By Katelyn Aluise and Jules Ogden
BBG Intern Reporters
Graphics By Kelsie Dowling
During the legislative session in March, West Virginia state senators proposed Senate Bill 462, which would, among other amendments, restrict automobile manufacturers’ and distributors’ right of first refusal.
In automobile dealing, the right of first refusal refers to an automobile manufacturer’s right to refuse the sale of any of its dealerships from one owner to another. Instead, the manufacturer may purchase the property back from the original dealer and sell it to their preferred dealer.
The purpose of restricting this right, as provided in testimony by West Virginia Automobile Dealers Association President Jared Wyrick during a House Judiciary committee meeting in March, was to prevent automobile manufacturers, like Ford and Toyota, from purchasing dealerships back from West Virginia dealers and selling them to any qualified buyer.
“This just gives the ability of the dealer to sell it to who they want to sell their dealership to,” Wyrick said during the session.
The bill, sponsored by state Senators Rupie Phillips, Mike Woefel, Jack Woodrum and Jason Barrett, was introduced because, according to Wyrick’s testimony, dealers feel manufacturers are not always selling dealerships to the most “qualified” buyer. Instead, Wyrick said he believes that manufacturers are buying back their dealerships to sell to more “diverse” dealers that “check off the right boxes,” regardless of their experience.
“What we’re seeing is a lot of efforts to move more into a diverse group, and so you were having manufacturers buying the dealer from the local dealerships, exercise right of first refusal and then selling that to a minority group because it checks the right boxes, as opposed to necessarily the qualified individual,” he said during a committee meeting.
In fact, although the exact number of minority-owned dealerships in West Virginia is unclear, only two are listed as members of the National Association of Minority Auto Dealers in their directory.
This is out of at least 974 new and used car dealerships in West Virginia, according to data from the North American Industry Classification System.
According to the U.S. Bureau of Labor Statistics, Black or African American citizens made up only 10.4% of automobile dealers in the country last year.
Still, Wyrick said he believes that minority dealers are receiving preferential treatment when being considered for purchasing a dealership.
“You have several manufacturers that will exercise the right of first refusal in an effort to increase the number of minorities that they have currently that own dealerships,” Wyrick said.
“We do, we have three or four minority dealers in the state of West Virginia. This, just, this doesn’t stop “Dealer Y” from selling it to a minority. This just gives the ability of the dealer to sell it who they want to sell their dealership to. The manufacturer still has the right to decline that, they just don’t no longer have the right to purchase it and then to sell it to whomever they want to.”
Black By God made multiple attempts to reach out to WVADA and the bill’s sponsors, but all have since declined to comment.
In hearing this testimony, only one delegate spoke up.
“My ears perked up … The testimony was provided that this removal of the right of first refusal portion of the bill was to essentially prevent minorities from joining in ownership for West Virginia dealers … And so, I just have to say that I don’t think that’s West Virginia values. I don’t think West Virginia values are to hold opinions of people based on their race. And for that reason, I can’t support this bill,” Delegate Evan Hansen said during the committee meeting.
To Hansen, West Virginia values mean both inclusivity and resiliency.
“I find that West Virginians in general are just the kindest, most helpful, most welcoming people that I’ve met anywhere,” he said in an interview with Black By God.
Listen to the debate. Start at time stamp 25:25
Audio courtest of West Virginia House of Delegates
Johnnie Brown, who serves as an outside general counsel for WVADA, outlined the protections in the proposed bill that would now allow dealers to sell to whomever they want to without the interference of a manufacturer’s right of first refusal.
“There’s also protection so that if a dealer is selling to a person who they believe will kind of continue their culture, protect their employees, their West Virginia values, that they should be able to sell to them and they can’t just unilaterally refuse that,” Brown said during the meeting.
Brown then said that there’s nothing in the bill that directly excludes minorities, although he felt the bill would stop manufacturers from selling West Virginia-owned dealerships to dealers out-of-state who do not have “West Virginia values.” He used two cases of dealerships being sold to Tennessee and Cleveland as examples.
“People who don’t know have West Virginia values, that’s what we’re trying to protect,” Brown said. “When an individual has spent their whole life spending millions of dollars to build a dealership or want to sell it to someone who’s going to watch after their employees and protect their West Virginia investment. They should be able to sell that person. Now that person has to be qualified and meet all the standards, but if they do, the manufacturer shouldn’t be able to take that dealership from an owner, and then give it to out-of-state individuals.”
Hansen believes that by saying that those states that engage in the right of first refusal do not share West Virginia values, it was like saying minorities in those states, who are seen as receiving preferential treatment for “checking off the right boxes,” do not share West Virginia values.
He also said that bills like SB 462 reinforce negative stereotypes about the state.
“This right of first refusal that’s in the state code for auto dealers is not common. And that’s a heavily regulated industry. But I would say as a legislature, I would like to see us pass bills that signal to the world what our values are. And because West Virginia, unfortunately, has a bad reputation outside of the state … ” he said.
“We need to reinvent ourselves in ways that communicate how welcome we are.”
Sim Fryson, the second Black Mercedes-Benz dealer and former president and CEO of Sim Fryson Motor Company, was born and raised in Charleston, West Virginia.
Each of his dealerships was located just across the West Virginia border in Ashland, Kentucky, where he said he was able to make a difference in the community and encourage young children of color to pursue their dreams.
Fryson said he was even part of a diverse learning program at General Motors and later joined a dealer diversity initiative at Mercedes-Benz because he feels “inclusion makes a difference.”
He said removing the manufacturer’s right of first refusal would lessen their current inclusion efforts and stifle opportunities for diversity in dealership owners.
He said diversity matters because it is important for young people to see people that look like themselves making a difference.
“I got a letter from one gentleman that said, ‘Mr. Fryson, if it hadn’t been for you, I never would’ve gotten a college degree,’… I think the diversity made a difference there,” he said.
Fryson moved back to Charleston after 11 years in Ashland, in hopes of making the same difference in his home state and town, but he said he was unable to due to stigma.
“I wanted to come back to West Virginia to make a difference here. But here in West Virginia, as much as I heralded it, I’m beginning to see now things that are subliminal that makes me almost on the same line with how people look at us.”
Similar to Hansen, Fryson said that legislation like SB 462 reinforces the state’s negative stigma and public perception of being uneducated “hillbillies.”
“What I’m seeing now is different than when I grew up in. I think growing up, things were a little bit better, I think because we had people that were from this area that we grew up with, different people from all walks of life, as we had our issues, but not to the degree that we’re having them right now,” he said when discussing other current political debates involving race, like critical race theory policies.
Hansen said it’s important, now more than ever, to stop pushing legislation that shows that West Virginia is anything less than welcoming to all.
“West Virginia is still losing population,” Fryson said. ”So we need to do whatever we can not just to keep people from moving out of West Virginia, but to convince people to move into West Virginia.”
“And if we want to convince people to move into West Virginia, we need to be welcoming of the diversity. That is America. And that includes all types of diversity, racial diversity, but other types of diversity as well.”
The bill has been moved to the inactive calendar following the 2022-23 legislative session’s ending in March; however, Hansen said that he anticipates the bill to be reintroduced in next year’s session.
