The advisory council also works closely with the GM Minority Dealers Association, a separate national organization. “The retention piece, that’s half the battle,” said Greg Cole, co-chair of the advisory council and an Asian-American Missouri native who got his first opportunity to buy a franchise in Pocatello, Idaho. He faced many of the same problems that befall most new minority dealers.
You have to keep in mind that minority dealers are typically taking over franchises in small to medium-sized markets, where they can afford the price of entry, said Cole. In most cases, they’re also moving to a new town where they don’t know anybody.
“A lot of time what we end up with are under-performing stores,” said Cole. “It could be a poor facility, the dealer lost interest, something wasn’t quite working right.” In most cases, these dealerships would probably average 500 to 1,000 vehicle sales a year, or at least have the potential for that amount. For example: GM could determine that a dealership they may have available was selling 400 vehicles a year, but could move 625 under good management.
Compare that experience to majority-owned franchises around the country, many of which are in their third or fourth generation at the helm. Those owners grew up in the business, know their markets like the back of their hands and already have the kind of cash flow to deal with any problems that might arise.
“Most majority dealers have an opportunity to have counsel with dad or granddad who was a dealer before them,” said Robert Turner, another member of the advisory council and a GM dealer in Nederland, Texas. “You might have generations of dealer expertise. In a minority dealership, this is a new thing. Chances are 90 percent of minority dealers are first-generation dealers.”
In a way, the minority dealership community stands in as a surrogate family. “If you’re faced with a problem,” said Turner, “you have contacts among other minority dealers. You can find others who have faced the same challenge, and let them tell you how they dealt with it.”
“The first 12 to 24 months is paramount. This business preys on the weak,” said Cole, who also credits his experience as a general manager before going into the minority program for much of his later success in the business. “They’re first-time dealers in new communities, the competition is tough. For the most part, we go in with a pretty heavy load to carry.”
However, if they learn how to carry the weight, more (and often better) dealerships can become available. Cole bought his second dealership in Athens, Ga. He later bought a third in the same state.
Said Cole: “It all revolves around performance. If you’re good, you get new opportunities; struggle and you do not.”
Those new opportunities, though, aren’t likely to be anywhere near home. “I may be the prime example of a gunslinger,” said Cole. “I’m from southern Missouri. I didn’t say I would only go to a dealership in Missouri or Arkansas. I was willing to go wherever and whenever the deal was.”
Actually, medium to small markets may be the best place for minority dealers to break into the business, said Turner. Everybody wants to start out in a top 50 metropolitan market, he added, but they usually don’t have the experience or financial resources to survive. “You may be the only one of your type in 30 miles,” he added. “You can concentrate on being the best instead of having a GM competitor just down the road.”
Like other graduates of the program, Cole and Turner were both willing to offer advice to new dealers coming up through the academy. Plenty of other minority dealers have also lent their assistance as well.
“I don’t know if the average majority dealer has someone 300 miles away willing to help,” said Cole. “Those guys knew that someone helped them and they’re willing to lend a hand.”
Vol 5, Issue 9
Cox Automotive’s latest Dealer Sentiment Index finds a ‘notable negative turn’ among U.S. dealers, the majority of whom took a dim view of the fourth-quarter market and their 2019 prospects.