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From: Jared Hamilton
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Jeremy Alicandri

Jeremy Alicandri Advisor

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Mr. Buffett: Want more car dealerships? Become a “car person”…

4e8610be636a6a371ddea40af2a51a1a.jpg?t=1Warren Buffett’s purchase of Van Tuyl Auto Group is an opportunity to raise the bar on diversity in automotive retail…

 

On March 8, the world celebrated International Women’s Day, a day that recognizes and revels in the achievements of women. In America, our mothers, sisters and daughters have made tremendous strides in equality, ranging from the board room to space exploration. Thus, it’s difficult to imagine that in one of America’s largest and most established industries – automotive retail – women comprise just 17.7 percent[1] of the workforce (in comparison, women make up 47 percent of the total U.S. labor force).

Diversity shortcomings in automotive retail aren’t just limited to women. In a recent report card from the Human Rights Campaign, dubbed the Corporate Equality Index[2], four publically-traded automotive retailers were scored on their LGBT “corporate policies and practices.” Out of 100 possible points, the group average among these retailers was an astonishing 14! In comparison, major manufacturers, including the likes of GM, Toyota, Volkswagen and even the Johnny-come-lately, Tesla, scored a perfect 100.

Many years ago, the nation’s automotive manufacturers recognized the diversity shortcomings in the retail dealership network, and launched bold initiatives to fix them. These initiatives not only improved workplace diversity for the manufacturers’ internal employees, but they also improved the diversity of the individuals who actually owned and operated the dealership franchises. As a sign of continued commitment today, many manufacturers glitter their websites with encouraging mission statements and bold quotes: “If we want to build great cars and trucks for the way our customers live, Toyota will strive to be a reflection of the America in which we live[3],” states Jim Lentz, CEO of Toyota North America, on Toyota’s website. On Volkswagen’s website, you’ll find this: “At Volkswagen Group of America, our goal is to be recognized as a top company for diversity.[4]” Yet, despite these honorable efforts, workplace diversity in automotive retail remains largely unfulfilled.

“We are now ‘car guys.’” The 800-pound gorilla enters automotive retail…

This week, Warren Buffett officially entered automotive retail with the completed purchase of the Van Tuyl Automotive dealership group. In a recent letter to his shareholders, he proudly touted “We are now ‘car guys.’” In this same letter, Buffett also explained that he wanted to buy more dealerships and that he must woo the manufacturers in order to reasonably do so. “Berkshire’s job is to perform in a manner that will cause manufacturers to welcome further purchases by us…. If we do this -- we can buy dealerships at sensible prices…[5]” Hmmm… So how does one court a car manufacturer? Generally, to make a manufacturer happy, a dealer needs to saturate a given market with the manufacturer’s make, and ensure a certain level of satisfied customers. From there, it’s smooth sailing to be approved by a manufacturer to purchase more dealerships. Alas, I have an idea! Since automotive retail is in dire need of diversity, and since the nation’s car manufacturers are relentlessly determined to improve it, why not reward Buffett if he becomes a diversity trendsetter? The manufacturers are publically committed to diversity, so they must recognize his efforts when awarding dealerships.

While a balance sheet with billions in cash is exciting… ending the quasi-realities of the “good old boy” culture is paramount …

According to a recent survey by Gallup on professions, car salespeople are rated the least[6] trustworthy in America, second only to members of Congress. The industry is plagued with a poor and unjust reputation that pushes away the diverse talent pool that is required for growth. But when you’re a world-famous billionaire, the world listens. Buffett can win the hearts and minds of the nation’s car manufacturers by becoming a trendsetter and leader in workplace diversity, while fueling the advancement of the entire industry by disbanding the “good old boy”[7] culture and related perception issues that plague automotive retail.

Welcome to the car business…

[1] 2014 NADA Workforce Study
[2] http://www.hrc.org/campaigns/corporate-equality-index
[3] http://www.diversityinc.com/jim-lentz/
[4] http://www.volkswagengroupamerica.com/diversity.html
[5] http://www.autonews.com/article/20150302/RETAIL07/150309986/Buffettt-says-berkshires-job-is-to-perform-grow-in-auto-retail
[6] http://www.gallup.com/poll/1654/honesty-ethics-professions.aspx
[7] 2013 NADA Workforce Study (Summary)

Mark Dubis
We will continue to see more "outsiders" buying auto dealerships. Manufacturers want "new blood" in their dealer ranks and want folks who do not continue to do things the way they have always been done. Maybe my article from last summer might ring true before we know it. http://www.drivingsales.com/blogs/dubisgroup/2014/06/16/future-headline-disney-google-partner-to-buy-100-auto-dealerships
Craig Waikem
Nice article.
Jonathan Dawson
I walked into a dealership in Ga, that has women representing 50% of the sales force! We need to represent the marketplace!
Tom Rocha
Exactly! Nicely done Jeremy.
Mark Dubis
Jeremy's quote: "Buffett can win the hearts and minds of the nation’s car manufacturers by becoming a trendsetter and leader in workplace diversity, while fueling the advancement of the entire industry by disbanding the “good old boy”[7] culture and related perception issues that plague automotive retail." So Jeremy you're saying the poor attitude and chauvinistic behavior of owners and managers changing won't make a difference in our industry? But the way to change our industry is for an outsider (Warren Buffet) to start doing things right? Well it seems like the good ol boys are you, and you and your dealerships need to take the lead in this area. When dealers want to get serious about selling more vehicles they will hire more women in the sales dept. They will treat them and all their sales people like professionals, not like idiots or lot boys. One owner, one manager in one dealership can make the difference. Or they can choose to maintain the status-quo. Seems that no sale manager every gets fired for doing what the store has always done. While I find many owners to be very entrepreneurial they are rarely risk takers who want to be the first one to do something different.

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