Black Owned Auto Dealers In Dire Straits

Black Voice News, News Report, Chris Levister Posted: Dec 18, 2008

In 2005 Fontana Nissan celebrated a couple of firsts; the $7.5 million facility became the first auto dealership in the Fontana Auto Mall; it’s owner, Marc Williams became the first African-American Nissan dealership in the company’s Southwest Region, which encompasses Arizona, the Las Vegas/Henderson area and from Bakersfield south.

Now with the future of the Big Three hanging in the balance, thirty-eight years of developing minority auto dealer franchises have come to a sudden halt.

While Fontana Nissan is said to be “holding its own” for Chuck McVay the San Diego resident and owner of Freeway Lincoln-Mercury the pump is out of gas.

In August the San Bernardino dealership on the local auto scene since the 90’s ceased operations and transferred its inventory to nearby Fairview Ford joining a growing list of local auto dealerships to close this year or to undergo a major financial transition in a dire climate.

Republican opposition killed a $14-billion auto industry bailout plan in the Senate last week, putting the future of U.S. automakers at the door of bankruptcy.

Even with emergency government help the future of ethnic minority owned auto dealers is unclear.

To stay afloat minority dealers need $500 million in emergency loans and small business (SBA) loan guarantees.

That’s the warning from Damon Lester, president of the National Association of Minority Automobile Dealers (NAMAD) during a December 5 hearing before the House Financial Services Committee.

“Minority owned dealerships are in dire straits.

Today, ethnic minority and small dealers throughout the U.S. are suffering at an alarming rate. Many are running out of cash, and will close their doors if immediate access to capital is not provided.”

Lester told committee members minority dealers should be included in the discussions with automobile manufacturers, because a healthy dealer leads to a healthy automobile industry and a healthy economy.”

Lester says minority and small dealers are being rejected for even high interest loans. Today, there are 2,100 such franchises, representing five percent of dealers in the U.S.

According to African Americans on Wheels, Inc. president/CEO Randi Payton so far about 600 dealerships and 30,000 jobs have been lost due to the credit crunch. About 150 of them were owned by ethnic minorities. Since banks will not lend to these dealers, NAMD has asked the Federal government to provide low interest loans to dealers.

Small and ethnic minority dealerships on average employ over 53 workers and generate over $33 million gross annual sales, says Payton.

“Every dealer that goes out of business also impacts surrounding communities,” says Payton.

The loss of jobs, marketing and advertising in local media, charitable contributions to non-profits and a host of other benefits will leave a considerable void.

The U.S. auto industry has made great strides since Edward Davis opened Davis Motor Sales, a downtown Detroit used car lot, in 1938.

Ed Davis fought to realize his dream of owning a dealership at a time when African-Americans were shut out of management in the industry, said Payton.

“In his first sales position, he wasn’t even allowed on the showroom floor and was forced to meet prospective customers in a converted second floor supply room, but that didn’t stop him from succeeding. He looked at something others thought was impossible, and made it happen.”

Undaunted by the racist act, Davis went on to sell more cars than any of the dealerships sales force.

In November 1963, Davis continued to make history when he opened a Chrysler showroom in Detroit, becoming the first Black in the country with a Big Three franchise.

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