Is DEI too “woke” for dealers? Yes and no.
The conversation about diversity, equity and inclusion in the auto retail industry is changing. While some auto retail companies are standing firm with DEI policies, others are distancing themselves from initiatives and messaging because they are politically charged. Meanwhile, other voices in the industry criticize DEI as a concept and believe it forces companies to comply with unfair quotas.
Some trace the origins of DEI to the civil rights movement, but the concept most recently gained attention and popularity in 2020 alongside the #blacklivesmatter movement. That year, many companies across industries faced internal and external pressures to adopt DEI policies.
Since then, however, attitudes surrounding DEI have been changing inside and outside the automotive industry. One of the latest blows came when President Donald Trump issued an executive order in January aimed at ending DEI in the federal government and in federally funded projects. Social media activists have also launched campaigns to pressure larger companies into stepping back from DEI.
The recent shifts in attitude come after a few automakers made major moves away from DEI last year. Ford Motor Co. modified its initiatives last summer and Toyota Motor Corp. curbed its programs in the fall after facing public pressure on social media.
That tense, politicized debate is now making waves in the auto retail industry. Many dealerships and industry companies that once proudly championed their DEI efforts now prefer to not discuss them publicly.
AutoNation in an April 7 regulatory filing said its shareholders have been asked to approve a proposal submitted by nonprofit shareholder advocacy group As You Sow, which would compel the auto retailer to report on the effectiveness of its DEI efforts. The AutoNation board opposes the proposal.
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But there is still a lot of interest in diversity in auto retail. Companies are investing in leadership development programs and making a point to hire from the communities they serve.
“We won’t achieve business outcomes without having the right people and top talent, and that includes having a bigger net to cast,” said Fleming Ford, the director of strategic growth at NCM Associates. “I don’t know that people are as comfortable calling it DEI because of the pressure.”
As the debate about diversity enters a new era, dealers and experts are speaking up about where they think the industry is headed.
What dealership groups think about DEI
Dealer stances on DEI vary widely.
In 2023, minority dealers owned about 1,570 dealership rooftops in the U.S., according to the National Association of Minority Automobile Dealers. That is up from about 875 in 2011.
African American dealers owned 334 of these stores, Hispanic American dealers owned 648, Asian American dealers owned 457 and Native American dealers 131.
There were 18,271 new-car dealerships in the U.S. as of Jan. 1, 2023, according to Automotive News’ annual dealer census.
Long-standing initiatives such as minority dealer groups are good for the industry, said Eric Lane, CEO of Gerry Lane Enterprises, a small dealership group in Baton Rouge, La. It is worth it for automakers to offer special financing to help minorities buy dealerships, Lane said, but the recent DEI push went too far:
“There is room for everybody at the table, but you shouldn’t force it,” said Lane, who said he identifies as American Indian.
At Car Pros Automotive Group in Renton, Wash., diversity is in the company’s DNA, said CEO Matthew Phillips. The dealership group does not run any specific DEI programs.
Car Pros focuses on “recruiting from the communities we serve and making sure that we have representation for the communities we serve,” Phillips said.
At Group 1 Automotive Inc., diversity initiatives are more formal. Group 1’s chief human resources officer is the company’s chief diversity officer and leads Group 1’s DEI council. The dealership group, which ranks fourth on the Automotive News list of top 150 groups based in the U.S., also offers mentorship programs and requires “Respect Training” as a part of the employee onboarding processes, according to its 2023 environment, sustainability and governance report.
Group 1 still embraces DEI and believes it is healthy for the company to be more diverse, CFO Daniel McHenry said in an interview Jan. 29.
“It has always been part of our fabric and we continue to work on it,” McHenry said. “It is not something that we say: ‘The administration changed so we are going to change.’ It is how we do business.”
Asbury Automotive Group Inc., another publicly traded company, supports DEI in its business. The dealership group was diverse before the formal concept of DEI emerged at U.S. businesses, CEO David Hult said.
“We just think it’s right for us,” Hult said. “We like having diverse teams. We like reflecting the markets that we’re in.”
Hult also pointed to Wendy Reynolds-Dobbs, chief DEI officer and vice president of DEI, learning, development and community programs at Asbury, whose duties include managing the company’s DEI efforts.
“We’re not pivoting away from our plan,” Hult said. “We just think it’s right for us.”
AutoNation Inc., Penske Automotive Group Inc., Sonic Automotive Inc. and Lithia Motors Inc. — the four other major, publicly traded dealership groups — did not respond to requests for comment.
Why some dealers are against DEI
Zeigler Automotive Group of Kalamazoo, Mich., never takes a political stance, said CEO Aaron Zeigler. In his perspective, DEI can be a culture killer instead of a culture builder.
Zeigler Automotive hires and promotes the best people for the job, regardless of skin color or sexual orientation, Zeigler said.
“That has worked out really well for us and helped us build a great culture,” he said.
There are many reasons why dealers are stepping back from DEI. The topic is controversial and there are political and social pressures surrounding DEI programs, Ford of NCM Associates said.
“It has become almost a negative to be ‘woke,’ ” she said.
Some dealers see DEI as too extreme and others think the programs are unfair, she said.
Skeptics ask: “Is a diverse candidate getting that role because they are diverse or because they are the best candidate?” she said. “That is where it got a little slippery.”
Many auto retail companies are concerned that DEI programs do not have a clear return on investment, Ford said. That is why they are moving away from meeting quotas or programs targeting social problems, she said.
“People always want to do the right thing, but we are running businesses,” Ford said. “There needs to be a business return on investment to any type of people strategy that we have.”
Auto retail continues to invest in diversity
Many companies in the auto retail industry are interested in diversity.
Dealers know their staff needs to look like their customers, Ford said. Diversity fulfills a lot of business needs, from helping customers feel comfortable to lowering sales barriers, she said.
At the same time, how dealership groups manage people is changing, Ford added. For example, dealerships offer more flexible schedules, provide paid parental leave and changed how they write job postings to attract a diverse set of candidates. The shifts benefit all employees and open up the industry to more people, she said.
“A lot of what has scaled back is because of the way everything has been seen in the media,” Ford said. But dealers are “still doing a lot to diversify their dealership network.”
At Car Pros, having a diverse staff means they are better able to meet the needs of a diverse market, Phillips said.
For example, a dealership group can run an ad in any language, but if “no one there is representative of that culture, no one speaks the language and no one understands it, you are unlikely to be very successful,” he said.
Now that auto retail companies are feeling less pressure to have specific DEI programs, Phillips hopes the industry will open the door to more conversations about diversity.
“Do we just want to run a program and check a box, or do we really see value in some of this?” Phillips said.
Dealership groups also are coming to NCM Associates with interest in leadership development programs, Ford said. The programs can bring underrepresented groups — such as women — into leadership, and show new employees from those same groups that they have a path toward leadership, she said.
“I don’t think anybody disagrees that having diversity gives you more innovation,” Ford said. “But being forced to do it is where I think people started to push back.”
As dealers plan out their people strategy, they should look at how their employees feel by using surveys or focus groups, Ford said. Often there are barriers that are more visible to employees than leadership.
“It is about asking and getting information and then making improvements,” Ford said. “That is just about making a great place for people to work and thrive, not just to hit the DEI numbers.”
