Ford bets on black: automaker is hoping to capitalize on African American spending - Business News - Brief Article

Black Enterprise, July, 2002 by K. Terrell Reed

In an effort to capitalize on rising car sales among African Americans, Ford Motor Corp. is increasing diversity in its marketing, supplier chain, and dealer ownership for its European luxury automobile lines.

Premier Automotive Group, which is responsible for Jaguar, Aston Martin, Land Rover, and Volvo sales in the U.S., announced its new diversity advisory council in April. The nine-member group is focused on increasing the number of minority employees and dealership owners, as well as the number of dollars it spends on multicultural advertising and minority-owned suppliers.

Though the diversity goals appear socially responsible, members of the council have no reservations about admitting that their primary interest is Ford's bottom line. "This is not a charitable affair. We're doing this because it makes sense for the business," says Simon Sproule, Premier's vice president of marketing and communication services and chair of the council's marketing committee. "We've got to grow the business, and one of the ways is to have a workforce, a core of dealership owners, suppliers, and marketing that is reflective of the wider population. The council is showing us the business opportunity in the African American community."

And that opportunity is huge. The number of African Americans in the U.S. is rising--currently totaling 12.3% of the population. According to Census Bureau projections, that number is expected to grow more than twice as fast as the projections for Caucasians through 2050. And African Americans are earning more now than they ever have (see Facts & Figures, "The Wealth Factor," this issue). With that increased earning power comes higher spending. Blacks spent some $31.3 billion on automobile purchases in 2000, the most recent data available from Chicago-based demographics publication Target Market News. In fact, some estimates suggest that African Americans account for nearly 30% of all U.S. luxury vehicle purchases.

Ford isn't the only auto manufacturer looking to cash in on African American buying power. Last year, General Motors announced the formation of a diversity marketing and sales organization to focus on the women's market and the growing African American, Hispanic American, and Asian American markets. On April 1, Chrysler, a unit of DaimlerChrysler AG, reported that it was reviewing two advertising agencies--Don Coleman Advertising and Montemayor y Asociados of San Antonio, Texas--to help the automaker "address the urban marketplace as effectively as possible."

Sproule didn't disclose statistics on how many minority employees or dealers are under Premier, or details on its multicultural supplier or advertising spending. The company is part of a growing trend among large firms hoping to take advantage of the nation's rising minority population.

Still, while the numbers add up to a huge opportunity for carmakers, capitalizing on a growing market requires partnerships, says NAMAD President Sheila Vaden-Williams. "In order for our numbers to increase toward real parity, we have to be constantly working with the industry," she says. "It's essential to be in position to talk to the people who have the ability to make decisions regarding things like who can own a dealership."

Anna Escobedo Cabral, president and CEO of the Hispanic Association on Corporate Responsibility, agrees. Cabral, whose organization tracks diversity inside companies such as Ford, General Motors, and DaimlerChrysler, says the number of minority-owned dealerships a brand has is a measure of particular concern. Serving on Premier's diversity council, she says, gives members of the black and Hispanic communities voices that have the ears of auto executives who can facilitate the growth of those dealerships.

"We're concerned that individuals have an opportunity because it's certainly a lucrative one," says Cabral. With an increasing number of affluent African Americans in the U.S., it just makes good business sense.