Bob Johnson Opens Car Dealership

Raises the 2% of Minority Owners

by Jeff Fortson
www.blackenterprise.com

October 8, 2007--As if billionaire and BET founder Robert Johnson didn't have enough on his plate, owning a NBA team, a film company, financial institutions, and hotels, he has decided to add car dealerships to his portfolio.

Last week, Johnson publicly announced he is forming a new automotive partnership, with Mack McLarty, who served as chief of staff for President Clinton and Steve Landers, an experienced automotive dealer. Both McLarty and Landers combined their resources and automotive expertise in 2004, forming the Arkansas-based McLarty-Landers Automotive Group.

In this partnership, Johnson is expected to invest about 60 percent of the capital needed to fund RLJ-McLarty-Landers Automotive Partnership, while the remaining 40 percent will come from his new partners. This joint entity will carry Chrysler, Dodge, Ford, Jeep, Scion and Toyota.

As a savvy entrepreneur, Johnson's philosophy has always been to be an industry catalyst, turning mainstream companies into minority-owned companies overnight. Currently African Americans own less than 2%, and ethnic minorities own 5 percent of America’s 41,000 car dealerships. Damon Lester, president of the National Association of Minority Automobile Dealers (NAMAD) believes Johnson will move the needle for minority-owned stores.

NAMAD plans to work closely with Johnson. Lester says, "There are currently twenty-four highly-qualified African Americans (General Managers and General Sales Managers) in NAMAD's database, ready to run a store." Through NAMAD and Johnson's name recognition, RLJ-McLarty-Landers Automotive Partnership shouldn't have difficulty creating a pipeline of well-trained minority managers, which should eventually lead to in-dealership ownership opportunities.

Johnson hopes to grow his new automotive partnership fairly quickly. He projects revenues to over $1 billion in the next three to five years. If he accomplishes this, Johnson will play in the same league as Gregory Jackson, CEO of Prestige Automotive Group, (No. 1 on the 2007 BE 100 Auto Dealer’s list), which generated $1.5 billion in sales last year.

One way to achieve this goal is by adding more dealerships, specifically acquiring franchises that are hard to get for African Americans—BMW, Lexus, Mercedes, Infiniti and Mini. Johnson shouldn't have a problem acquiring these brands if he so chooses to.

Good for him.

Lemme take one guess as to who will get the Lemons.