IN RECOGNITION AND SUPPORT OF MINORITY AUTOMOBILE DEALERS

WHEREAS, the number of ethnic minority automobile dealers in the United States has declined dramatically since 2008;

WHEREAS, according to the National Association of Minority Owned Dealers, on January 1, 2008, there were 1,325 ethnic minority-owned automobile dealerships, and on January 1, 2011, there were just 921. Black-owned automobile dealers were the hardest hit in this recession with a decline of 50 percent, as their numbers during that same period were reduced from 523 to just 261;

WHEREAS, the forced closure of automobile dealerships has had a devastating financial impact on both the dealership owners and their communities due to the loss of jobs;

WHEREAS, during the recession, domestic automobile manufacturers significantly reduced ethnic minority Dealer Development Programs, which had made access to the ownership of automobile dealerships possible for minorities;

WHEREAS, the decline in the number of ethnic minority automobile dealers continues due, in large part, to the lack of access to capital and floor plan financing loans;

WHEREAS, since 2009, a large number of floor plan lenders have exited the market because of their inability to sell their loans on the secondary market;

WHEREAS, because of the severe decrease of automobile dealer floor plan financing and working capital loans, a new program to provide each of these loans is vital to the reinstatement of ethnic minority automobile dealers;

WHEREAS, an Ethnic Minority Dealer Financing (EMDF) Program will provide the access to capital many ethnic minority automobile dealers need at this critical time, as they go through the transition brought on by larger changes within the domestic automobile industry;

WHEREAS, with the increasing presence of international name plates opening manufacturing facilities in the United States that lack ethnic minority automobile dealer representation in their dealer body, such entities must also be required to implement a Dealer Development Program that allows ethnic minority automobile dealers to participate;

WHEREAS, the EMDF Program would provide working capital, lock in term loans, and provide stable floor plan financing for terminated and displaced dealers so they may take advantage of opportunities to reenter the automobile dealership market during these tough economic times;

WHEREAS, the EMDF Program would increase the viability and success of ethnic minority dealers as well as create jobs;

WHEREAS, the EMDF Program would give first priority to those ethnic minority automobile dealers, which General Motors, Chrysler, and Ford terminated between 2008-2011, and then to ethnic minorities who are struggling to maintain their dealerships due to the lack of access to capital, and finally to ethnic minorities entering the automobile dealership industry;

WHEREAS, the EMDF Program would provide long-term, fixed-rate, and revolving financing to provide working capital, floor plan lending, and real estate financing (such a plan would require a contribution of at least 15 percent equity from the automobile dealer for acquisition cost; a floor plan loan from a lender covering up to 100 percent of the vehicle cost, guaranteed by the Original Equipment Manufacturer (OEM) and the dealer; a working capital loan, with the OEM covering up to 35 percent of the acquisition cost; and a real estate loan of 70 percent from a bank and 30 percent OEM financing);

WHEREAS, it is estimated that as many as 1,000 ethnic minority automobile dealers may ultimately participate in such a program;

WHEREAS, the program could be completely funded by the reinstatement of OEM Dealer Development Programs and the enactment of a requirement that those international manufacturers who manufacture automobiles in the United States implement such a Dealer Development Program, thus at no cost to the taxpayer;

WHEREAS, all such loans would be made through private lenders to creditworthy dealers and dealerships that meet the lender’s requirements and demonstrate sound finances and a viable business plan (the maximum term for an EMDF Program working capital loan would be seven years and twenty years for a real estate loan, with the floor plan financing only covering titleable inventory and the lenders controlling title transfer as a means of risk mitigation); and

WHEREAS, the creation of such a program would create jobs across this great nation, in addition to increasing economic development in those communities hit hard by the continuing international financial crisis.

THEREFORE BE IT RESOLVED, that the National Black Caucus of State Legislators (NBCSL) and its members hereby urge the establishment and creation of an Ethnic Minority Dealers Financing Program, housed within the United States Department of Commerce;

BE IT FURTHER RESOLVED, that the NBCSL requests that automobile manufacturers should do everything possible to prevent the termination of ethnic minority automobile dealers for at least the next five years;

BE IT FURTHER RESOLVED, that the NBCSL supports increasing diversity in the appointment of minority automobile dealers within a five-year time frame, so that ethnic minorities own at least 15 percent of domestic automobile dealerships, even though they represent over 35 percent of the total U.S. population and growing;

BE IT FURTHER RESOLVED, that the NBCSL urges a priority for appointment to new dealerships be afforded to ethnic minority automobile dealers that have previously been displaced or terminated because of the recession; and

BE IT FINALLY RESOLVED, that a copy of this resolution be transmitted to the President of the United States, the Vice President of the United States, members of the United States House of Representatives and the United States Senate, and other federal and state government officials as appropriate.

SPONSOR(S): Representative Karen Camper (TN) and Representative Lois DeBerry (TN)
Committee of Jurisdiction: Business, Financial Services, and Insurance Policy Committee
Certified by Committee Chair: Representative George Flaggs, Jr. (MS)
Ratified in Plenary Session: Ratification Date is December 9, 2011
Ratification is certified by: Representative Barbara W. Ballard (KS), President