DETROIT -- Minority-owned dealerships could become virtually extinct by the end of the year if carmakers and President Barack Obama's auto task force don't step in to stop the hemorrhaging, says the head of the nation's largest minority dealer group.
"The impact on the minority dealer is devastating," Desmond Roberts, chairman of the National Association of Minority Automobile Dealers, said of the current economic crisis. "If something is not done to help this situation, minority dealers will cease to be a part of the American industry."
There were 1,229 minority-owned dealerships at the end of 2008, down 200 from the end of 2007, says Damon Lester, president of NAMAD. By the end of March, at least 25 more had been sold or closed, he says.
The count will drop by 300 to 400 this year as a result of General Motors' and Chrysler LLC's restructurings and poor economic conditions unless changes are made, Lester says.
On Jan. 1, there were 20,453 U.S. dealerships, according to the annual Automotive News dealership census.
Roberts spoke at a press event here with civil rights activist Jesse Jackson and minority dealers and suppliers.
Jackson said minority dealers and suppliers are seeking meetings with the presidents of the Detroit 3 and the auto task force. He said they also want congressional hearings to draw attention to the plight of minority dealers and suppliers.
Jackson said banks and auto companies that have received federal financial assistance should be required to follow the same federal guidelines for diversity as companies that obtain government contracts.
Roberts, who is black, owns two Chevrolet stores and a Chrysler-Dodge-Jeep store in the Chicago area. All dealers are having a hard time, he said, but minority dealers are suffering at a disproportionate rate.
About 58 percent of the 300 minority-owned GM dealerships face closure with the elimination of Hummer, Pontiac and Saturn, Roberts said. About 80 percent of the 158 minority-owned Chrysler, Dodge and Jeep dealerships are at risk, in part because Chrysler's bankruptcy reorganization includes shrinking its retail network, he said.
Kirk Lewis, president of the Bing Group, a Detroit minority-owned auto supplier, says Chrysler's shutdown until it emerges from bankruptcy, along with GM's plan to halt production for nine weeks this summer, is devastating for minority suppliers.
He says 60 percent of the 875 minority-owned supplier companies in the United States are at risk of failure.
Lewis adds: "We need bridge financing so we can weather this storm."