The Loaded Sticker Price - African American car dealer Mel Farr Automotive Group

Black Enterprise, June, 1999 by Bevolyn Williams-Harold

Chandler B. Lee of Classic Pontiac-Buick-GMC in Hicksville, New York (No. 88 on the BE AUTO DEALER 100 list with $25.5 million in gross sales), discovered that firsthand when, in 1986, he took over a domestic dealership with two imports--Mercedes-Benz and Toyota--in Southern Pines, North Carolina.

"Toyota exercised their right of first refusal, while Mercedes-Benz told me they wanted to discontinue my service contract," says the now 46-year-old dealer, who then had over 10 years' experience in the auto industry as an engineer for GM.

Car companies usually screen their dealer candidates on the basis of four criteria: sufficient capital, extensive experience managing a dealership, commitment to customer satisfaction and a willingness to invest long term in the community where the dealership is located. If a candidate is not up to snuff, the company can exercise its "right of first refusal" and deny the applicant a dealership. Conversely, it can give them the green light and issue a letter of intent to purchase a dealer-owned store.

Despite the service contract Lee had with Mercedes-Benz at the time, and the more than $150,000 he'd invested to purchase the assets and equipment to carry Toyota's lineup at the location, ultimately both deals fell through.

"The Southern Pines location did not provide sufficient market potential to justify a sales outlet for Mercedes-Benz products," explains Donna Boland, public relations department manager for Mercedes-Benz of North America, based in Montvale, New Jersey. "Any reluctance to issue Mr. Lee a dealership agreement was because the market was too small to support a dealership at that time," she says.

Today the Japanese and German car makers deny that race played a role, although Lee doesn't agree. "It wasn't education, training or money; it was strictly color," claims Lee. In 1992, he testified about his dealings with Toyota during a congressional hearing convened by Michigan Reps. John Conyers and Barbara Rose Collins that brought national attention to imports and their allegedly discriminatory practices against minority auto dealers.

In fact, NAMAD presented documents at those hearings to show that between 1982 and 1992, 140 black auto dealers were denied dealerships. Of the 7,626 Asian car dealerships in the U.S. at that time, only 23 were owned by African Americans (11 of them Toyota dealerships). But the hearings were just the beginning of the outcry. In the early 1990s, groups such as NAMAD, the Rainbow/PUSH Coalition and the National Urban League demanded that imports diversify their dealer body.

The imports emerged from that tumultuous time "with the realization that diversity leads to profits," according to Randi Payton, publisher of African Americans on Wheels, a Washington, D.C.-based quarterly automotive magazine. "To have your company reflect your customer base makes good business sense."

THE DIVERSITY MANTRA

Imports like BMW and Jaguar are now seeking to create their own dealer diversity initiatives. Last February, BMW announced its plan to appoint at least 10 African American dealers within the next 12 months. By this summer, the company expects to be just shy of its goal, with negotiations already under way with seven African American candidates and another three letters of intent in the pipeline. Eventually these dealerships will be added to the 341 it already has.