The automotive melt down: how it's burning black America: higher gas prices, loss of industry-related jobs are crippling businesses, consumers

Ebony, Nov, 2008 by Frank S. Washington

Even worse, when minority suppliers disappear, they almost never return and other companies don't rise to take their place, says Rainbow Push's Gill. The same can be said of any area in the automotive industry in which Blacks have a presence.

Last November, GM announced a restructuring of its advertising agency accounts that left six of GM's eight African-American advertising accounts in the hands of White-owned companies. Worse, the initial announcement removed the Black-owned Carol H. Williams Advertising as the agency of record from three of the four GM divisions that it had as automotive clients and put the fourth account, Chevrolet, up for review.

There was a firestorm of protests within the Black advertising and marketing communities. It's unclear whether the flap was smoothed over, but GM seemingly backed off a bit and in January announced that Carol H. Williams Advertising would provide African-American, urban and youth marketing support for Cadillac, HUMMER, Saab, Saturn and the GM Corporate brand.

The company also announced that Sanders/Wingo, based in El Paso, Texas, would help the Chevrolet brand assess its current multicultural marketing activities and identify additional marketing opportunities for Chevy in the African-American market. Further, Translation Marketing, a New York City-based brand marketing firm, will continue to consult with GM in support of the company's multicultural marketing activities.

Still, Ken Smikle, editor of Target Market News, which tracks advertising and marketing in the Black community, sees storm clouds over the Black community. "When they [GM] decide not to use Black-owned advertising, there's a ripple effect. And as the industry leader goes, so goes the competition," Smikle says. The point is if GM is willing to dump a Black-owned advertising agency, what other Black-owned or Black entities will it throw overboard and why shouldn't its competitors follow suit?

At times, Black new car dealers feel like they're alone on the deck of a sinking ship. The majority of them own domestic franchises. As Chrysler, Ford and General Motors lose market share, their Black dealers lose sales. The main problem is the same as it was when the National Association of Minority Automobile Dealers was first formed in 1980--a lack of capital.

"One of the biggest things we're having issues with right now is that most of us are starting to run out of cash, or we're running low on cash," says Johnson of Michael Chevrolet. "That's business across America. But dealerships are a hugely cash-intensive business. We run through hundreds of thousands of dollars a day. Banks don't want to finance Black dealers). There's no support from GM. They are trying to stay alive and whether they've got a certain number of African-American stores up and running is not a priority now."

Amid shrinking sales, Black dealers need capital to buy out manufacturers' shares in their dealerships and they need working capital to conduct daily business like meeting their payrolls. For Black dealers of domestic brands, one situation sounds familiar. They may be upside down in their dealerships. That is, the dealership may not be worth what they owe on it.