LOS ANGELES -- Black customers pay higher loan markups than whites when they finance purchases at U.S. Honda dealerships in the United States, according to a report by Mark Cohen, a professor of management at Vanderbilt University.
The same accusation has been lodged against dealers for other automakers. But Cohen says American Honda Finance Co. may be the only captive finance company that allows dealers to use a two-tier cap based on creditworthiness. That further discriminates against blacks, he says.
Critics accuse dealers of profiteering when they add percentage points to the loan rates offered by finance companies.
Cohen analyzed Honda data that is evidence in a lawsuit filed against the company's finance arm in federal court in Tennessee. Cohen has been hired by the plaintiff's lawyers as an expert witness.
American Honda Motor Co., in a statement, denies that it condones discrimination at its dealerships.
Cohen analyzed 383,652 contracts from June 1999 through April 2003. Customers paid $101.8 million in markup charges during that period. Of the total, $24.7 million, or 24 percent, was paid by blacks. But he says blacks accounted for only 11.6 percent of the customer base.