers.

Roberts says a “substantial” number of minority dealers — black dealers in particular — that operate domestic franchises are in “dire straits.”

He describes a disadvantaged dealer as any dealer who has been turned down even for high interest loans. Many minority dealers fit that description and without some financial relief, face failure by year end, he adds.

Detroit 3 CEOs are asking congressional leaders to fund a $25 billion loan program for the industry.

“We were asking before the manufacturers went with their request,” says Roberts, owner of Advantage Chevrolet, of Hodgkins, Ill.

“What we’re asking now is if they are going to appropriate $25 billion, can’t they carve out $500 million for the dealers who are in dire straits, whose absolute existence is threatened today? We’re the forgotten component.”

Roberts says the minority dealers’ request has a precedent. As part of the deal that bailed out Chrysler in 1979, the Carter Administration set aside $12 million in direct loans and $200 million to $300 million in guaranteed loans to assist minority auto dealers.

Roberts says his members are appealing to members of the Congressional Black Caucus and other congressional leaders.

Black Caucus members are open to the idea of helping the dealers, Roberts says. NAMAD is pressing those leaders to ask members of the Congressional Hispanic and the Congressional Asian Pacific American caucuses for support, he added.

Other congressional leaders have indicated that they do not support the dealers’ quest for help, he says.

When Roberts became a dealer in 1984, there were 125 black entrepreneurs that owned GM dealerships, Roberts says. Currently, there are fewer than 50. “I can tell you a significant number of those 50 are in jeopardy of losing their dealerships prior to the end of the year,” he says. “This is across the board with domestic manufacturers.”

GM has about 340 minority owned dealerships out of 6,550.

A.V. Fleming, executive director of the Ford minority dealer association, which represents the owners of 125 dealerships, agrees that many of his members, who also are NAMAD members, are hurting.

About 271 of Ford Motor Co.’s 4,056 dealerships are owned by minority dealers, he says.

He says the auto industry is transforming itself and will make more desirable vehicles in the future. When that happens, sales will pick up and in turn strengthen the distribution system, he says.

But many minority, nonminority and small dealers need cash now, Fleming says.

He adds: “Every minority dealer may not need a loan, but we have a lot that do.”

You can reach Arlena Sawyers at asawyers@crain.com

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