|
| |
In 1972, General Motors (GM) became the
first American automaker to institute a structured minority dealer initiative.
Through its Minority Dealer Development Program GM provides industry-leading
training opportunities to help qualified minorities prepare to become future
dealers and succeed once they become dealers.
Six years ago, in 1998, the Minority
Dealer Development Program was reorganized with a focus on the assessment
process. Today, applicants who lack substantial general manager experience go
through Leadership Assessment. Dealer Expertise Assessment is for those
individuals who have more extensive general manager experience.
"Prior to 1998 we did have an assessment
process but it didn’t have the rigor that we currently have today. When we are
looking at qualifications and applicants we kind of segment them into the
Leadership or the Dealer Expertise Assessment. I would submit to you that
there’s probably not a sales manager in a dealership in America that doesn’t
think that they could become the dealer. But if an applicant’s experience is
basically isolated in just one area – for example sales or service – or maybe
not in any of those, then we would certainly suggest that they go through the
leadership assessment because when they are sitting there as the dealer they
are going to have to be familiar with every profit center within the
dealership," says Bob Romero, General Director for Minority Dealer
Development. "When you get a better quality applicant who is bringing a little
more money to the investment as well as a better opportunity to go into the
business then that spells a higher degree of success.
"They [applicants] are coming better
prepared and with more capital. Several years ago we raised the minimum
capital required from $85,000 to $125,000 in unencumbered funds because of the
escalating price of dealerships today versus five years ago. We want to set
certain expectations and we don’t want to bring people into the program who,
when it is time to present them with an opportunity, don’t have the required
minimum to get in."
"I think our stats certainly would point
to the success we have had with our program," continues Romero. "There are 11%
fewer General Motors dealers today than there were in 1998. While the general
dealer population decreased within General Motors, our minority dealers
increased by 36% during that same period. Better quality applicants can fill
those additional opportunities. We have taken the profitability for our
minority dealers from about 60% to well over 85%. It really underscores that
the rigor that was put into the process is the reason we are having more
success with new entrepreneurs we bring on board. The net result is that we
have a better quality applicant coming out of the process and we are putting
those applicants into what we feel are better quality deals. Bottom line: when
our dealers are successful General Motors is successful and that is the goal
that we are working toward."
You’ve Come A Long Way, Baby
Not too long ago automobile dealerships
would top the list of businesses most considered reserved for males. However
women represent one of the fastest-growing segments in the industry. Consumer
spending by women is $3.7 trillion; women buy 81% of all products and
services; and females purchased over six million vehicles and influence 80% of
all sales decisions. In January, 2001 recognizing the increasing importance of
women as consumers and influencers, GM launched its Women’s Retail Initiative
(WRI) – another industry first. General Motors Women’s Retail Initiative is
dedicated to increasing the female presence in the automotive industry by
attracting women into GM retail organizations as dealer operators, general
managers and employees and making the dealership environment attractive to
female customers and employees.
"At one time the mindset was that a
dealership is typically owned by a male and typically all the people who
worked in the dealership were male and it used to be Caucasian. We now live in
a more diverse world so there are a lot of changes taking place not only with
gender but also with ethnic diversity. When we started looking at the various
opportunities that were out there and as saw what was happening with our
buy-sell agreements – which means one location is switching hands and going to
another owner – there was some natural migration to ethnic as well as gender
diversity," says Pat Roberts, General Director for the Women’s Retail
Initiative.
"As we looked at the makeup of our
dealer body we saw a need for us to increase the number of females who not
only own their own dealerships but also to work towards increasing the number
of females who would work in the dealership so that we could better reflect
the marketplace in which we do business.
"In the past it would usually be a
husband or father passing or selling to a wife or daughter. But my experience
is that we started to see more women and ethnic minorities get into the
workplace when the Equal Employment Opportunity Act was passed and everyone
was given an opportunity to enter the work world. So we fast-forward to the
year 2000 and there are a lot of women and ethnic minorities who have been out
in the work world getting experience, gathering and saving their funds so that
they have capital, and accumulating some wealth so that they too could get
involved in an entrepreneurial experience. And that is our requirement: that
someone have a financial investment with the entrepreneurial spirit to get
into a General Motors dealership opportunity.
"When the Women’s Retail Initiative
started we had 199 females who owned various GM dealerships which include
Saturn, Saab, Hummer as well as our normal GM franchises like Chevrolet, etc.
Since that time we have increased the number of female dealers to 240 and we
have a training initiative which both the Minority Dealer and the Women’s
Retail Initiative utilize where we recruit, train, and then jointly, with our
applicants, work towards getting them placed in a dealership location."
The Driving Spirit
Whether applying for the Minority Dealer
Development Program or the Women’s Retail Initiative, prospective participants
must possess an entrepreneurial spirit and leadership capabilities. "When
someone applies to either of our programs we put the applicants through a
series of steps to ensure that we are in fact selecting the right person to go
into the dealership opportunity. Everyone has their skill levels and areas of
interest and we want to make sure that when people come into the training
programs we have established that we are choosing those people who will have
the greatest chance for success," says Roberts.
Previous experience in a dealership may
be helpful but is not a requisite for participation in the GM programs. "Our
applicants come from everywhere. If they work in a dealership and they would
like to be involved in the initiatives then of course our dealer has to bless
that because we want to make sure they are aware and are okay with the fact
that this person is coming into what we have to offer. But," continues
Roberts, "many of our applicants own other businesses and we have people who
have an entrepreneurial experience or that drive to own their own business."
Since both programs offer multiple
opportunities to learn the dealership business, strong managerial and
leadership skills can be more important that dealership experience.
"Essentially dealerships are many
businesses. You have a sales business, a new car business, a used car
business, a finance and insurance business, a service business, a parts
business and, in some cases you might have a body shop business so there are
many businesses under that one roof and you have to be able to successfully
handle all of them," adds Romero.
The Prize
As a general rule, dealerships, which
are awarded – not sold – become available through attrition. GM does not add
locations simply to accommodate the needs of prospective dealers. Desired
geographic locations may not be available upon completion of the programs and
flexibility is a must. "There are only so many people in this country and you
only need so many dealership locations to sell and service that population,"
says Roberts. "Typically in any given year we have a number of dealerships
that change hands for various reasons. It could be through retirement, a
death, or it could be that someone wants out of the business. The dealership
is put up for sale and we then award the franchise. We always look for
opportunities where we can place minorities and women so that we can have a
different balance in our dealership population."
Minority and women dealers can take
advantage of Motors Holding to put them in the best position to grow their
business out of the starting gate. General Motors established Motors Holding
to provide investment capital to develop quality GM dealerships. GM recognizes
that quality Dealership Operators, those with integrity, ambition and the
willingness to work, often do not have access to sufficient capital, which is
an equally essential ingredient of success. Motors Holding presents
individuals with an opportunity to own dealerships through structured
investment and buyout plans and offers a business opportunity that provides
business management experience and other operational assistance.
GM also provides additional
opportunities and training to help its minority- and women-owned dealerships
successfully compete. "Within both of our programs we have meetings that
provide a forum for our dealers to share best practices. In the minority group
we have two PEP – Profit Enhancement meetings where dealers get together in
groups of usually like-size, same brand-type dealerships and do a composite of
their operating reports – their financial statements. The discussion that
ensues is basically how they can improve their dealership operations not only
with respect to profits but also customer service and working with their
communities. That is the platform where many of the dealers share what’s
working for them and there is quite a bit of mentoring that goes on within
those groups as well," Romero explains.
"The objective for Bob and me is to
ensure that we provide our attending dealers with ideas to increase the
profitability of their dealerships. There are best practices shared with
running the dealership operation because, as Bob said, we have groups of
people who sit and share best practices and help each other so that they
indeed can have the most efficient business they can run and service the
community in which they live," says Roberts.
"This year’s conference will take place
in Arizona. Half of the conference is devoted to the ladies working in groups
to share best practices. These are the profit enhancement sessions where they
sit down as a group, look at their operations and help each other to make
their business entity better.
"We also have a couple of workshops. One
of the workshops is on media training so that our dealers will understand how
to interact with and utilize the media for their brand and help promote what
they are doing in the community as well as to understand the impact of
reaching out and interfacing with the diverse, meaning the ethnically diverse
media that is out there.
"The other workshop," continues Roberts,
"happens to be a diversity workshop to help the ladies develop some strategies
around attracting and retaining diverse employees – not only gender diversity
but ethnic diversity – and to make sure they have a dealership environment
that is conducive to the different groups that might be in their community."
Economic Empowerment
True power lies in economic clout and
dealerships are potentially lucrative enterprises. To ensure exposure of
dealership opportunities to its constituency groups both Roberts and Romero
are involved with some of the nation’s leading minority and women
organizations. "Bob and I both reach out to various organizations to look for
applicants for our initiatives. For example, we are partnered with the
businesswomen’s networks and organizations like the Links and the National
Association of Business Owners. During the year I also go out and speak to the
different ethnic groups where there are predominantly women and I know that
Bob is involved with various organizations as well because we are looking for
people that can help us address the need we have as we look at the entire
dealership facilities across the country," says Roberts.
"We try to nurture relationships with
some of the organizations that Pat mentioned. On the minority side we are
dealing with some of the key minority organizations like the NAACP, the U.S.
Hispanic Chamber of Commerce, Rainbow/PUSH Coalition, and the National
Association of Minority Automobile Dealers because at the end of the day we
want the leadership of these organizations to recognize General Motors as the
company of choice for our products and services and for employment and
investment. If there are any entrepreneurs – which there certainly are in all
of these organizations – we’d like them to take a look at a possible
dealership opportunity with us.
"We are committed to diversity within
the dealer network and we are working towards a much broader group of
minority-owned dealerships as we go over the next ten to fifteen years. GM has
the most diverse portfolio of any manufacturer in the industry and we have a
fairly good balance between the groups: currently approximately 43% of our
portfolio is Hispanic-American; 31% are African-American; about 14% are
Asian-American; and about 12% that are Native-American. In fact, if you take a
look at all manufacturers that compete in the United States, about 30% of all
minority dealers are General Motors minority dealers," adds Romero.
"One of the things that is driving all
of this and our program obviously has quite a few more years than does the
Women’s Retail Initiative, is economic empowerment. When we talk about
economic empowerment the dealers in our portfolio of 400 minority owned
dealerships, delivered in excess of 237,000 new vehicles this past year, which
represented about $12.4 billion in revenue. Most importantly, they provided
jobs for approximately 17,500 people in the communities in which they do
business. They are a fairly significant economic force not only internally to
General Motors but also in their communities.
"16% of our entire minority portfolio
made $1 million net before bonus and taxes in 2003. We are creating wealth and
we are contributing to the whole issue of economic empowerment for minorities
and women," Romero avers.
Roberts says the successes are equally
strong on the women’s side, particularly considering that the WRI is only
three years old. "Of the 240 women, about 10% made over $1 million last year.
We sold 105,000 new vehicles generating $2.9 billion in revenue with 10,000
employees. There’s a couple of dynamics happening," continues Roberts.
"Because the Initiative started three years ago many of our women were not
aware that there was a Motors Holding opportunity for them. So as our women
are becoming more familiar with Motors Holding they too are getting into a
partnership with them."
Giving Back
As successful businesspeople, dealers
recognize the importance of being involved with the communities in which they
live and work. "The fact of the matter is that our dealerships are considered
large businesses in communities because of the sheer volume of business they
do and of course automobiles are considered a higher ticket item. Our dealers
are very involved with various constituents like the chambers of commerce.
They get involved by joining the golfing clubs, and particularly in the West
with the Hispanic community where there is a lot of family activities, they
get involved with some of the celebrations that take place.
"Our dealers also can piggyback on the
various organizations that we are affiliated with at GM so they have the
opportunity to get involved with activities around the Links, the NAACP, the
Hispanic Chamber of Commerce, the Athena organization, etc. From a diversity
and gender standpoint, I think our dealers recognize this as a way they can
give back to the community as well. For me, having been in the business for 37
years, I can tell you it is very unusual not to find an automobile
business owner – I don’t care which manufacturer – that’s not involved in the
community in some way," says Roberts.
She acknowledges that some dealers may
have the desire but lack the understanding of how to get started. "We have to
help our dealers if they are struggling with how to become involved. That is
why we have a diversity center of expertise. They have created some training
workshops to help the dealers develop plans and marketing and community
initiatives to get involved with the various activities which are taking place
or, if there aren’t things that are happening in the community, for them to
start their own.
"We deliver the information through
interactive distance learning whereby our dealerships can go into our training
broadcast and participate with other people around the country. We also have
individual workshops that go into various markets where dealers come together
to learn what can be done in order to reach out into the community. Then of
course you have the shared learning that you take back to the dealership
because everybody has a different way of approaching things and there are some
that are more successful than others."
Leading the Way
"We have a dealer network that is
ethnically diverse as well as diverse with women. When you take a look at how
the face of America has changed, and how it is changing relative to ethnic
minorities, it makes good business sense for all manufacturers – not only
General Motors – and not just for minority dealers but for all of our dealers
to tap into some of the disposable income that ethnic minorities represent
today which, depending on the source, is somewhere between $1.3 to over $2
trillion," explains Romero.
Recognizing the ever-increasing amount
of discretionary income that minorities and women bring to the marketplace
General Motors has built its business case on the economic viability of these
constituency groups. "It is part of the General Motors business culture, part
of our strategy. It’s part of the way we do business today," says Romero.
For more on the General Motors Minority Dealer Development Program or the
Women’s Retail Initiative, gmdealerdevelopment@ddiworld.com.
| |
|
