STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
FOUNTAIN MOTORS, INC., and ) GENERAL MOTORS CORPORATION, )
)
Petitioner, )
)
vs. ) CASE NO. 84-3795
) LANDMARK OLDSMOBILE CORPORATION ) and DEPARTMENT OF HIGHWAY SAFETY ) & MOTOR VEHICLES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a hearing was held before Diane A. Grubbs, a Hearing Officer of the Division of Administrative Hearings. The hearing was conducted from May 20 through May 25, 1985, in Orlando, Florida.
APPEARANCES
For Petitioner:
Fountain Motors Eli Subin
Subin, Shams, Rosenbluth & Moran, P.A. Suite 670, CNA Tower
Post Office Box 285 Orlando, Florida 32802
General Motors Dean Bunch
Corp. Ervin, Varn, Jacobs, Odom & Kitchen Post Office Drawer 1170 Tallahassee, Florida 32302
and Dennis J. Helfman Michael J. Robinson
Office of General Counsel General Motors Corporation 3044 West Grand Boulevard Detroit, Michigan 48202
For Respondent:
Landmark
Oldsmobile, Inc. Louis H. Anders, Jr.
Joseph W. Letzer
D. Frank Davis Janet L. Humphreys
Thomas, Taliaferro, Forman, Burr & Murray 1600 Bank for Savings Building
Birmingham, Alabama 35203
and Robert Butterworth
Atkinson, Golden, Jenne, Diner & Henry 1946 Tyler Street
Hollywood, Florida 33022
Department of Highway Safety &
Motor Vehicles No Appearance
ISSUE
Whether the application of Fountain Motors, Inc. (Fountain) for a new motor vehicle dealer license should be granted on the ground that the existing Oldsmobile dealers in the Orlando area are not providing adequate representation.
BACKGROUND
On September 19, 1984, Fountain filed an application with the Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles (Division), for licensure as a dealer of Oldsmobile automobiles in Orlando, Florida. Landmark Oldsmobile Corporation (Landmark) filed a letter of protest requesting a formal hearing pursuant to Section 320.642, Florida Statutes, to contest the application. By letter dated October 26, 1984, the matter was forwarded by the Division to the Division of Administrative Hearings with the request that a hearing officer be assigned to conduct a formal hearing. General Motors Corporation (GM) intervened in support of Fountain's application.
At the final hearing, Fountain offered Exhibit 1 which was composed of its application and the agency file in the matter, which was received in evidence, GM presented the testimony of Dr. Ronald Rubin, an expert in marketing research; William W. Stiles, manager of the GM Corporate Survey Department and an expert in dealer network planning and market analysis of automobile markets; John Martabano, Jacksonville Zone Manager for Oldsmobile; and James Anderson, President of Urban Science Applications, Inc., and an expert in automobile dealer location analysis, as a rebuttal witness. It also offered GM's Exhibits 1, 2, 4-17, 17(a), 18-20, 20(a), 21-33, 33(a) and (b), 34-38, 55, 57, 59, 60T,
63, 65 and 70, which were received in evidence. Objections to the receipt of Exhibits 54, 64 and 66-69 were sustained and those exhibits were proffered for the record.
Respondent, Landmark, presented the testimony of John Kitzmiller, dealer- operator of Landmark and an expert in automotive sales and marketing; Eddie Dimond, an employee of the Fontana Group and an expert in analyzing allocation systems; J.R. Griffin, a consultant of the Fontana Group and an expert in corporate network planning and market analysis of automobile markets; Dr. Lyman Ostlund, President of the Fontana Group and an expert in several fields related to automobile marketing; and Carol Gross. Landmark's Exhibits 43, 45-53, 55, 55(a), 58, 59, 59(a), 60, 61, 65, 68, 69, 71, 78, 81, 83-86, and 88-93, were
admitted into evidence as were the depositions of James Danhof, Robert Woodfork, Thomas G. Smith and Robert J. Senak. Exhibit No. 44 was proffered for the record.
The transcripts of hearing consisting of 11 volumes and 1830 pages were filed on June 4, 1985. Proposed Findings of Fact and Conclusions of Law were timely filed by Fountain, GM, and Landmark on June 14, 1985, and have been carefully considered. All proposed findings of fact have been addressed, either directly or indirectly, in this recommended order, and a ruling has been made on each proposed finding of fact in the Appendix to this order.
Subsequent to the submission of the proposed recommended orders, several motions were filed relating to the sale of Landmark Oldsmobile to Royal Oldsmobile. Those motions are addressed in the conclusions of law.
FINDINGS OF FACT
THE MARKET AREA:
The relevant market area for purposes of section 320.642 is the Orlando multiple dealer area (MDA). 1/ The Orlando MDA consists of Orange County, Seminole County and the communities of Osteen and DeBary in Volusia County.
This area is presently being served by Landmark and Willett Oldsmobile.
The Orlando MDA has been subdivided by GM into three market areas known as Areas of Geographic Sales and Service Advantage (AGSSA). 2/ AGSSA 1 includes the extreme southern end of Seminole County and that portion of Orange County generally north of Colonial Drive. It defines the area that, in theory, would be served primarily by Landmark. AGSSA 2 is north of AGSSA 1 and generally surrounds the Sanford area. It defines Willett's area of primary responsibility. AGSSA 3 is the area of Orange County generally south of Colonial Drive and defines the area that would be Fountain's area of primary responsibility.
THE DEALERS:
LANDMARK OLDSMOBILE
John Kitzmiller, the dealer/operator of Landmark Oldsmobile, worked with GM, Pontiac Division, for 24 years and eight months. He held a variety of responsible positions with the Pontiac Division including Zone Manager for the Oklahoma City Zone and Zone Manager for the Los Angeles Zone. Mr. Kitzmiller received high performance ratings throughout the time he was with GM. He left GM on July 6, 1983, to become vice-president and general manager of an import distributorship.
In February 1984, Mr. Kitzmiller, in conjunction with Mr. Fred Schneider, executed a buy/sell agreement with Scott Smith Oldsmobile in Orlando, Florida, and the application and documentation to finalize the transaction was presented to the Oldsmobile Zone Office in Jacksonville on February 28, 1984.
On March 2, 1984, Mr. Kitzmiller and Mr. Schneider met with Mr. Martabano, the Zone Manager for the Jacksonville Zone, to discuss the application. Mr. Martabano stated that he felt that that both Mr. Kitzmiller and Mr. Schneider were qualified applicants and that he saw no problem with the application being processed. However, Mr. Martabano advised Mr. Kitzmiller and Mr. Schneider that Scott Smith did not have a good performance record either in sales or customer relations. He stated that additional cars would have to be sold to get average national market penetration, and he indicated that he would provide additional car allocations above what Scott Smith had earned, to help Landmark achieve sufficient market penetration. Mr. Martabano also informed Mr.
Kitzmiller and Mr. Schneider that a market survey had been started in October of 1983 to determine whether a new dealer point should be added in the Orlando metropolitan area, that all indications were that a new dealer point would be added, and that Orlando would probably become a three-dealer metro area.
Because there are numerous factors which affect the time within which a new dealership can be established, Mr. Martabano did not venture an opinion as to the time that it would take to establish the new dealership should the survey indicate the need for one.
Although not initially approved, Landmark ultimately entered into a dealer agreement with GM and began operation on July 16, 1984, as an Oldsmobile dealer in Orlando, Florida, at the location formerly occupied by Scott Smith Oldsmobile. Landmark is located just north of the border between Orange and Seminole Counties. 3/
Approximately three weeks after Landmark started operating, Mr. Martabano visited Landmark and informed Mr. Kitzmiller that the survey had been completed and indicated the need for an additional dealer in the Orlando market. Mr. Kitzmiller was asked not to protest the addition of a new dealer point.
FOUNTAIN:
On September 19, 1984, Fountain filed an application with the Division seeking the issuance of a license to operate a new Oldsmobile dealership in Orange County, at 1406 Sand Lake Road. The application was subsequently amended to state that the Sand Lake Road location had been approved by Oldsmobile on a temporary basis only and that Fountain had secured property at 8621 Orange Blossom Trail for the later construction of the permanent dealership facility. The Orange Blossom Trail location is three-tenths of a mile west on Sand Lake Road and seven-tenths of a mile south on Orange Blossom Trail from the Sand Lake Road location.
A letter of protest to the application was filed by Landmark on October 8, 1984.
WILLETT:
Willett purchased the Joe Creamons Oldsmobile dealership and began operations in March 1985, at the location formerly occupied by Joe Creamons Oldsmobile in Seminole County. Creamons had been dualed with Chevrolet and Cadillac, but Willett was no longer dualed with Chevrolet at the time of the hearing. Willett is not a party in this proceeding.
AREA POPULATION AND ECONOMIC GROWTH:
While the number of Oldsmobile dealers in the area designated the Orlando MDA has remained at two since 1940, the population of the area as a whole has increased more than seven fold, from slightly under 100,000 in 1940 to over 750,000 in 1984.
Orange County's 1985 population is estimated to be 523,300, an 11.1 percent increase over the 1980 population of 471,016. In that portion of Orange County designated AGSSA 3, the population increased from 188,200 in 1980 to an estimated 1985 population of 215,154, an increase of 14.3 percent. The remaining area of Orange County, located within AGSSA 1, experienced an estimated increase in population between 1980 and 1985 of approximately 9 percent.
The number of households in Orange and Seminole Counties has substantially increased over the past fifteen years. Between 1970 and 1980 the number of households in Orange County increased from 108,645 to 170,754, a 57.2 percent increase. During the same period the number of households in Seminole County increased from 25,757 to 63,247, an increase of 68.7 percent. Between 1980 and 1984, Orange County added another 26,062 households and Seminole County added 14,708. Of the East Central Florida Regional Planning Council's planning areas which roughly correspond to AGSSA 3 (ECFRPC Planning Areas 7, 9, 14, 15,
16 and 17) planning area 17, located generally to the west of the proposed add point experienced the greatest percentage increase in the number of households, going from 2,559 households in 1970 to 11,122 households in 1984, an increase of almost 335 percent. However, the greatest number of households are located to the north and northeast of the proposed dealer location, the area of AGSSA 3 located closest to Landmark.
Of five new schools scheduled to be built in Orange County, four will be located in the AGSSA 3 area.
Between 1980 and 1985, both Orange County and AGSSA 3 showed increases in the number of dwelling units, in residential employment (persons living within the area that are employed), and in attendant employment (number of persons whose work place is located in the area regardless of where the person lives). However, the AGSSA 3 area experienced greater growth than the county as a whole. In 1980, AGSSA 3 had 39.3 percent of the total county's residential employment and 36.5 of the attendant employment. AGSSA 3 is estimated to have 40.9 percent of the residential employment and 41.2 percent of the attendant employment in 1985.
As can be seen from the Commercial Land Use Inventory map (GM Ex. 2), the AGSSA 3 area south and west of the proposed dealer location is an area of heavy development, containing several developments of regional impact and numerous planned developments and subdivisions. This area of heavy development is generally within ECFRPC planning area 17, the area which also experienced a tremendous gain in the number of households. Another area of heavy development is located to the east and northeast of Orlando, just southeast of Landmark. Although there is some development in the northwest and the southwest areas of the county, it appears that the pattern of growth is to the east and northeast of Orlando and to the southwest. Landmark is located in a good position to capitalize on the growth to the northeast, and Fountain would be in a good location to take advantage of the growth in the southwest.
As measured by the Business Barometer of Central Florida's composite index of economic activity, the Orlando area experienced healthy economic growth in every year from 1977 to the present, except 1981 when the growth rate was -
1.8 percent. The two peak years were 1978, with a 14.9 percent growth rate, and 1983, with an 11.3 percent growth rate. The growth rate projected for 1985 is
3.1 percent.
In 1982, the per capita income in Orange County was $11,641, as compared to $10,907 for Florida and $11,100 for the United States. The 1982 per capita income in Seminole County was $9,122. The 1985 per capita income for Seminole County is $11,081 and is $14,140 for Orange County. In 1979, the median family income for Orange County was $17,705, and based on inflation, projected at $20,553 in 1984. Of the 171 traffic zones 4/ in AGSSA 3, 90 or
52.6 percent had a median family income higher than the county's average median income. In most of the census tracts comprising the Orlando MDA, the average
household income is between $15,000 and $40,000. However, the AGSSA 3 area contains 6 census tracts where the average household income is over $40,000 and it contains no census tracts where the average household income is below
$15,000.
MARKET PENETRATION:
General Motors conducts periodic market penetration analyses of AGSSAs by compiling the registration data provided by R. L. Polk Company at a census tract level. The registration data provided by Polk to GM includes every vehicle registered within a particular census tract regardless of the identity or location of the dealer which sold the vehicle. The R. L. Polk Company is the authoritative source of registration data used for marketing penetration analysis in the automotive industry. This registration data is made up of components including fleet and retail. The most current AGSSA level registration data available is year end 1984 data. Both parties have utilized retail registrations to analyze market penetration.
Market penetration for a manufacturer is a relative concept which compares the registrations of one make of vehicle against the total industry registrations in a particular geographic area. For example, in 1984, 10.04 percent of all vehicles registered in the United States were Oldsmobiles; therefore, the market penetration nationally was 10.04 percent. Registration efficiency is the relationship of the marketing area's penetration percentage to the zone or national penetration percentage. Of the six MDAs in Florida, the Orlando MDA ranked 5th in registration efficiency.
The Orlando MDA penetration has been consistently below zone and national penetration, and of the three AGSSAs in the MDA, AGSSA 3 has the lowest penetration. For the years 1982, 1983, and 1984, Oldsmobile's retail market penetration nationally, by zone, by MDA, and by AGSSA were as follows:
1982 | 1983 | 1984 | |
National | 9.59 | 10.51 | 10.04 |
Zone | 8.49 | 8.77 | 8.25 |
Orlando Multiple Dealer | 6.67 | 6.99 | 6.71 |
Area (MDA) AGSSA 1 | 6.66 | 6.9 | 6.7 |
AGSSA 2 | 9.53 | 9.7 | 8.7 |
AGSSA 3 | 5.2 | 5.8 | 5.5 |
22. In 1984, the Orlando MDA | rated | 137th in | retail penetration percentage |
of the 159 largest United States markets for Oldsmobile. Only one MDA in the Jacksonville Oldsmobile zone had a worse retail penetration percentage during 1984.
Lost opportunity is the difference between actual Oldsmobile retail registrations in an area and the number of registrations which would have occurred if national average penetration or zone average penetration had been achieved. The number of lost opportunities represents the potential number of
registrations available to the Oldsmobile dealers if national or zone average penetration were attained. The following chart reflects lost opportunities in the Orlando MDA for 1982, 1983, and 1984:
1982 ZONE NATIONAL | 1983 ZONE NATIONAL | 1984 ZONE NATIONAL | ||||
Orlando | MDA | (438) | (702) | (522) | (1032) | (481) (1038) |
AGSSA | 1 | (263) | (420) | (325) | (630) | (278) (608) |
AGSSA | 2 | 0 | 0 | 0 | (33) | 0 (66) |
AGSSA | 3 | (212) | (282) | (234) | (369) | (221) (366) |
The Orlando MDA and AGSSAs had fewer lost opportunities when compared zone rather than national penetration because in 1982, 1983, and 1984, the Jacksonville zone penetration was below national market penetration.
The extremely low retail market penetration rate in the Orlando MDA, particularly the area designated AGSSA 3, is a legitimate cause for concern. However, identifying a problem is less difficult than identifying the reason or reasons for the problem. GM contends that the low market penetration indicates inadequate representation in the Orlando MDA, specifically the lack of an Oldsmobile dealer in the southern part of the MDA, the AGSSA 3 area. Landmark points to other factors which might influence low retail penetration, including large fleet registrations, insufficient car allocations, and area demographics.
FLEET REGISTRATIONS:
Fleet automobiles are automobiles that are sold to large fleet customers such as rental car companies. Fleet registrations are not counted when determining retail market penetration statistics.
The Orlando market has an extremely high number of fleet registrations. In 1984, fleet registrations accounted for almost 62 percent of all Oldsmobile registrations in the Orlando area. 5/ The percentage of fleet registrations nationally, in 1984, was 17.27 percent. Fleet cars are sold by rental car companies both at wholesale and retail after they have been in rental service for a period of time.
During 1984 and the first four months of 1985, Budget Rent-a-Car sold 1,364 cars from their rental car sales lot in Orlando, of which 281 were Oldsmobiles. During the same period of time Avis sold 82 Oldsmobiles at retail and 132 Oldsmobiles at wholesale and National Rent-a-Car sold 1 Oldsmobile at retail and 584 at wholesale. The 82 Avis cars and the one car sold by National at retail had limited warranties. At the Orlando Auto Auction held in May 1985, approximately 4,000 fleet cars were sold at wholesale, of which approximately 70 percent stayed in Florida.
The average age 6/ of an Avis car sold at retail was 11 months, at wholesale 15 months. The minimum age of an Avis retail car was 6 months; the maximum was 22 months. At wholesale, the minimum age was 6 months; the maximum was 30 months, which could be a 4-year old car. The average age of a Budget Rent-a-Car was about 6 1/2 months, with the minimal amount of time in rental service being 2 months. National keeps a car in rental service from 4 to 20 months, with an average of 11 months.
There was insufficient evidence to support a finding that the high fleet penetration of Oldsmobile in the Orlando area had an effect on retail penetration in the area. There was no evidence presented to show that the purchasers of the fleet cars, either the direct retail customers or the ultimate purchasers of the cars sold at wholesale, resided within the Orlando area. Indeed, the only evidence concerning the destination of the wholesaled cars indicates that the great majority of wholesaled cars did not remain in the Orlando area for resell. There was no evidence that a greater percentage of fleet cars were available to the retail purchaser in the Orlando market than in other market areas. Finally, there was not sufficient evidence presented to support a finding that the purchase of a rental car at retail takes a new car purchaser out of the market. Therefore, it cannot be concluded that the high fleet registrations substantially affect the Oldsmobile dealers' opportunities for new car sales within the Orlando market.
CAR ALLOCATIONS:
The Oldsmobile allocation system is divided into two basic phases called controlled distribution and earned distribution, also known as "earn and turn," travel rate distribution, or computerized phase. The "built-out" phase is part of the earned distribution phase which occurs at the conclusion of the year's model run, when the last of the cars for the current model year are being produced and the plants are being retooled to build the new models. The controlled distribution phase for the upcoming model year begins approximately in July of each year, following build-out. During this period, when the first new models are being produced and accordingly there is a limited number of cars available for distribution, a dealer gets a fixed percentage of the zone's cars based on the percentage of his sale of vehicles within the zone from January 1 through June of that year. 7/ For example, if a dealer sold five percent of the zone's sales of a particular model from January through June, then the number of cars received by that dealer during controlled distribution would be five percent of that model's initial production received by the zone. After a sufficient number of new model cars have been manufactured, the system for arriving at the number of cars distributed to the dealer is converted to the earned distribution formula, this conversion taking place in October or November of each year.
Prior to 1984, the earned system compared the new model year sales and availability of each dealer during the preceding approximately 60 days to the sales of each other dealer in the Jacksonville zone. Beginning in November 1984, Oldsmobile began computerized distribution, the earn-and-turn system for all dealers. The system provides a guide to the zone manager on a weekly basis for the allocation of cars to all dealers within the zone. Under the system, all dealers within the zone are competing on a national system with all the other Oldsmobile dealers throughout the United States. The guide uses a 60-day sales rate, comparing the dealer's sales by model within the 60- day period to the inventory of the model for the dealership. An earned rate is then computed for that week with each dealer earning a proportionate share of the national production of that particular model. A factor built into the computerized system is the "protected" car. A protected car is not counted in the dealer's inventory and therefore gives him a better sales rate under the formula. In other words, the dealer will earn more vehicles than he would have had the car been counted as part of his inventory. A car remains protected for approximately six or seven weeks and then it is included in the dealer's inventory if not sold. A dealer may receive protected cars if he is having a special campaign. The zone manager also receives 125 to 130 protected cars every seven weeks that are distributed at his discretion.
Cars for a new Oldsmobile dealership, that is, one which has not previously existed, are taken out of the national pool of available production capacity prior to the allocations being made to each dealer. Thus, the establishment of a new dealership impacts each existing dealership in the United States equally. When a dealership is sold by an existing dealer to a replacement dealer, the replacement dealer assumes the previous dealer's sales record.
It has been the policy of Mr. Martabano, the Jacksonville zone manager, to allocate additional vehicles beyond the suggested guide figures to the replacement dealer, for the period immediately after the sale. The zone manager has the authority to allocate these additional vehicles to replacement dealers. The zone manager also may allocate to dealers who are opening new facilities and having special sales promotions, because the allocation numbers established through the controlled system and the earned rate system are guides, subject to the discretion of the zone manager to make the final allocation to each dealer. However, every additional vehicle allocated to any dealer within the zone by the zone manager in excess of that dealer's guide figure results in another dealer in the zone getting one less vehicle than his earned number.
During the first meeting between Martabano and the prospective purchasers of the Landmark dealership, Mr. Kitzmiller and Mr. Schneider, Mr. Martabano indicated that he would allocate to Landmark cars in addition to guide numbers that had been established by the sales of Scott Smith. However, during the period immediately after Landmark became a dealer, on July 16, 1984, Martabano's ability to allocate additional vehicles to Landmark was limited. During the initial phase of 1985 model year production, product was scare for all dealers. This situation was compounded by a national strike against General Motors in September and, at the conclusion of the strike, production problems on the Cutlass Ciera.
However, during the controlled distribution period between July 25 and November 7, 1984, Landmark received fifty- five 1985 model cars in addition to what they would have received using the controlled distribution guide numbers. This was the largest additional number of cars allocated to any dealer in the zone during controlled distribution. 8/ The breakdown on the units earned and received during the controlled distribution system is as follows:
Earned percentage
of Zone Thru No Units No Units
10/31 Earned Received Difference
Firenza | 5.65 | 24 | 14 | -10 |
Calais | 3.25 | 30 | 35 | + 5 |
Ciera | 2.57 | 21 | 38 | +17 |
Supreme | 3.42 | 91 | 98 | + 7 |
88 | 2.90 | 69 | 90 | +21 |
98 | 2.20 | 26 | 41 | +15 |
Toronado | 4.29 | 14 | 14 | 0 |
TOTAL | 3.18 | 275 | 330 | +55 |
However, Landmark did not receive any protected cars during that period.
During the earned distribution period, between November 14, 1984, and May 1, 1985, Landmark was allocated 553 vehicles in addition to those suggested by the guide number. This was the largest additional number of cars allocated to any dealer during earned rate distribution. 9/ The breakdown on the units earned and received during the computerized period is as follows:
#Units Earned #Units Received
Firenza | 20* | 29 |
Calais | 16 | 93 |
Ciera | 93 | 205 |
Supreme | 77 | 213 |
88 | 5 | 147 |
98 | 40 | 100 |
Toronado | 5 | 22 |
TOTAL | 256 | 809 |
*Firenza under controlled distribution until January 10, 1985. INVENTORY AND MODEL MIX:
To achieve a sales objective of 125-150 cars per month, a dealer should have a grounded inventory of 300-350 cars per month. The general measure to be applied is that grounded inventory should be between two and three times the proposed sales volume. Moreover, by industry standards a dealership needs a 60-day grounded inventory to achieve a given sales ratio.
Although Landmark repeatedly requested extra cars and although Landmark received more cars than they would have received following the guidelines, Landmark's grounded inventory from July through December of 1984 was too low to support the sales objectives projected by Landmark and Oldsmobile. When Landmark took over the Scott Smith dealership there were 79 automobiles in inventory. At the end of July 1984, Landmark had 81 cars in inventory. At the end of August, Landmark had 119 cars in inventory. At the end of September, Landmark had 72 cars in inventory. At the end of October, Landmark had on ground inventory of only 34 cars, at the end of November, Landmark had 106 cars in inventory, and at the end of December, Landmark had 167 cars in inventory.
Further, during most of this period of time, the model mix of Landmark's on ground inventory was imbalanced when compared to the zone average. For example at the end of July, Landmark had 23.46 percent of its inventory in Toronadoes, as opposed to the zone average of 7.14 percent, and 20.99 percent of its inventory in the "hot cars," 10/ Ciera and Supreme, as compared to the zone average of 32.09 percent. At the end of October, 76.57 percent of Landmark's inventory were 98s and Toronadoes, compared to the zone average of
34.55 percent, and 8.82 percent of the inventory in "hot cars," compared to the zone average of 14.10 percent. However, by the end of December, Landmark's model mix was quite similar to the zone's average model mix. Landmark had 34.14 percent of its inventory in "hot cars," as compared to the zone average of 34.24 percent, and 4.79 percent of Landmark's inventory were Toronadoes, as compared to the zone average of 4.90 percent. Thus, until the end of 1984, Landmark tended to have higher percentages of slow moving models and lower percentages of fast moving models in its inventory. 11/
Although inventory is a factor in sales, it is not the sole factor. From November 1984, to April 1985, Landmark's rank in sales was lower than its rank in inventory among dealers in the zone at month end in every month except April. The following compares rank in inventory to rank in sales for that period:
Nov. Dec. Jan. Feb. Mar. Apr.
Sales | 7 | 8 | 7 | 8 | 8 | 3 |
Inventory | 3 | 2 | 4 | 3 | 2 | 4 |
Mr. Smith, the Director of Sales Analysis and Distribution for Oldsmobile, named several factors which a Zone Manager should take into account when utilizing his discretion in the allocation of cars, both during earn and turn distribution and during controlled distribution. Among these considerations are: a dealer's financial problems if based on his product mix and availability of automobiles, expenditures of dealers for new facilities or additions or improvements to existing facilities, a change in ownership of a dealership, and the sales pattern of the dealer within the 60-day period used to establish the number of cars earned. Most of these factors were present in Landmark's situation. Landmark lost money during each month from July through December of 1984, Landmark had problems with inventory and model mix, and Landmark had expanded and improved its facilities.
When presented with a scenario applicable to the Landmark situation, in which a dealer takes over a metropolitan dealership that is poorly run, and in which the new dealer believes that he can sell more cars than would be allocated under the strict terms of the earn and turn allocation system, Mr. Smith stated that, under the system that existed prior to November 1984, the problem should be solved by the Zone Manager, who should "approach the Regional Manager or the Assistant General Sales Manager and plead his case and ask for an allocation of reserve cars to prime the pump and that should get the dealer up and running at whatever rate they want to get into". 12/ Smith further testified that under this illustration, getting this dealer enough cars to establish his own sales rate would be a number one priority, and that in this situation the Regional Manager and Assistant General Sales Manager would always come up with some cars. However, when given the same scenario as above, with the added information that the new car dealer takes over the existing dealership in the middle of the summer, and asked how the problem would be solved, Mr. Smith replied, "I don't know how you would solve that problem." The reason being that the Regional Manager and the Assistant General Sales Manager do not have a reserve available during the period from July until the earn and turn distribution begins, which generally is in October, but in 1984 began in November.
Landmark contends that it should have gotten special treatment from the zone manager in terms of additional cars during its start up period, and it did get special treatment. Not only did it get the 55 additional 1985 models previously mentioned, it also received 44 additional 1984 cars out of the 188 available in the last 1984 model year preference, which was the highest allocation of extra 1984 models to any dealer in the Jacksonville zone for that final preference. Also, in late 1984, the leadership of the "super group," an advertising group consisting of all the dealers in the Jacksonville zone, appealed to Oldsmobile management in Lansing for an additional allocation of protected cars and were allocated 600 cars which were divided among all 92 dealers in the zone. The refusal to allow Landmark to keep all 40 of the Citrus Bowl "Brass Hat" cars in its inventory and the failure to approve 150 additional cars for a promotional planned by Landmark were not arbitrary decisions designed
to prevent Landmark from getting cars. In both situations, there were sound reasons for the decisions. 13/ Landmark has not been discriminated against by GM in the allocation of cars when compared with other dealers in the zone or with King Oldsmobile, the largest dealer in the zone.
DEALER PROXIMITY AND DEMOGRAPHICS:
The number of locations of dealerships for various line makes, including Oldsmobile, provide a basis for comparing the relative levels of customer convenience for buyers in a particular AGSSA. Oldsmobile has the worst level of customer convenience in AGSSA 3 of any of the major manufacturers located in the Orlando area. Potential buyers in AGSSA 1 and 2 enjoy far greater convenience to the nearest Oldsmobile dealer than a buyer living in AGSSA 3, and Oldsmobile retail registration penetration is worse in AGSSA 3 than either AGSSA 1 or AGSSA 2.
The average consumer must travel farther from a residence in AGSSA 3 to reach an Oldsmobile dealer than to reach a Honda, Ford, Chrysler-Plymouth, Datsun, Pontiac, Chevrolet, Toyota or Buick dealer. The addition of an Oldsmobile dealer in AGSSA 3 would provide Oldsmobile customers convenience commensurate with convenience offered by competitive lines. The customer convenience offered by Oldsmobile in AGSSA 3 would be slightly better than the convenience now offered to consumers in AGSSA 1 and slightly less than the convenience currently offered to consumers in AGSSA 2.
The driving time, taking the shortest route in non-rush hour traffic, from the proposed Fountain location to the Landmark location in AGSSA 1 is extreme when compared to the convenience levels offered by other manufacturers. The most direct drive time between the two locations ranged between 35:30 minutes and 29:40 minutes. The shortest measured driving distance was 16.7 miles. A consumer living in an average residential area in AGSSA 3 would travel less than half the distance to get to the proposed location than he presently must travel to get to Landmark.
Within two miles of the Landmark location, Oldsmobile achieved national average penetration in the retail market during 1984. Generally, Oldsmobile penetration decreased farther away from the Landmark location until the 12-14 mile distance, which is the approximate location of the dealership in AGSSA 2 to the north. The relation of Oldsmobile retail market penetration to the distance from Landmark is shown below:
OLDSMOBILE RETAIL PENETRATION
IN 2-MILE RINGS SURROUNDING LANDMARK OLDSMOBILE
2 - | 4 | miles | 7.37 | percent |
4 - | 6 | miles | 6.26 | percent |
6 - | 8 | miles | 6.92 | percent |
8 - | 10 | miles | 6.67 | percent |
10 - | 12 | miles | 6.19 | percent |
12 - | 14 | miles | 7.80 | percent |
Distance Ring Oldsmobile Retail Penetration Less than 2 miles 10.00 percent
Greater than 14 miles 7.63 percent
Proximity affects market penetration, but there are obviously other factors which influence consumer choice in interbrand competition, the foremost of which is the product itself.
Product preference can be associated with such characteristics as age and income. Therefore, an analysis of market penetration in a specified area must take into account the demographic characteristics of the people in that area. Therefore, penetration is not solely a function of proximity of a certain line make, but may also reflect the preference of the people contained in a given geographic area. Put simply, consumers' characteristics may give rise to pockets of high penetration and pockets of low penetration by line make and by model.
The Continuous Automotive Market Information Program ("CAMIP") report offered into evidence by Landmark shows that Oldsmobile has retail customers in every income group, particularly income groups where the household income exceeds $15,000. The demographics for the entire Orlando MDA, and AGSSA 3 in particular, show heavy concentrations of household income between $15,000 and
$40,000 and at levels above $40,000. As of 1984, there were no census tracts in AGSSA 3 where the average household income was less than $15,000.
Landmark's evidence regarding age and income demographics only considered 42 percent of the total Oldsmobile buyers from a household income standpoint, and did not consider the majority of known Oldsmobile buyers. Further, and perhaps as a result, in several census tracts where there were purportedly a lack of high propensity Oldsmobile buyers, Oldsmobile penetration was high. Additionally, although age and income demographics for Buick buyers were essentially the same as for Oldsmobile buyers, Buick performed better than Oldsmobile in market penetration.
In sum, the age, income, and housing demographics presented do not explain the poor retail penetration for Oldsmobile in the Orlando MDA, and more specifically do not explain why there is lower market penetration in AGSSA 3 than in the rest of the MDA.
REPRESENTATION OF LANDMARK
Scott Smith Oldsmobile, Landmark's predecessor, had been performing below average in sales and registration effectiveness for several years. 14/ Scott Smith was so deficient in sales and service performance that it had been on the Oldsmobile Action Program for approximately 8 years, which was longer than any other dealer in the zone had ever been on the program. The Action Program is a program for dealerships with deficiencies so serious that they may result in termination of the dealership. John Kitzmiller made every effort to correct these problems from the inception of Landmark Oldsmobile.
Immediately upon opening the Landmark dealership Mr. Kitzmiller hired a replacement service manager. This service manager quit within two weeks after discovering the magnitude of the problems with the service department inherited from Scott Smith. A month or so thereafter, Mr. Kitzmiller was able to hire Mr. Bob Dorton from Houston, Texas, to be service manager from Landmark. Mr. Dorton, who had won 9 times Pontiac Motor Division's award for five star service excellence, joined Landmark on November 1. At the time of the hearing, Landmark's Service Department had improved to the point that the Jacksonville
Zone Office had, on at least two occasions, requested that Landmark assist it by repairing Oldsmobiles which other Oldsmobile dealerships have been unable to repair. Landmark has complied with the Zone's requests and resolved the problems.
Robert L. Woodfork, Zone Development Manager and former District Sales Manager for the district encompassing Orlando, testified that Scott Smith was deficient in sales due to inadequate sales force, poor advertising, and lack of consistency in reporting sales and that a dealership with poor sales performance can remedy that situation by increasing the sales force, increasing advertising, and increasing levels of inventory through prompt reporting. Based upon his knowledge of the total sales opportunity in the Orlando market, Mr. Woodfork concluded that the Scott Smith dealership, now Landmark, should have a sales objective of 125 to 150 retail sales per month. Based upon this sales objective, Scott Smith's sales force of five or ten salesmen was inadequate. In Mr. Woodfork's opinion, 15 salesmen were needed to reach this objective. Due to the limited amount of cars available in the Fall of 1984, Landmark was unable to stabilize its sales force until February 1985, but by April Landmark had 17 salesmen. Landmark also had established sales incentive and bonus programs for salesmen.
Landmark spent in excess of $45,000 a month in advertising since it began business which is more than adequate by Mr. Woodfork's standard and perhaps excessive considering the limited availability of cars to Landmark during the Fall of 1984. Additionally, Landmark hired a professional advertising agency to develop an advertising program with the theme "We Care." Landmark also had various promotionals for retail sales.
In addition to increasing the sales force and advertising, Landmark immediately hired an experienced Oldsmobile sales manager who came highly recommended by Oldsmobile. Landmark expanded and improved the existing sales and service facilities and established a regular training program for salesmen. Landmark instituted a new method of handling calls from prospective buyers and a system in which each customer who comes on the lot is called and encouraged to come back in. Also, Landmark instituted a system of calling purchasers within a week of purchasing the car and again in 5 months to make sure they are satisfied with the car and service they received.
In April 1985, Landmark's total sales were third in the zone and reached or exceeded the sales objectives set for the dealership. From April 1st to and including May 1st Landmark sold 165 cars. 15/ The results of Landmark's comprehensive programs to improve sales, service, and customer relations are further evidenced by Oldsmobile Par Excellence Report for April 1985, in which Landmark was given a 95 percent overall sales rating by its customers. This was higher than both zone (92 percent) and national (91 percent) averages.
The travel rates for both Landmark and Willett increased steadily during the first four months of 1985, culminating in the month of April, in which Landmark increased its travel rate 36.4 percent over the previous month, and Willett increased its travel rate 41.4 percent over the previous month. While the travel rate for the zone decreased from May 3, 1984, to May 1, 1985, Landmark's travel rate increased 2.4 percent (from 4.520 to 4.627) over Scott Smith's May 3rd travel rate, and Willett's travel rate increased 38.6 percent (from 1.260 to 1.746) over Creamon's travel rate.
The existing Landmark and Willett facilities exceed the quantity of facilities which GM determined were needed to serve the Orlando MDA.
TRADE AREAS
Trade areas are a commonly used method of identifying dealer sales areas of influence within the automobile industry. A 67 percent trade area is that geographic area within which 67 percent of the cars sold by a particular dealer are registered. In 1984, two-thirds of all cars sold by Landmark were registered within an eight mile radius of Landmark. The 67 percent trade area circle for Scott Smith from 1982-1984 was approximately the same. The geographical distribution of Landmark's sales between January and April 1985, also reflect a similar pattern.
The size of the trade area surrounding the AGSSA 1 dealer has remained constant regardless of the dealer, the time period covered, or the source of the data used. The size of the trade area circle does not necessarily increase with increased sales. Indeed, Landmark's 67 percent trade area was slightly smaller during its best sales month, April 1985, than it was during 1984.
Landmark's trade area circle extends approximately eight miles from its dealership location or about halfway between Landmark's location and Fountain's proposed location; it is close to the dividing line between AGSSA 1 and AGSSA 3. Although the trade area circle may tend to reflect the distance a purchaser is willing to travel to purchase a particular car, 16/ the size of the trade area circle is related to the dealer's location vis-a- vis the location of areas of high market potential density. In other words, a dealer located in the middle of an area densely populated with potential buyers should have a smaller trade area circle than a dealer located in a sparsely populated rural area.
EFFECT OF SALE OF EXISTING DEALERSHIPS
At the time of the hearing in this cause, both of the two existing dealerships had been in operation for less than a year under their current ownership. 17/ Scott Smith Oldsmobile was sold to Landmark effective July 1984, and Joe Creamons was sold to Willett Oldsmobile effective March 1985. Replacement dealers are evaluated for sales and service performance after a full calendar year to measure compliance with the dealers' contractual obligation to GM. It is the practice of GM not to consider an additional dealership in an area within one year of the opening of a new dealership or dealer point within that area. However, there is no GM policy providing that the addition of a dealership within an area will be delayed or affected by the sale of an existing dealer in the area. GM does not control the timing of the sale of an existing dealership.
ADEQUACY OF REPRESENTATION
Oldsmobile has sustained the burden of proof placed upon it by Section 320.642. It has demonstrated that the dealers existing in the Orlando MDA have not provided adequate representation in terms of retail market penetration in the territory as a whole or within the area designated AGSSA 3. The evidence presented shows that retail penetration in the area is and has been below both average zone and average national retail registration rates. The evidence does not support a finding that lower than average penetration is an inherent characteristic of the Orlando market due to high fleet penetration or
demographics. Further, the disparity in market penetration between AGSSA 3 and the rest of the Orlando MDA clearly indicates that Oldsmobile is being inadequately represented in the AGSSA 3 area. The only plausible reason for the extremely low market penetration in the AGSSA 3 area is the lack of an Oldsmobile dealer conveniently located to serve that market.
The addition of another Oldsmobile dealer at the proposed location will not result in more dealers than the area can support.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Section 120.57, Florida Statutes.
Section 320.642, Florida Statutes (1983), prescribes the standards for the issuance and denial of motor vehicle dealers' licenses:
The Department [of Highway Safety and Motor Vehicles] shall deny an application for a motor vehicle dealer license in any community or territory where the licensee's [manufactur- er's] presently licensed franchised motor vehicle dealer or dealers have complied with licensee's agreement and are providing ade- quate representation in the community or ter- ritory for such licensee. The burden of proof in showing inadequate representation shall be on the licensee.
Since no issue has been raised concerning whether Oldsmobile's present dealers have complied with their franchise agreements, the sole issue to be determined here is whether such dealers are providing "adequate representation" of Oldsmobile in the community or territory involved.
The purpose of Section 320.642 is to prevent a manufacturer from taking unfair advantage of a dealer by overloading a market area with more dealers than can be justified by the legitimate interests of the manufacturer and its dealers, existing and prospective. Bill Kelly Chevrolet, Inc. v. Calvin, 322 So.2d 50 (Fla. 1st DCA 1975); Plantation Datsun, Inc. v. Calvin,
275 So.2d 26 (Fla. 1st DCA 1973). The purpose of the statute "is not to foster combinations to prevent the introduction of dealer competition which is reasonably justified in terms of market potential." Bill Kelly, 322 So.2d at 52.
The standard of adequate representation may be considered in relation to the community or territory as a whole, or if inadequate representation in the community as a whole cannot be shown, the licensee may show the existence of an identifiable plot not yet cultivated within the territory to demonstrate inadequate representation. Bill Kelly, supra. In this case, GM has carried its burden of showing that Oldsmobile is not being provided with adequate representation in the community as a whole, the Orlando MDA, and GM has also shown that there is an identifiable plot not yet cultivated within the community, the AGSSA 3 area, which has not received adequate attention.
The present population of the Orlando MDA is seven times the size of the population in 1940, yet the number of dealers serving that population has
remained the same. Further, the AGSSA 3 area has experienced even greater growth than Orange County as a whole in the last five years, yet does not have an Oldsmobile dealer that is as conveniently located to that growing population as any of the other major manufacturers. Landmark is located approximately 17 miles away from the proposed dealer location.
In addition, and perhaps because of the lack of a dealer in the southern part of the Orlando MDA, Oldsmobile retail penetration in the Orlando MDA has been below zone and national averages for the preceding three years. Further, the AGSSA 3 area consistently has had even lower retail penetration than the rest of the Orlando MDA. Since there is no inherent reason why Oldsmobile cannot achieve average national or zone penetration in the MDA or in AGSSA 3, it must be concluded that Oldsmobile is not receiving adequate representation.
Landmark argues that GM did not prove inadequate representation because its statistics on retail market penetration did not include any months after December 1984, and therefore did not include any information concerning one of the existing dealers in the area, Willett Oldsmobile. Further, Landmark points out that during the period of time it was in operation in 1984, car availability was limited and Landmark did not get enough cars to sell to achieve national or zone penetration.
There is no question that GM produced the most current statistics on retail market penetration and there is no question that retail market penetration is a primary factor in determining adequacy of representation. Landmark's argument, in essence, is that statistics compiled during a period of time when any of the existing dealerships were under prior ownership cannot be used to show inadequacy of representation of the existing dealers. If this argument were accepted, it would preclude a manufacturer from adding a new dealer in any community or territory where an existing dealership in the territory had been sold during the preceding year. This could result in a manufacturer being effectively barred from ever being able to add a new dealership, especially in a territory which has a number of existing dealers. 18/ The intent of the statute is to prevent a manufacturer from taking an unfair advantage of a dealer by overloading a market area. There is nothing in the statute or in the cases interpreting the statute that suggests that a manufacturer, which proves by the most current data available that it has not been adequately represented, should be prevented from establishing a new dealership solely because one of the existing dealerships within the area had been sold within the year. Therefore, Landmark's argument is rejected.
However, even assuming that Landmark's argument might be valid under some circumstances, it still would not be applicable in this case. The only possible basis for the argument is that the incompetency of the prior owner of the dealership resulted in the low market penetration. However, in this case, the ineffectiveness of the prior owner cannot possibly account for the much lower penetration rate in the AGSSA 3 area as compared to the rest of the territory because the prior dealer's poor performance could not have affected that AGSSA to any greater degree than its own. In other words, even if the prior owner's performance contributed to the low penetration rate for the area, the evidence presented would still support a finding that the AGSSA 3 area is an identifiable plot not yet cultivated.
It is therefore concluded that GM has sustained the burden of proof placed upon it by Section 320.642, Florida Statutes.
Subsequent to the hearing the parties to this proceeding filed a number of documents and motions relating to the sale of Landmark Oldsmobile to Royal Oldsmobile. Initially, the Department filed a stack of documents with a cover letter stating, "For your information enclosed are documents relating to the application of Royal Oldsmobile, Inc. as a replacement as motor vehicle dealer for Landmark Oldsmobile Corp." That engendered a motion to strike filed by Landmark and a response to the motion to strike; a motion to dismiss filed by GM with response by Landmark; and a notice of appearance filed by Royal Oldsmobile, Inc., a response by GM, and reply by Royal.
The motion to strike the documents filed by the Department should be, and is hereby, granted. The papers were not attached to a motion as supporting documentation for requested relief. Further, the papers were related to the application of Royal Oldsmobile as a replacement dealer; they were not part of the Fountain Motors' application, and therefore unlike the amendment to Fountain Motors' application which was transmitted for filing in this cause after this proceeding was referred to the Division.
However, granting the motion to strike does not resolve the issues raised by the motion to dismiss and the notice of appearance. The pleadings filed by the parties do not raise any disputed issues of fact. The parties are in agreement that subsequent to the hearing on the merits of this case, Landmark sold its dealership to Royal Oldsmobile and assigned all rights, title, and interest that it had in this proceeding to Royal. (The Assignment of Legal Rights is attached to the Notice of Appearance). Based on the foregoing, GM contends that Landmark lacks the standing to continue to protest Fountain's application and urges that "this cause should be dismissed and the license sought granted." Royal contends that it has standing as a party to pursue this matter because it purchased the Landmark dealership, received an assignment of Landmark's rights and interests in this proceeding, and is now the duly licensed and franchised Oldsmobile dealer operating at Landmark's former location. However, Royal requests that the action be allowed to proceed under the name of Landmark Oldsmobile because substitution of named parties would cause confusion.
First, it is apparent that Landmark no longer has standing to participate in this proceeding. It is no longer an Oldsmobile dealer in the Orlando area and whatever rights or interests it may have had have been assigned to Royal Oldsmobile. Second, dismissal of Landmark as a party to this proceeding could not result in the dismissal of this cause and the granting of the license. GM and Fountain are the petitioners and the Department is a respondent as designated in the Department's letter of transmittal. As the petitioner, GM still would have to prove inadequate representation in the Orlando MDA since there was never a preliminary intent to grant the license issued by the Department.
Finally, it would appear that a replacement dealer, whose substantial interests are affected to the same degree as the predecessor dealer, should be substituted for the predecessor dealer. The replacement dealer has the identical interests in the proceeding as the predecessor dealer. Even though there is no specific rule which states that parties may be substituted, Rule 22I-6.16, Florida Administrative Code, authorizes any request for relief to be made by motion, and there is no rule prohibiting substitution of parties.
Based on the foregoing findings of fact and conclusions of law it is
RECOMMENDED that Royal Oldsmobile be substituted for Landmark Oldsmobile as a party respondent and that the application of Fountain Motors, Inc. for a motor vehicle dealer's license be granted.
DONE and ENTERED this 29th day of October, 1985, in Tallahassee, Leon County, Florida.
DIANE A. GRUBBS
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 29th day of October, 1985.
ENDNOTES
1/ A multiple dealer area is an automobile marketing area consisting of contiguous communities; it is a demographic or geographic area too large to be served by one dealer.
2/ An AGSSA defines the area of primary responsibility for the dealer in question. It is the area within the MDA in which the resident dealer should have an advantage over the other same line make dealers in the MDA due to the resident dealer's location. Each AGSSA consists of those census tracts closest to a proposed or existing dealership and identifies an area of shopping convenience for consumers. An AGSSA is determined by the location of the dealer or proposed dealer; dealer location is not determined by preexisting AGSSAs.
AGSSAs were developed by GM in 1976 as a network planning tool which enabled GM to collect and utilize data more effectively.
3/ The Scott Smith dealership had previously been located in Orange County but moved to the location now occupied by Landmark in 1978 pursuant to a "facilities letter" from GM.
4/ A traffic zone is a geographic subdivision related to a census tract. There are one or more traffic zones for each census tract. A census tract is designed to average about 4,000 people. Therefore, census tracts in areas of heavy population density will be smaller than census tracts in areas of light population density.
5/ The Orlando area used for determining fleet registration statistics included most of Orange County, excluding a portion in the northwest, and the southern part of Seminole County. Using the Orlando MDA, fleet registrations accounted for 56 percent of the registrations or 2693 out of 4808 total registrations (GM Ex. 17(a)). For the entire auto industry, fleet registrations accounted for 52 percent of the total registrations.
6/ Age is the length of time the car was in rental service.
7/ The actual numbers received by the dealer may differ from the formula because the zone manager uses the formula merely as a guideline for distribution.
8/ By comparison, King Oldsmobile in Fort Lauderdale, Florida, (King) the largest dealer in the zone in terms of number of sales, received 88 vehicles less than the controlled distribution guide number.
9/ King received only 24 vehicles more than the earned rate distribution guide numbers for the same periods, and 47 fewer Cieras and 86 fewer Supremes than it had earned.
10/ The "hot cars" were defined as the fastest moving, the easiest to sell.
11/ Other than the year end inventory, September was the only month end inventory that had a model mix similar to the zone model mix.
12/ The Regional Sales Managers and the Assistant General Sales Manager of Oldsmobile have reserves of cars, which are taken off the top of the national distribution system, which they can allocate discretionarily. Each Regional Sales Manager and each Assistant General Sales Manager receives 500 cars every six or seven weeks during the earn and turn distribution cycle.
13/ The fact that King Oldsmobile received 489 additional cars during the spring of 1984 for a special promotion is irrelevant to the issue due to the totally different circumstances involved, including among other things, car availability. As to the "Brass Hat" cars, because half of the cars had to go to the state auction, twice as many cars as provided to Scott Smith in the previous year were provided for the Citrus Bowl in 1984. Therefore, Landmark received the same number of "Brass Hat" cars as Scott Smith did in the previous year.
14/ Smith's performance during the first six months of 1984, however, was better than in prior years.
15/ This figure includes 13 "red stripe" cars that at the time of the hearing had not been verified.
16/ Landmark's eight-mile trade area circle corresponds to the study performed by Dr. Ostland which determined that, based upon the two dealers in the Orlando MDA, the average distance driven by an Oldsmobile buyer was 8 miles. On the national level, the average distance driven was 13.05 miles.
17/ Subsequent to the hearing Landmark sold its assets to Royal Oldsmobile which resulted in the motion to dismiss filed by GM and the notice of appearance filed by Royal which are discussed in the conclusions of law.
18/ In this case there are only two existing dealerships, yet between July of 1984 and September of 1985 Creamons was sold to Willett, Scott Smith was sold to Landmark, and Landmark was sold to Royal. In a territory represented by twelve dealers, such as the situation in Bill Kelly, the possibility of a recent dealership sale is even greater.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 84-3795
This appendix indicates the ruling on each proposed finding of fact by paragraph and refers to the paragraph(s) where the matter is addressed in the recommended order.
LANDMARK'S PROPOSED RULING AND CORRESPONDING
FINDINGS PARAGRAPH(S) IN R.O.
Paragraphs:
1-12 Accepted in substance in RO paragraphs 3-7; specifically rejected part of paragraph 9 in RO paragraph 5.
Accepted RO paragraphs 9 and 10.
Accepted in part; rejected in part. (RO paragraphs 1 and 2) The AGSSA concept is a legitimate method of analyzing a market and AGSSA 3 is an appropriate "identifiable plot" within the territory and community.
Accepted (RO paragraph 54)
16-18 Accepted in substance (RO paragraph 55) 19-22 Accepted in substance. Based on exhibit,
number of salesmen in April corrected to 17 (RO paragraph 56)
23-24 Accepted (RO paragraph 57)
26-27 Accepted (RO paragraph 58; last part of last sentence in paragraph 27 accepted in RO paragraph 57)
28-30 Accepted in substance (RO paragraphs 38-39)
Accepted in substance (RO paragraph 40); however, more comprehensive statistics, comparing Landmark's model mix to zone model mix during specified months, were used.
Accepted in part (RO paragraph 39); rejected in part by contrary finding (RO paragraph 36); last sentence accepted (RO paragraph 36, last sentence). Footnote 1 accepted in sub- stance (RO paragraph 31). Footnote 2 accepted in substance without example (RO paragraph 32).
33, 34 Accepted in part; (RO paragraphs 34, 35) Last sentence specifically rejected by con- trary finding (RO paragraph 35). Although Mr. Martabano had discretion in allocating cars -- and there were obviously more cars available to the entire zone than those allo- cated to Landmark -- other dealers also had to be considered (see last sentence RO paragraph 34).
35-36 Accepted as modified (RO paragraph 42); last part of last sentence in paragraph 36 re- jected specifically by contrary finding (RO paragraph 44)
37-38 Accepted as modified by additional findings (RO paragraph 43).
39-40 Rejected in part; accepted in part as set forth in RO paragraph 44 with footnote.
Rejected as cumulative or irrelevant. All
cars received from 11/14/84 until 5/1/85 fully set forth in RO paragraph 36. Although fact that Landmark's model mix of inventory on May 1 was out of balance when compared to model mix sold during month of April is ac- cepted, the model mix of cars on that par- ticular day is not relevant. Landmark's April sales addressed in RO paragraph 59.
Last sentence is rejected by contrary finding in RO paragraph 41.
Accepted in substance, Landmark's April sales addressed in RO paragraph 59.
Accepted as to results of Par Excellence Report (RO paragraph 59).
Accepted first two sentences (RO paragraph 10), last sentence rejected as speculative.
Accepted in general (RO paragraph 60).
Accepted that Landmark's sales in April reached or exceeded goals (RO paragraph 59).
47-50 Accepted in substance (RO paragraph 61).
Rejected by contrary findings (RO paragraphs 49 and 66).
Accepted RO paragraph 50 - Last sentence ac- cepted to the degree of recognizing GM's Exhibit 12 shows total population.
Accepted that Landmark's is in a good loca- tion; (RO paragraph 16); rejected that Wil- lett does not have good Oldsmobile prospects around its dealership for lack of evidence. Rejected last sentence as speculative, not supported by the ultimate finding and ir- relevant in that "aggressively" does not equal "adequately".
Accepted as modified (RO paragraph 64, foot- note 16). Last sentence rejected as irrele- vant in that national figures were not shown to be based on metropolitan communities.
Rejected. The conclusion is not supported by the testimony cited. The evidence shows that some people traveled from AGSSA 3 to AGSSA 2 to buy an Oldsmobile, but the evidence does not support the conclusion that the entire Oldsmobile buying population of the Orlando MDA would be willing to travel to AGSSA 2
to buy an Oldsmobile, nor does Mr. Senak's testimony suggest that. Further, the fact that Mr. Senak had not seen any study of the Orlando market concerning dealer proximity and penetration is totally irrelevant.
Accepted (RO paragraph 6 and footnote 3; RO paragraph 16)
Rejected as a finding in that isolated figures for the last quarter of 1984 and the first quarter of 1985 do not accurately re- flect the overall growth of the Orlando area as set forth in RO paragraphs 11-18.
Accepted generally (RO paragraphs 27 and 28).
Accepted as expanded (RO paragraph 29)
Rejected as there was no evidence that cars were sold into the Orlando area (RO paragraph 30). Accepted as modified as to warranties (RO paragraph 28).
61-63 Rejected as not supported by the evidence.
The age of the cars stated in RO paragraph 29 and no evidence as to actual mileage of the cars. Further, no objective evidence to show that these cars should be considered dif- ferently than any other used car of that age or how the sale of these cars impact on the sale of new cars. Also, insufficient evi- dence to show the effect on the Orlando market (RO paragraph 30).
Rejected as irrelevant, although accepted that Buick and Pontiac have only two dealers within the Orlando MDA. Both, however, also have a dealer immediately
south of the Orange County line, whereas the next Oldsmobile dealer to the south is ap- proximately seven miles beyond those Buick and Pontiac dealers. Further, because of the location of these dealers to AGSSA 3, the people in the AGSSA 3 area would have at least one Buick and one Pontiac dealer locat- ed closer to them than an Oldsmobile dealer, and many would have two Buick and Pontiac dealers closer than an Oldsmobile dealer.
Rejected by contrary finding (RO paragraph 16).
Accepted (RO paragraph 55).
Rejected by contrary finding as to GM's policy for adding new dealer points.
Rejected as irrelevant and speculative.
69-70 Rejected as irrelevant (See response to proposed finding paragraph 62).
70 Rejected for reasons previously stated in re- jecting conclusions here summarized. Re- jected by contrary finding (RO paragraph 66) Rejected conclusion that new dealer cannot be established until at least one year after all dealers have been in operation as not sup- ported by the law or the evidence presented.
GM'S PROPOSED RULING AND CORRESPONDING
FINDINGS PARAGRAPH(S) IN RO
Paragraph(s):
1-4 Accepted (RO paragraphs 8, 9 and last sentence of first paragraph of "Background")
5-8 Accepted (RO paragraphs 1 and 2 with footnotes)
9-15 Accepted (RO paragraphs 19-22)
Accepted (RO paragraph 23)
Accepted (RO paragraph 25)
Accepted (RO paragraph 45)
Accepted (RO paragraph 49)
20, 21 Accepted (RO paragraph 45)
22 Accepted (RO paragraph 61, and last sentence RO paragraph 66)
23-24 Accepted (RO paragraph 46)
Accepted (RO paragraph 47)
Accepted (RO paragraph 66)
Accepted (RO paragraphs 66 and 48).
Accepted (footnote 16)
29-30 Accepted (RO paragraph 62)
Accepted (RO paragraph 62)
Accepted (RO paragraph 64)
33-34 Accepted (RO paragraph 51)
35-36 Accepted (RO paragraph 52)
37-38 Accepted in part as to Buick (RO paragraph
52) but rejected as to Chrysler because al- though the buyer profile of Chrysler Division automobiles and Oldsmobiles are similar, the market penetration statistics were based on Chrysler Corporation registrations.
39-40 Accepted (RO paragraph 53)
41-51 Accepted generally with additions (RO paragraphs 11-18).
52 Accepted (last sentence of RO paragraph 25).
53-56 Accepted (RO paragraph 31)
Accepted (RO paragraphs 32 and 33).
Accepted (RO paragraphs 33 and 34)
Accepted (RO paragraph 31, footnote 7, RO paragraph 34)
Accepted (RO paragraph 34)
61-62 Accepted (RO paragraph 5, RO paragraph 35) 63-64 Accepted distribution as shown on GM Ex. 59
(RO paragraph 36)
Accepted as shown by chart (RO paragraph 37)
Accepted (footnotes 8 and 9)
Accepted as reflected in chart (RO paragraph
37 and footnote 9)
Accepted (RO paragraph 44)
69-72 Accepted (RO paragraph 41) Rank in sales within zone reflected by chart.
73-75 Rejected as irrelevant as suggested by the proposed findings
76 Accepted (RO paragraph 44)
77-79 Accepted as to ultimate fact (footnote 13)
Rejected as irrelevant except to degree mentioned in footnote 13.
Accepted (RO paragraph 44)
Accepted (RO paragraph 32; RO paragraph 44)
Accepted (RO paragraph 26)
84-86 Generally accepted (RO paragraph 65)
Accepted (RO paragraph 5)
Accepted generally (RO paragraph 65)
Accepted (RO paragraph 61)
Rejected as the parties specifically agreed on the number of cars sold between April 1 and May 1. (R-1525, lines 8, 9 and 16). (RO
paragraph 61)
Rejected as insufficient evidence to show credibility of survey. Further, survey did not indicate when service work was performed. However, accepted to the degree that it sup- ports the finding that Landmark's service de- partment was in terrible shape for at least the first couple of months of operation (RO paragraph 55)
92-93 Accepted in part; rejected in part. Reject the .4 percent figure as not supported by the evidence.
Accepted (RO paragraph 26)
Rejected in that GM's Ex. 17(a) reflects the number of fleet registrations for the entire industry as well as for Oldsmobile (footnote 5). Accepted that Orlando has high number of fleet registrations (RO paragraph 27) and that impact was not shown (RO paragraph 30)
Accepted (RO paragraph 28)
97-98 Accepted (RO paragraph 30)
FOUNTAIN MOTOR'S RULING AND CORRESPONDING
PROPOSED FINDING PARAGRAPH(S) IN RO
1-3 Accepted in substance (RO 8)
Accepted (RO 36).
Rejected as cumulative. The allocation system is explained in RO 31.
Accepted as to ultimate fact (footnote 13)
Accepted (RO 41)
Accepted (RO 44)
Accepted (RO 21)
Rejected as unnecessary.
COPIES FURNISHED:
Eli Subin, Esquire Subin, Shams, Rosenbluth
& Moran, P.A.
Suite 670, CNA Tower Post Office Box 285 Orlando, Florida 32802
Dean Bunch, Esquire Ervin, Varn, Jacobs,
Odom & Kitchen
Post Office Drawer 1170 Tallahassee, Florida 32302
Dennis J. Helfman, Esquire Michael J. Robinson, Esquire Office of General Counsel General Motors Corporation 3044 West Grand Boulevard Detroit, Michigan 48202
Louis H. Anders, Jr., Esquire Joseph W. Letzer, Esquire
Dr. Frank Davis, Esquire Janet L. Humphreys, Esquire Thomas, Taliaferro, Forman,
Burr & Murray
1600 Bank for Savings Building Birmingham, Alabama 35203
Robert Butterworth, Esquire
Atkinson, Golden, Jenne, Diner & Henry 1946 Tyler Street
Hollywood, Florida 33022
Charles J. Brantley, Director Division of Motor Vehicles Department of Highway Safety
and Motor Vehicles Neil Kirkman Building
Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES
FOUNTAIN MOTORS, INC., and GENERAL MOTORS CORPORATION,
Petitioners,
vs. DOAH CASE NO. 84-3795
LANDMARK OLDSMOBILE CORPORATION andDEPARTMENT OF HIGHWAY SAFETY & MOTOR VEHICLES,
Respondents.
/
FINAL ORDER
This matter came before the Director upon the Recommended Order of Diane A. Grubbs entered October 29, 1985. Upon consideration, it is ORDERED as follows:
The Recommended Order of October 29, 1985 is hereby adopted as the Final Order of the Department, with the exception of the following Conclusion of Law appearing at page 33 of the Recommended Order, which is specifically REJECTED:
"Second, dismissal of Landmark as a party to this proceeding could not result in the dismissal of this cause and the granting of the license. GM and Fountain are the petitioners and the Department is a respondent as designated in the Department's letter of transmittal. As the petitioner, GM still would have to prove inadequate representation in the Orlando MDA since there was never a preliminary intent to grant the license issued by the Department."
This conclusion is inconsistent with the Departments longstanding construction of Section 320.642, Florida Statutes.
That the application of Fountain Motors, Inc., for licensure as a franchised Oldsmobile dealer shall issue subject to compliance with all other provisions of Section 320.27,.Florida Statutes.
DONE AND ORDERED this 10th day December, 1985, Tallahassee, Leon County, Florida.
CHARLES J. BRANTLEY, Director
Division of Motor Vehicles Department of Highway Safety and Motor Vehicles
Neil Kirkman Building Tallahassee, Florida 32301
CERTIFICATION OF AGENCY CLERK
I, HENRY C. NOXTINE, Agency Clerk, Division of Motor Vehicles, hereby certify that the foregoing Final Order has been filed in the official records of the Division of Motor Vehicles this 10th day of December, 1985.
HENRY C. NOXTINE, Agency Clerk
Copies furnished:
Eli Subin, Esquire
Subin, Shams, Rosenbluth & Moran, P.A.
Suite 670, CNA Tower Post Office Box 285 Orlando, Florida 32802
Dean Bunch, Esquire Ervin, Varn, Jacobs, Odom
& Kitchen
Post Office Drawer 1170 Tallahassee, Florida 32302
Dennis J. Helfman, Esquire Michael J. Robinson, Esquire Office of General Counsel General Motors Corporation 3044 West Grand Boulevard Detroit, MI 48202
Louis H. Anders, Jr., Esquire Joseph W. Letzer, Esquire
Dr. Frank Davis, Esquire Janet L. Humphreys, Esquire Thomas, Taliaferro, Forman,
Burr & Murray
1600 Bank for Savings Building Birmingham, AL 35203
Robert Butterworth, Esquire Atkinson, Golden, Jenne,
Diner & Henry 1946 Tyler Street
Hollywood, Florida 33022
Charles J. Brantley, Director Division of Motor Vehicles Department of Highway Safety
and Motor Vehicles Neil Kirkman Building
Tallahassee, Florida 32301
Michael J. Alderman Assistant General Counsel Department of Highway Safety and Motor Vehicles
Neil Kirkman Building 2900 Apalachee Parkway
Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Oct. 29, 1985 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Dec. 10, 1985 | Agency Final Order | |
| Oct. 29, 1985 | Recommended Order | License issued. Petitioner established indentifiable plot not yet cultivated and inadequate representation in area. |
EL SOL TRADING, INC., AND ECO GREEN MACHINE, LLC vs FINISH LINE SCOOTERS, LLC, 84-003795 (1984)
EL SOL TRADING, INC., AND FINISH LINE SCOOTERS, LLC vs SCOOTER ELITE, LLC, 84-003795 (1984)
KEEWAY AMERICA, LLC AND SUNSET POINT SCOOTER, INC. vs RETRO UNLIMITED, INC., 84-003795 (1984)
GENERAL MOTORS CORPORATION vs DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES, 84-003795 (1984)
