DETROIT -- General Motors Co. plans to add 35 minority-owned dealerships to its retail network by the end of 2011, said Eric Peterson, director of industry dealer affairs at GM.
The company currently has 205 minority-owned dealerships, Peterson said, down almost 30 percent from about a year ago. Many of those lost dealerships sold Saturns or Hummers. Both brands were discontinued by the automaker.
GM's Motors Holding investment arm has a budget to invest in dealerships with skilled minority entrepreneurs who lack adequate capital to acquire a dealership, Peterson said.
"With everything we've been through within the last 18 months, it would have been easy to say we can't afford to support and underwrite a minority-dealer program," said Peterson, who made his comments during the annual Global Automotive Summit sponsored by the Rainbow PUSH Coalition.
Marjorie Stanton, executive director of the GM Minority Dealer Association, said she is pleased about GM's commitment to bolster its minority-dealer count but is still concerned about the network's erosion. The current tally is down 46 percent when compared with the 382 GM minority-owned dealerships at the end of 2004 and down 28 percent from the 285 in October 2009.
Stanton said that in the past, minority dealers often were appointed to stores in areas with little or no chance for success. She said she has confidence in GM's plan to put dealers in markets with growth potential.
"We like the strategic plan Eric has in these markets," Stanton said.
Peterson said candidates for the stores will come primarily from the pool of minority dealers who lost their stores as a result of GM's consolidation, as well as minority-dealer hopefuls who have been trained by the company but never owned a store. He said the dealerships primarily will be in markets in which GM wants to restore a presence.
Under its restructuring plan, GM planned to cut its more than 6,000 dealerships to 3,600. But with reinstatements and arbitration victories by dealers, GM wound up with 4,500.
Under the company's minority-dealer program, dealers must provide 15 percent of the dealership investment; Motors Holding finances the rest. Dealers are supposed to use store profits to buy out GM's stake gradually.
Peterson said all owners of dealerships that were closed as a result of the company's restructuring and that are in areas where GM wants to restore a presence are eligible to submit a business proposal to re-establish their stores. He said GM will evaluate the proposals and interview the dealers.
GM is making sure that minority dealers who were good operators but lost their stores though no fault of their own are included in the process, Peterson said.
"We won't appoint minorities to every one, but with having minorities on every list, we feel very confident that we're going to have a significant number of minority appointments as a result," he said.
Through August, 90 percent of GM's current minority-dealer body was profitable, Peterson said. In contrast, he said, just over 89 percent of GM's entire dealer body was profitable during that period.