Fred Salinas didn't want his two sons to step into the family business until after they had worked for somebody else.
Salinas, a dealer near Houston, believed it was important for them to gain outside experience to build responsibility and get a different view of how companies work. When his sons were ready for roles at his store, Friendly Ford of Crosby, Salinas said they'd have to climb their way up to the "big chair." Nothing would be handed to them.
This directive led the Salinas brothers down divergent paths. Austin headed to the University of Kansas, his father's alma mater, and became a homebuilder in Dallas before joining his father in 2008. Younger brother Blake enlisted in the Marine Corps, like his dad, and served five years, including a tour in Afghanistan.
Blake, 33, new-car director at Friendly Ford, credits the Marines for making him a better leader. Austin, 36, now the general sales manager, said his time outside the family business was invaluable to developing independence.
"You didn't have the safety net of a family to fall back on. I was out there on my own," said Austin. Being a builder "was my first job out of college. I learned what it was like to earn my own paycheck, what it was like to live paycheck to paycheck, pay my own bills [and] have a boss that's not family."
The Salinas brothers now are buying out their father on an eight-year plan as he gradually loosens his grip on the store he acquired in 2002, confident it will remain in the family for many more years.
For other minority-owned dealerships around the U.S., the future may not be as clear. The number of stores owned by minorities has stabilized since the recession, but the landscape could change dramatically in the next 10 to 15 years if these dealers don't pass down their stores to their children or find qualified minority successors.
With many approaching retirement — at 65, Salinas is around the average age for a minority dealer community that's primarily composed of first-generation owners new to succession planning — preparing their heirs to take over is about more than just carrying on the family legacy. It's critical to keeping the minority dealer body alive.
Minority dealers can't afford to be shortsighted, says Irving Matthews, chairman of the National Association of Minority Automobile Dealers and owner of Matthews Automotive Group, which has two Ford dealerships in Florida. Matthews, 69, has two of his sons working for him to bolster their credentials. He wants them to know the ins and outs of every department at a dealership. "You can't control what you don't know," he explained.
"I don't want to be one generational," Matthews told NAMAD members at the group's annual convention in Miami this summer. "When I leave, I want to make sure it goes beyond them. However we set it up, I want to make sure the succession plan includes the grandkids and so forth, so we can keep it going. I think each of you have to focus on it that way, or we'll quickly vanish."
Ups and downs
Despite a post-recession rebound, there are fewer minority-owned U.S. dealerships than a decade ago.
| 2000 | 1,088 | 2009 | 977 | |
| 2001 | 1,100 | 2010 | 881 | |
| 2002 | 1,139 | 2011 | 873 | |
| 2003 | 1,452 | 2012 | 1,053 | |
| 2004 | 1,617 | 2013 | 1,116 | |
| 2005 | 1,805 | 2014 | 1,096 | |
| 2006 | 1,757 | 2015 | 1,130 | |
| 2007 | 1,156 | 2016 | 1,112 | |
| 2008 | 1,131 |
Bloodline vs. bottom line
Simply being the child of a dealer isn't enough to take over a store.
Manufacturers, which want to ensure dealerships will be run effectively, get the final say on successors. They want candidates who have had operational experience and the proper training through programs such as the NADA Dealer Academy.
Lester: Factories may reject kids.
NAMAD President Damon Lester said he's heard of instances when dealers named their son or daughter as the successor, but the manufacturer balked and proposed someone else.
"That's one big hurdle that all dealers need to be aware of," Lester told Automotive News. "I know in many instances, manufacturers have urged dealers to provide them with a succession plan. I think mainly for the reason that they may not approve the son or daughter, or they may have someone else in mind to run the store. I think dealers have historically been leery of giving that information up."
NAMAD is looking to develop the next batch of minority dealers through an initiative called NextGen, which aims to sharpen their industry knowledge and prepare them to be considered by manufacturers as successors. The program allows aspiring dealers to exchange ideas and learn from industry experts through workshops on best practices.
NextGen is for the children of NAMAD members or those who hold management positions at member-owned stores but don't have family in the business.
Karen Sutton-Ford, left, and Karmala Sutton, with their father, Nathaniel, who owns Sutton Auto Team.
Karmala Sutton, NextGen's president, calls it a "safe space" for dealer hopefuls to bounce ideas off one another. About 60 members with varying experience levels participate, including salespeople and general managers.
NAMAD also partnered with the National Automobile Dealers Association this year to create a 20 Group for NextGen members. The group looks over the financial statements of their stores with their peers. Top performers, Sutton said, can then share what's working for them with the rest of the group.
Sutton's father, Nathaniel, owns Sutton Auto Team, which sells Ford, Lincoln and Honda vehicles in Matteson, Ill., and Bristol, Wis. She works in accounting at her father's Honda of Kenosha store in Bristol.
"We want to keep this culture of peers to be able to bond and talk about things that happen in their stores that they don't know how to solve," said Sutton, 30.
Fred Salinas made sure his sons were well-groomed for leadership so they were ready when it came time for Ford to approve them. Salinas started his career with Ford in 1979 on the manufacturing side, so he had an insider's view of what the automaker was looking for.
The brothers ran the gauntlet of dealership duties, putting in the long hours their father says are necessary to be successful.
Austin got his start in Internet sales before moving to the finance department and sales desk on his way to becoming general sales manager. Blake returned from the Marines in 2012 and started his career with two years in the service shop. He then made his way to the sales desk before being promoted to new-car director.
Both brothers graduated from the NADA Dealer Academy as well.
Salinas included his sons in key meetings otherwise designated for upper management while they worked their way up the ladder. He broke down variables in financial statements so they knew what was important and often pulled them aside to explain why he made certain decisions.
"With all the preparation, both on their part and my part, they didn't have any problems getting approved by Ford," Salinas said. "I could walk away tomorrow and have full confidence in them. Most importantly, I wanted to pass it along and have a family legacy."
While the family's succession plan plays out, Friendly Ford must confront destruction from Hurricane Harvey in late August. Salinas said the store, 20 miles from downtown Houston, lost up to 70 percent of its inventory to flooding.
It bought replacements from dealers around the country, and Ford was helping to replenish the inventory as well.
"You're on their clock, you're on their dime. You see how they perform. You have to have that experience."
Parm Matharu, dealer principal, Porterville Ford, with his sone, Deepak, who spent time at another store
Like Salinas, Parm Matharu wanted his son, Deepak, to work for someone else before coming to the family store.
Matharu, dealer principal at Porterville Ford in central California, said his son worked at a private-equity firm last summer after spending the previous summer at another dealership to see how it felt to work at a store where no one already knew him.
"You're on their clock, you're on their dime. You see how they perform. You have to have that experience," said Matharu, 55. "The only way to get it is to go work. Go spend 10 hours a day, 12 hours a day. See what happens when you don't have a deal, when you don't sell cars."
He added, with a laugh: "Then the sales manager or [general sales manager] brings you into the office and asks, 'What the hell's going on with you?'"
Deepak, a 20-year-old economics major at the University of California, Berkeley, who plans to graduate in December, worked this summer at Porterville Ford as a salesperson. He's deciding between going into banking or staying at his father's store.
If it's the latter, his father hopes to have a succession plan in place within two to three years. Deepak's 17-year-old sister, a student at the University of California, Santa Cruz, also hasn't made up her mind whether to join the family business.
Preparing for a death isn't easy, but it's necessary, says second-gen dealer Jenell Ross.
Expecting the unexpected
Dealerships are the embodiment of years of sacrifice and are often family jewels. Succession planning should involve much more than simply determining who will run the store next. Dealers need to have conversations about the estate tax to protect their families and businesses after they're gone, says Jenell Ross, president of Bob Ross Auto Group in Centerville, Ohio. The group sells Alfa Romeo, Fiat, Buick, GMC and Mercedes-Benz products.
Ross, believed to be the only black woman in the country who is a second-generation dealer principal, had a sudden introduction to the estate tax when her father died unexpectedly in 1997 at 62. Bob Ross had been a pioneer in the business, becoming the nation's first black Mercedes dealer in 1979.
Jenell was only 27 when she was thrust into the dealer principal role and tasked with running the organization alongside her mother, who became CEO and president.
In the midst of its grief, the family received a federal tax bill for more than half the value of the business. It was a huge expense, especially when nearly 90 percent of that value was wrapped up in assets such as land, equipment and inventory.
The family made it through, but Jenell said the estate tax can be devastating to dealerships. She said many stores may not have the assets to pay the bill and need to consider liquidation in some cases.
After her father's passing, Jenell said, her mother made sure to have a concrete plan in place when her own time came. Norma Ross died in 2010.
"It is a discussion that nobody wants to embark on. I get that," she said. "It is a necessary evil in order to protect your loved ones and the organization you planned to grow and be successful in. I've had conversations with other dealers and other business owners who said, 'I won't be here, so it won't be my problem.'"
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