GM leads in adding minority dealerships

CHICAGO — General Motors topped the industry in minority dealer appointments in 2017, bolstering its ethnic minority roster by 16.

The automaker had an industry-leading 264 minority-owned rooftops at the end of last year, 94 more than the next-closest competitor, Ford Motor Co., the National Association of Minority Automobile Dealers' 2017 census found.

Now GM is looking to spark minority dealer interest in its home market, which is lagging other regions in the U.S.

Regional trends

GM said candidates are showing the most interest in owning stores in the South and on the West Coast. But it's having difficulty finding qualified candidates for the north- central region that encompasses Michigan, Minnesota, Illinois, Indiana, Iowa, Ohio, Wisconsin and the Dakotas.

This is a surprising trend to Maurice Williams, GM's general manager of sales support, because these areas are good fits for the company's lineup.

GM was slated to hold an open house during NAMAD's annual conference, held here last week, to highlight the value of the north-central region and generate more interest there.

"When you talk about a domestic brand like what we represent, domestic values are really strong in the north-central area. The products we sell are tailored to those markets," Williams told Automotive News during the conference. "Pickup trucks, things of that nature. Farming activities, that type of culture and environment."

While farming is an important aspect of that region, Williams pointed out that it's also home to major metro markets such as Chicago, Detroit and Minneapolis.

GM has steadily boosted its minority dealer tally without the luxury of open points, said Mark Rainey, the company's director of dealer development, who is switching roles to become a zone manager in Boston for Chevrolet. Buy-sells have been an important part of the growth over the years.

GM has filled a bench of approved minority candidates that it seeks to connect with desired points when opportunities arise. Right now, the automaker has a list of 68 candidates. GM says 25 are in the western region; 17 in the south-central region; 13 in the southeast region; seven in the north-central region and six in the northeast region.

"One of the things we're really going after is trying to identify candidates in advance," Williams said. "We're doing a lot of work with identifying potential candidates, building a nice pool, trying to identify where they'd like to be. So when opportunities present themselves, or if we can give them a lead to an opportunity, we can point them in the right direction. We're trying to get ahead of the game."

The national minority-owned rooftop count grew by 75 units to 1,187 at the end of December from a year earlier. That's the most since 2006 when the tally stood at 1,757, just before the recession tanked the industry and devastated minority dealers.

After GM, the biggest additions of minority dealers came from Fiat Chrysler Automobiles (up 13), Mitsubishi (up 9), Ford and Volkswagen (up 8 each) and Hyundai (up 7).

Caution 

While ethnic dealer numbers continue to rebound, NAMAD is urging those dealers to keep their guards up.

NAMAD Chairman Irving Matthews warned that an economic downturn could be on the way in the next year or two. Matthews said dealers should act now to ensure they can survive a slow period.

Matthews said dealers should avoid incurring a lot of debt, cut unproductive staffers if necessary and monitor inventory levels. "It's going to be imperative that when this thing hits, we're in a position to sustain," he said.

NAMAD President Damon Lester predicted the next downturn will look different from the one in 2007-08. He also pointed out the risk of import tariffs.

“You’re looking at a possible new tsunami coming at us like never before. It’s not going to be a bank issue. It will be an inventory issue,” Lester said. “It will be an issue of how you’re going to maintain the expense of an increase in your floorplan [interest] rate, coupled with cars you can’t sell.”