Ford Offers Minority Dealers Bailout Plan

While GM and Chrysler are working with the government to determine the viability of their organizations, Ford is taking a different route - focusing on the health of its minority dealers, according to Automotive News. In a once in a lifetime opportunity, Ford is offering dealers in its minority dealer development program, which consist mainly of African Americans and Hispanics, an opportunity to buy their store (dealership) for $1. The dealers will have until September 30 to accept Ford's offer and they must prove that they have adequate operating capital to run their stores. Thus, in this unprecedented move, Ford will write-off the remaining loan balances.

While this is a good move for the minority dealers, who are working to pay off their loans to Ford, it will be interesting to see if the dealers will be able to secure financing for operating capital through outside sources, since the credit market is so tight. Due to the current economic climate, several of the majority-owned stores are having difficulty keeping their doors open due to the inability to secure financing. I guess as the old saying goes.... where there's a will there's a way.

Typically dealers are apart of the automakers minority dealer development programs in order to seek financial assistance, allowing them the opportunity to realize their dreams. Since most stores cost more than a few million dollars to buy, most minorities aren't in a position to fork over that much capital, so the automaker agrees to provide special financing through its minority dealer development program. Without this type of program being provided by the automakers, we would have only a handful of minority dealers today.

Just last year Ford offered to buyout a number of dealers in its minority program, who were struggling to stay afloat prior to the bottom falling out of the economy. I guess with this latest offer from Ford, could this be the end of the minority dealer development program or a way for the automakers to reduce their dealer count? I guess time will tell.