MIAMI BEACH, Fla. -- "The entire minority dealer body within Ford is performing in all the key financial metrics at a higher level than our average Ford dealers," said Kevin Cour, Ford Motor Co.'s director of U.S. retail network and consumer experience development.
"We're really happy with the financial strength of our minority footprint," Cour said, following a presentation at the National Association of Minority Automobile Dealers conference here.
As Cour and other automaker executives updated the group on the state of their minority dealer programs, it became increasingly clear that those programs vary widely in their scope and effectiveness.
Ford Motor, for example, has granted six loans to minority operators of its dealerships under a program it introduced two years ago to help bolster its minority dealer count, Cour said.
Ford's minority dealer capital loan program calls for candidates to put up 20 percent of the cost of the stores. There is a first loan through Ford Motor Credit, secured by the dealership's assets, and a second unsecured loan. The secured loan is to be paid off first; the second loan then is refinanced and converted into a secured loan. The borrower doesn't begin to pay off the principal on the second loan until the first loan is paid off.
Cour said the program is structured to sustain dealers whether industrywide U.S. sales rise to 17 million vehicles or decline to 13 million.
Ford had 158 minority-owned dealerships on Dec. 31, down from 164 at the end of 2013, according to NAMAD.
The total number of minority-owned dealerships in the U.S. declined 1.8 percent in 2014 to 1,096, NAMAD data shows.
The decline was due in large part to three factors: a change in the definition of what qualifies as a minority-owned store; the purchase of a large minority-owned dealership group by publicly traded Lithia Motors Inc.; and the decision to drop from the tally those stores whose owners are not U.S. citizens.
Mas Kozai, American Honda Motor Co.'s national manager of dealer development, said Honda's dealer investment program is similar to those of other automakers, but the results aren't.
"Unfortunately, we haven't been very successful with it," he said during a panel discussion. "We've only had two investment dealers." One of those dealers wound up buying a Honda store through a buy-sell and another, in Akron, Ohio, got a store through the program, he said. Honda is looking at ways to strengthen the program, he said.
Honda lost 13 dealerships that had been counted as minority-owned when DCH Auto Group, which had been owned by a group of Chinese investors, was sold to publicly held Lithia Motors, said Marc Burt, the company's assistant vice president of diversity and inclusion. But Honda also appointed other minority dealers, Burt said. That lifted Honda's minority-owned dealership tally to 57 at the end of last year from 48 at the end of 2013, NAMAD data show.
Neither BMW of North America nor Hyundai Motor America has formal investment programs.
Data presented by NAMAD show that minorities owned 14 BMW dealerships at the end of 2014, down from 20 at the end of 2013, and that minorities owned 69 Hyundai dealerships at the end of 2014, up from 45.
"We don't have a lot of points. We don't add a lot of points," Jay Fulton, BMW senior retailer projects manager, told dealers during a presentation.
BMW dealer candidates must have their own financing, but "from time to time" BMW connects people to help them create partnerships, he added.
Brian O'Malley, Hyundai Motor America's director of dealer development, said with consolidation by public groups and private equity groups buying dealerships, there is concern about prices of dealerships escalating.
"We are evaluating other opportunities to bring partnerships or outside investment in with suitable dealer candidates," O'Malley said. Hyundai might have to come up with "financial alternatives it has not used in the past."