Flying High
W ith M el F a rr
Be careful what
you ask for!
By Tedra B utler-D udley
By Warren Brow n
The trouble with conventional wisdom is
that it’s usually wrong.
Take the matter of African .Americans and
auto dealerships. Blacks own 1.5 percent of the
nations 22,700 new-car stores. Many black
business and civil rights leaders, the Rev. Jesse
Jackson among them, are demanding more.
That seems reasonable. Blacks constitute 13
percent o f the nation’s population and ac­
counted for $33 billion, or 11 percent of the
$300 billion spent last year on new cars and
trucks in the U nited States. M ore black
dealerships, please!
But this might not be so smart. Look at it
this way: You finally can buy your dream house-
-the one you couldn’t get before— because you
were black. But the house is in a neighborhood
that is now falling apart. Do you still want to
buy it—at an inflated price, to boot?
Now, consider the auto retail industry. It is
a lucrative industry. But it is also one that is
literally coming apart at the seams—the un­
happy by-product o f its efforts to become more
cost-efficient, profitable and, presumably, more
consumer friendly.
W ho are the victims o f this shakeout? Pri­
marily single-point dealerships—the traditional
“M om and Pop” types selling one
manufacturer’s cars and trucks from one store.
These dealerships, which often are the kind
blacks get, are going out of business.
Many small dealerships simply can’t cut it
in an era o f growing capital needs for every­
thing from computers to better trained auto
technicians. Nowadays, even the big dealerships
are being swallowed up by huge, publicly fi­
nanced superstores, such as AutoNation USA
of Fort Lauderdale, Fla. and CarMax, a sub­
sidiary o f Circuit City Stores Inc., based in
Richmond, Va.
The superstore auto retail chains are to tra­
ditional dealerships—even the big ones—what
supermarkets and shopping malls are to the
corner grocery and the local discount store.
So, it simply isn’t enough for black leaders
to demand more black dealerships without first
asking what kind. Put another way, it is down­
right silly to ask a company like Mitsubishi
M otor Corp., which has a skimpy 1.48
percent share of the U.S. auto market, to
expand its dealership ranks when ALL of
its major competitors are thinning their
dealer lines. Many are looking towards
AutoNation and similar operations to help
cut costs and increase efficiencies in their
product distribution.
Is this a call for blacks to abandon their
quest for a greater and more lucrative pres­
ence in auto retail? No. It is, instead, a call
for a more rational analysis o f the auto re­
tail market than many o f our leaders have
offered to date.
The shortest road to disaster is one that
lacks clear direction. So, let’s be clear about
this: We do not need more single-point,
small volume, black-owned dealerships
operating in marginal markets.
This is what we need:
A new way of thinking about the auto
sales business. Existing, successful black
dealerships might consider pooling their
resources and form ing several national
dealer chains.
Audacity and vision. Black bankers and
other business people might consider work­
ing with a group of black dealers to create a
publicly traded company, one that would
be able to raise money via Wall Street.
A refocused business/civil rights cam­
paign. Instead o f using economic and po­
litical pressure to gain more traditional
dealerships, our civil rights leaders should
be studying the formation o f companies
such as Circuit City’s CarMax.
A rededication to consum er service.
O ne o f the everlasting tragedies o f black
auto dealers is that too many treat their
black customers the same way high-sales-
pressure white dealers treat them. Consum­
ers of all colors are rebelling against this
kind of treatment in a revolution that is the
driving force behind many o f the changes
taking place in the auto retail industry to­
day.
Sheila 1 'aden- U ’illiams
Nonetheless, NAMAD must find wavs
to tap into an Information Highway phe­
nomenon responsible for moving 15 per­
cent of the 15.1 million light trucks and
cars sold last year, according to automo­
tive consultants J.D. Power and Associ­
ates. Some analysts estimate the percent­
age could grow to 40 percent within five
years. Meanwhile, superstores are aggres­
sively gobbling up dealerships while of­
fering consumers a haggle-free way to
purchase automobiles.
And, against the odds, many NAMAD
members are doing well. In 1995, the top
100 African-American dealers employed
8,671 people and generated $5.7 billion
in revenue, according to NAMAD.
But that’s not enough. “The time has
come to turn our attention from just mere
survival," Vaden-Williams says. “The au­
tomobile industry is a trillion-dollar in­
dustry — one we heavily support. It’s not
us against them: it’s an issue of sharing
wealth and generating opportunities. ’
The organization will pursue its activ­
ist objectives in conjunction with the Rev.
Jesse Jackson, an acknowledged master at
holding corporations accountable for bi­
ased behavior.
“We have to keep the pressure on for
the (minority) auto dealers because many
of them are in financial trouble,” Jackson
notes. “Either they can't get the facility
they need, or the financing they need. And
now, the superstore thing is coming in —
they're shifting dynamics in the whole-
dealership world. Jackson, who has met
with automotive executives in Japan, says
the “foreign dealerships are the most bla­
tant when it comes to discrimination."
Toyota Motor Corp, s Lexus, its luxury
division with near cult status among some
Mel Farr, Sr. has made the word “Superstar" his brand image, pitching it in
television ads: “Mel Farr Superstar. "And he personifies it. From former Detroit
Lion’s running back to mega dealership franchisee — Farr represents a true Su­
perstar.
“I have always been a dreamer,” says Farr. “You just need to set goals when you
dream. My goal is to become the largest merchandiser o f automobiles both new
and used for urban dwellers.”
W ith current annual
sales of over $400 milhon
and a 1997 projection of
$700 million, this caped
crusader is flying high as
one of the nation s top Af­
rican-American dealers.
Farr oversees the Mel Farr
Automotive Group, a fam­
ily of eight franchises in
Michigan and Ohio. In his
television ads, Farr be­
comes a caped crusader
cham pioning reasonably
priced cars.
“You have to have a
good campaign for selling
cars,” Farr explains. “A
black guy flying in a cape
is sure to get attention.”
His formula for success?
“Be not only a good busi­
nessman, but a good mer­
c h a n t, w hich m eans
knowing how to sell goods
and services for a profit,”
Farr explains. He is a prod­
uct of Ford’s dealer train­
ing program , but rates
G eneral M otors and
C h ry sle r’s program as
among the best, fo r those
who want to become auto
dealers, Farr says some re­
tail or automotive experi­
ence and a large bank ac­
count are a must.
As for the future?
“Well, dealerships on Wall
Street are good for the in­
dustry,” says Farr. “I’ve
been approached by in­
vestment bankers on going
public and I'm seriously
considering it.”
AFRICAN AMERK ASS ON WHEELS
13