Making Inroads in Southland : Minority Dealerships Popping Up Across the Region, but Trail Growth in Area’s Ethnic Groups
Bill Shack grew up in rural southern Alabama, the son of a machinist’s helper. Lenny Woods was the private school-educated son of a Los Angeles general contractor. Both loved cars.
Shack and Woods have followed two long and very different roads to success. The roads met in Long Beach, where the two are equal partners in the nation’s second-largest black-owned car dealership company.
They share a talent for making money in the Southern California car market, while their dissimilar backgrounds typify the broad range of experiences that the region’s minority auto dealers bring to the industry.
As Los Angeles has grown and become more ethnically diverse, so have the ranks of minority auto dealers in Southern California. The company owned by Shack and Woods controls seven dealerships. Four Syrian immigrant brothers run the one of the nation’s largest Mitsubishi dealership in West Covina. Camino Real Chevrolet in Monterey Park is the nation’s eighth-largest Latino-owned dealership. The Grand Chevrolet sales staff of Filipino immigrant Jun Reodica sells cars in 50 languages and dialects.
Even so, in Southern California--by some measures the car dealership capital of the United States--growth in the number of minority dealerships has lagged behind ethnic population growth in general.
The successes and continued difficulties that Shack and Woods have encountered seem to be emblematic of minority entrepreneurs as they seek their own hold on one of the country’s most prosperous professions--the car dealer.
Mostly White Dealers
Auto dealers typically come from one of three backgrounds: former general managers, sons of existing dealers and professional managers with some business training.
Many are drawn by the money. A small, mom-and-pop franchise may earn $50,000 to $75,000 a year for the dealer, while the owner of a very large dealership takes home as much as 10% of annual sales, said Jack Mayne, editor of Auto Age, a Van Nuys-based trade magazine for auto dealers.
And white dealers are the rule, not the exception. The National Assn. of Minority Automobile Dealers in Detroit counts fewer than 400 black-owned dealerships and just 150 Latino- and 50 Asian-owned dealerships. That compares to a total of about 30,000 dealerships nationwide.
Minority dealers stress that they don’t just hire and sell to other minorities. “We don’t envision ourselves as a black dealer. We envision ourselves as a black-owned business that operates in the mainstream,” Shack said.
Extremely few minority dealers start their business careers at car dealerships, dealer development experts in Detroit said. Most come from elsewhere in the car industry, or are sales managers in other businesses. General Motors has even had two retired police detectives, a retired senior military officer and a former electrical engineer, said Joseph J. Vasquez, director of dealer business management and development.
“Most of these gentlemen are first-generation business people. They didn’t inherit these stores from their fathers or grandfathers,” said Joseph J. Shady, Chrysler’s director of marketing investment and dealer development.
Shack and Woods are cases in point. Shack dropped out of Atlanta’s Clark College after his freshman year to get married and join the Air Force. He joined minority management training program at Thrifty Corp. in 1966 and became a store manager. In 1972, after three years of working as a part-time car salesman during his spare time, he left Thrifty to join Ford Motor’s first minority dealer training program. Five years later, he sold his house and most of his personal possessions, then borrowed to the hilt to buy his own Ford franchise in Yucca Valley in 1977.
Handling employees, payrolls and inventory control at a Thrifty store was a good substitute for finishing college--the experience taught him a sense for business and accounting, Shack said. “It does not take any genius to be an auto dealer.”
Woods’ preparation to become an auto dealer was very different. He was one of three blacks in a Bellflower private school and was elected senior class president. He earned a bachelor’s degree in finance at the University of Notre Dame, followed by an MBA in marketing at Atlanta University. Hired by Ford straight out of graduate school, he says he held 18 jobs in 13 years as a rising management star there. He then entered Ford’s 18-month-long dealer training program and afterwards didn’t even take out a mortgage to buy Chino Hills Ford in 1983, instead using money from his Ford stock plan.
Woods linked up with Shack in October, 1985, to buy Queen City Ford in Long Beach. Their company, Shack-Woods & Associates, now owns five area dealerships outright and has majority stakes in two others. Shack handles the accounting and other management controls, while Woods focuses on marketing. Education is vital to becoming a successful dealer, Woods said. “The dealership business has evolved immensely in the last 15 years. It’s very sophisticated and it can no longer be run as a mom-and-pop business. . . . You can’t know enough.”
Artificially Created
Woods and Shack agree on how to increase the number of minority-owned dealerships: Give more senior management jobs at existing dealerships to minorities, rather than relying on training programs.
“Most of the black dealers in the Ford organization have been artificially created. . . . Certainly you can’t equate 18 months of experience to the experience gained over 10 to 15 years in the business,” Shack said.
The proportion of Shack-Woods & Associates managers who are black ranges from about 30% at Yucca Valley Ford to 60% at Queen City Ford. So far, 13 former managers have become dealers, forming a significant proportion of the 300 or so black dealers in the United States.
Bill Wright, owner of Pasadena Lincoln-Mercury, is one such dealer. A high school English teacher turned professional golf player, he invested part of his winnings with Shack in a detail shop and then a car rental agency in the mid-1970s. In 1977 he invested in Yucca Valley Ford with Shack and became the dealership’s general manager.
“Every time I came off the tour, I found myself doing a little more,” he recalled.
Four years later he sold his stake in Yucca Valley Ford, went through Ford’s dealer training program and ran his own rental agency for three years before buying Pasadena Lincoln-Mercury in 1985. The dealership is now thriving, he said.
Racism Still a Problem
“The main thing I had going for me was the practical experience,” Wright said. “Being black, it is very difficult to get that general manager’s job and get that experience.”
Petty racism, from promotions to everyday contacts, is still a problem for blacks at car dealerships, Shack said. “As a constant, ongoing problem we still have in 1988, if I’m standing side by side with one of my white salesmen and if a customer or even a vendor comes in, they will address my salesman.”
Meeting bankers and car accessory vendors for the first time is often difficult, he said. “I’ve walked into places and told them I’m a dealer with three or four dealerships, and they’ve looked at me like I was from outer space.”
Despite such handicaps, Shack and Woods say their firm’s sales have boomed to nearly $100 million last year from $48 million in 1986 through the acquisition of new dealerships and rising sales.
And profits? Shack would only say: “Just tell them we’re very profitable.”
