How Hyundai enlisted more minority dealers

on Aug5

Brian O’Malley, Hyundai’s dealer development director, and NAMAD President Damon Lester, center, listen at a dealer reception Hyundai hosted at the NADA convention in New Orleans this year. Lester says Hyundai’s leadership has shown its commitment to adding minority dealers.

MIAMI — In 2011, Hyundai ranked seventh among automakers in terms of minority-owned dealerships in the U.S., with 48. It was far from the bottom of the industry, but there was plenty of room for growth.

Then Hyundai flipped the script.

By the end of 2016, the Korean automaker had vaulted to 78 minority-owned rooftops, leapfrogging the likes of Toyota, Honda and Nissan. Hyundai is now fourth in the industry, trailing only the Detroit 3, according to an annual census by the National Association of Minority Automobile Dealers.

What changed?

NAMAD credits former Hyundai Motor America CEO Dave Zuchowski, who took the helm in early 2014, with making a commitment to growing minority representation within the dealer body. Although Zuchowski was ousted last December, Hyundai says it will continue to build its roster of minority owners.

Leadership

When Zuchowski took over, he told NAMAD that Hyundai’s minority-dealer count wasn’t where the automaker wanted it to be, recalled Brian O’Malley, director of dealer development for Hyundai Motor America. So Zuchowksi said Hyundai would dedicate itself to improving its numbers.

Then Hyundai’s minority rooftops began to surge: The count jumped to 69, up 17, in 2014 — Zuchowski’s first year on the job. Over the next two years, the brand added nine stores to reach 78.

O’Malley said Hyundai has been working closely with NAMAD to find qualified minority candidates. He said the brand also had its regional leadership teams increase their emphasis on identifying and interviewing minority dealers. O’Malley attributes Hyundai’s ethnic-dealer growth not just to Zuchowski, but to the efforts of its regional staff as well.

During NAMAD’s annual conference,Hyundai hosts a reception where it can meet minority candidates. This time is valuable because it allows Hyundai to talk with potential owners and learn details such as their geographic preferences for a store. O’Malley said NAMAD sometimes presents Hyundai with candidates the automaker hadn’t known about.

O’Malley said the reception has been “directly attributable” to some of its minority dealer appointments in the past few years.

NAMAD President Damon Lester said Hyundai’s progress shows what’s possible when company brass steps up and commits to adding minority stores.

“When we see their leadership wants to put forth an effort and says what they’re going to do to increase numbers, things happen,” Lester told Automotive News on the sidelines of NAMAD’s conference here last month. “Even with [interim CEO Jerry Flannery], the commitment remains at Hyundai.”

O’Malley said Hyundai’s goal is clear: It wants its dealer body to more closely reflect the ethnic makeup of its customers.

More sales

Recently released IHS Markit data show why this is critical. IHS said minority-owned dealerships sell a higher percentage of their inventory to minority customers than nonminority stores. While ethnic consumers accounted for 28 percent of new-vehicle sales in the U.S. through April, they made up 40 percent of sales for minority dealers.

Minority dealers also sell a higher proportion of new vehicles to customers of the same ethnicity.

For instance, African-Americans represented 8 percent of new-vehicle sales in the U.S. through April but 16 percent of sales at African-American-owned dealerships. Hispanics made up 14 percent of U.S. sales but 33 percent of Hispanic-owned dealerships’ sales.

Those numbers carry extra weight given minorities’ growing share of the U.S. population.

O’Malley said bolstering Hyundai’s minority-dealer base makes business sense.

“We certainly recognize that various ethnicities are more confident and comfortable buying in their locale, and they like to deal with people of their own ethnicity,” O’Malley told Automotive News. “It’s good business.”



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