October 11, 2022 — Last week, after 16 years at the helm of the National Association of Minority Automobile Dealers (NAMAD), Damon Lester retired, handing the reins to Hugene T. Fields.
In July 2008, I wrote a cover story for Ward’s Dealer Business magazine (Now WardsAuto) about Lester’s efforts at shoring up the association’s declining membership. At the time, he had been with the association for six years, assuming leadership in 2006.
Looking back on his career, Lester accomplished what was nearly impossible. When he joined NAMAD in 2002, the number of minority dealers was near its all-time high.
But its membership began dwindling after 2005. While OEMs gave lip service to growing their minority dealer ranks, their efforts amounted to little more than words. Sources of capital, along with legitimate opportunities, began drying up.
About 1,264 minority dealers owned more than 2,100 rooftops (stores, not franchises) in 2002, according to data NAMAD provided to Ward’s Dealer Business in 2008. By 2006, the number of dealers had dropped to just under 1,200 with 1,750+ stores. (Note: Other publications in previous years have cited different numbers. I’m relying on what NAMAD provided me at various times over the years).
The recession years were ruthless. By 2011, minority-owned dealerships had dropped to an all-time low of 873. Most minority dealers were first-generation dealers with little access to capital to survive difficult times.
It was a time when all dealers were fighting for survival. As part of the bankruptcy (bailout) package negotiated by the White House in 2009, General Motors and Chrysler canceled the franchise agreements of thousands of dealers. Meanwhile, GMAC and Chrysler Financial pulled floorplan lending from hundreds of other dealers, forcing many of them out of the market.
Furthermore, dealer buy-sells slowed to a standstill.
In 2009, Lester and his board secured a meeting with White House Senior Advisor Valerie Jarrett to make the administration aware of the challenges facing the nation’s minority dealers. President Obama attended the meeting.
Lester asked the President to require the Small Business Administration to create loan packages specific for minority dealers. Although Lester did not get what he asked for, the meeting led to a memorandum of understanding with General Motors that became the basis for legislation later passed by Congress providing financial assistance to dealers whose dealerships were shut down as part of the bankruptcy.
Lester kept chipping away. He pleaded with lending institutions to loan money to both current minority dealers and potential dealer candidates. Lester also knocked on the doors of countless private equity firms to find sources of capital to invest in minority dealers. But even with the success of several minority dealers over the years, Lester heard the word “No” many more times than he heard “Yes.”
Slowly, Lester began righting the ship. His collaborative and easy-going manner often masked his relentless approach, which often included days of 16 hours of phone calls and meetings.
His efforts began paying off. He formed relationships with banks and lending institutions to provide capital and floorplan assistance to minority candidates. OEMs began listening and stepping up their efforts to grow their numbers of minority dealers.
In recent years, a strong economy creating an average of 17 million new car sales, helped open sources of capital for dealers, including minority dealers. In 2021, an additional 109 minority dealers entered the industry. A total of 1,366 minorities own dealerships now — up from 1,264 in 2002 when Lester first joined NAMAD 20 years ago and up from 1,194 when he became President in 2006.
During his tenure, Damon helped over 300 minority entrepreneurs become car dealers. Last year, he decided to jump into the business himself, acquiring Nissan of Bowie, MD.
As Hugene T. Fields assumes the mantle, dealership profits are at an all-time high, and capital is more accessible than ever. But the future is uncertain for automotive retail as recession fears likely will make investment harder to obtain, at least for the next several months. Fields challenge will be continuing to keep private equity, OEMs, and lending institutions engaged and focused on strengthening the minority dealership base.