Billion-dollar dealer: Prestige automotive is the first black-owned auto dealership to achieve this earnings milestone. Behind the wheel is a CEO focused on maximizing profits while grooming future business leaders

Black Enterprise, June, 2005 by James C. Johnson

On a sunny springtime morning just outside of Detroit, Gregory Jackson makes his rounds, strolling past row after row of gleaming automobiles on the lot of his Pontiac/Buick/GMC Truck dealership. A hint of winter still lingers in the air as Jackson walks past a colorful assembly of polished vehicles.

He spots a couple eyeing a shiny Buick LaCrosse parked in a row of sedans. There's no salesman in sight. A few moments later, he sees another customer pull into the lot and slowly drive past him in search of a parking spot. Jackson has seen enough. Turning toward the large glass windows of the Prestige showroom, the 40-something president and CEO raises his hand, summoning a salesman. Immediately the door flies open and a manager rushes outside. "There are customers over there. "Jackson points out, gesturing toward the first couple. "I want someone to keep his eyes on this lot," he says to the manager, who quickly complies.

Jackson prides himself on providing his customers with personalized attention, and he doesn't waver from that fundamental. And the results are showing up in the total earnings of his nine dealerships. Detroit-based Prestige Automotive became the first black-owned auto dealer to surpass $1 billion in sales, making it one of four black-owned companies to ever achieve this. TLC Beatrice International Holdings Inc., World Wide Technology Inc., and CAMAC Holdings Inc. are the other three..

Prestige saw a 39% increase in sales revenues, which was aided by revenues generated from a newly opened location as well as increased fleet sales. Some 60% of Prestige's sales are fleet transactions. This firmly ensconces Prestige Automotive in the No. 1 spot--the pole position--on the BE AUTO DEALER 100 list. Profit margins on fleet sales are not as high as they are in other areas, but Prestige generated $20 million from its service department business, most of it coming from retail car sales. The business manages to produce the lion's share Of its profits from repair services and retail sales, which produce profits of 3% to 5% on sales. Also, the sheer volume of fleet transactions, which include sales, car rentals, and leasing companies, makes the deals worthwhile.

In an industry where perception is everything, the Prestige showroom has a warm and inviting feel to it. Soft lighting highlights the cars and relaxes customers. This Prestige dealership is a far cry from the drab lots with strands of multicolored, plastic flags flapping in the breeze, and handwritten "sale" posters hung on the gate. Even the waiting area in the service department has two small tables with toys on them--a godsend for customers waiting with impatient children. The showroom has a library with magazines and brochures, free coffee, and a computer for customers who want to surf the Internet while they wait.

In recognition of the company reaching its $1 billion milestone and achieving sales growth despite a lackluster business climate, BLACK ENTERPRISE has named Prestige Automotive the 2005 Auto Dealer of the Year. Jackson is not resting on his laurels, though. He is currently reviewing about five new deals and intends to expand the size of his impressive empire by adding two additional dealerships this year, one of which is already in the final architectural phase. To capitalize on America's trend of buying foreign, Jackson is going international and completing a Mercedes-Benz location in suburban Detroit. "We're very proud to offer a fine European brand such as Mercedes-Benz within the Prestige family," he says.

But for black auto dealers who struggled to hold their own amid weak sales, last year's tenuous market turned into a correction cycle that weeded out lesser players. "Last year, sales were either down or flat for most minority dealers. It was a year that really tested everyone, and tested them from the standpoint that you could no longer be in business and just hope for the best, you had to truely make the best of it," says Jackson, who is president of the General Motors Minority Dealers Association.

GMMDA Executive Director Marjorie Staten says the decline in the number of black auto dealers came about because a number of black dealers did not run their dealerships efficiently, while others received offers they couldn't refuse--in many cases, selling to nonminority dealers." Of its 7,500 dealerships, 109 are owned by African Americans. As American automakers lose ground to their Asian rivals, more African American dealers are going after imports. General Motors is struggling with poor car sales in North America. With the once-dominant U.S. market share of the world's largest automaker eroded to 25.4%, it's hard to tally the exact effect this has on GM minority dealers.

MAINTAINING A COMPETITIVE EDGE

It is no coincidence that dealerships are trying to improve their reputations with customers at a time when wing for car buyer's attention is especially intense. So what competitive advantage does Prestige have over its peers? "Greg Jackson is the advantage that Prestige Automotive has over other dealerships," says Rick Wagoner, GM chairman and chief executive officer. "Greg recognizes that an integral part of running a successful business requires a commitment to his customers and their complete satisfaction, and being an active member of the community in which the dealership operates."