The Cadillac, Tampa MDA is broken down into 5 separate Areas of Geographic Sales and Service Advantage (AGSSA). Each AGSSA represents an area wherein a dealer enjoys a competitive advantage over other dealers of the same line-make because of his geographic location. The 5 AGSSAs relevant here are:
Northern Tampa plus eastern Pasco and Hernando Counties. (Morse)
Southern Pinellas County (Dew)
Northern Pinellas County (Dimmitt)
Western Pasco and Hernando Counties.. (proposed for Seacrest)
Eastern Tampa near Brandon (no dealership within)
AGSSAs comprised of U.S. census tracts or otherwise well accepted geographic descriptions, are determined by the manufacturer who assigns each geographic piece to its nearest dealer or proposed dealer location unless there is some overriding consideration such as a natural or man made barrier, (Tampa Bay), or a demonstrated unwillingness by consumers to travel from one area to another. AGSSA sizes and the geographic areas are flexible and can be changed over time on the basis of changing population patterns and purposes. The geographic definition of AGSSA 4 has changed from time to time and may well change in the future. The greatest growth in Pinellas County is in the northern portion contiguous to Pasco County which, itself, can be expected to experience a substantial growth in the future.
AGSSA 4 consists of census tracts and geographical pieces which are closer to the proposed Seacrest location than to any other existing Cadillac dealer or which, utilizing sound business judgement, should be assigned to AGSSA 4.
Consumer research indicates that within the Cadillac, Tampa MDA there are two separate market areas generally separated by Tampa Bay. Those east of the bay, (AGSSAs 1 and 5, covering Tampa and Brandon), constitute one of the market areas. The area west and northwest of the bay, (AGSSAs 2, 3, and 4, consisting of St. Petersburg, Clearwater and Port Richey, respectively), constitutes the other. The eastern market area, made up of AGSSAs 1 and 5, are not only geographically but by consumer behavior, separated from the other three and do not constitute a part of the community or territory relevant to the issues herein.
A Cadillac dealership is not currently located in Port Richey. For that reason, a determination whether AGSSAs 2, 3, and 4 comprise a single community or territory, or whether AGSSA 4 is separate and distinct is not easy to make. Indications are that it is a single community or territory and that the establishment of a dealership in Port Richey would not change this.
Clearly there are two and Petitioner contends three separate auto shopping areas for high group or prestige/luxury cars along U.S. Highway 19 within the AGSSA 2, 3, 4 community or territory. One of these surrounds Dew Cadillac in St. Petersburg; one is in the area of Dimmitt Cadillac in Clearwater; and the third, if it exists as Petitioner claims, would be located near Port Richey in the area of the proposed Seacrest location.
Numbers of people alone, however, do not necessarily determine the market for a particular brand of automobile. A demographic profile is often helpful in evaluating market potential and can play a significant part in the evaluation of adequacy of representation, the basic issue involved in this case.
Studies run by and for General Motors Corporation indicate that 63% of Cadillac buyers are 55 years of age or older and over 60% of Cadillac buyers have household income in excess of $55,000.00.
Survey statistics reflect that a large percentage of the population in AGSSAs 2, 3 and 4 are 65 and older. More than half the population in AGSSA 4 is over 55 and more people 65 or over reside in AGSSA 4 than in the other two AGSSAs within the community or territory.
Age alone is not the determining factor, however. While older individuals generally have mode disposable income than younger people who have other needs for their money, the percentage of household income which is "disposable" is not necessarily indicative of the individual's ability to purchase a high group/luxury vehicle.
Studies reveal that a higher percentage of people residing in AGSSA 4 have lower income levels than in the Florida zone. However, average household wealth in AGSSA 4 is about the same as in the 2,3,4 community or territory and only slightly lower than in the state as a whole. From this it might be inferred that because of the lower number of "well to do" people in AGSSA 4, the popularity or high group or luxury cars, when compared to all cars sold, may be lower than average. However, income does not have an overriding effect on Cadillac's share of the domestic high group market.
The high group includes the Cadillac, the top of the line Buicks and Oldmobiles, the Lincoln Town Car, the top of the Chrysler line, and several imports.
General Motors Corporation's quarterly CAMIP report which relates to average household income, marital status, sex, and education of purchase decision-makers, recognizes that even within the high group, certain vehicles do not compete. Within the high group, there are three competitive subgroups which, because of size, price, style, or image, compete more directly against one another. The three categories are the large luxury, the El Dorado/Mark, and the Seville/Continental. In the first are primarily the passenger sedans and coupes and included are three Cadillacs, (deVille, Fleetwood and Brougham); the upper line of Oldsmobile and Buick; the Lincoln Town Car; and the Chrysler Fifth Avenue. The "sport division" includes such vehicles as the El Dorado, the Mark VII, the Corvette, the Porsches and the Jaguars, and the third subcategory includes the Seville, the Continental, the Mercedes, the BMW and the upper line Volvos.
Compared with both the Florida and the AGSSA 2,3,4 community or territory, more purchasers in AGSSA 4 selected cars from the large luxury subcategory and fewer from the other two.
Since Cadillac generally dominates the large luxury group, it is appropriate, in an analysis of market penetration, to look at that sub group independent of the others. Market statistics indicate that during 1987, 1,309 high group cars were registered in AGSSA 4. Of this number, 76.5% were in the large luxury segment. This compares to 52.4% in the Florida zone. Within that Florida zone, Cadillac garners 46.3% of the large luxury segment, 11.73% of the ElDorado group segment, and 6.31% of the Seville group. When these percentages are applied to the 1,309 unit sales in the AGSSA 4 high group market, Cadillac could reasonably expect to sell 464 large luxury cars, 17 cars in the ElDorado group, and 9 cars in the Seville group for a total of 490 units. When the three segments are combined to reflect a single market share for Cadillac in AGSSA 4, an expectation of 38.3% share results.
As it was, however, in 1987, Cadillac sold a total of only 333 in AGSSA 4 which represented a loss of 162 cars in the large luxury group and a combined gain of 5 from the other two for a net loss of 157 cars from expectation. In other words, Cadillac achieved 68.7% of what it could reasonably expect to have achieved in AGSSA 4. On the other hand, in AGSSAs 2 and 3, Cadillac met or exceeded 100% of its estimated large luxury group share. It should also be noted that almost every other domestic high group manufacturer represented in the large luxury group in AGSSA 4 also achieved better than 100% of its expectation for that segment. Further, the West Palm Beach, Miami, and Jacksonville Cadillac MDAs also met or exceeded 100% of their expected penetration.
While the domestic high group models did well in AGSSA 4, the other high group manufacturers not represented by dealers in AGSSA 4 did not do as well. BMW, Mercedes, Volvo, and Acura all were below 100% as was Cadillac, and it is interesting to note that BMW, Mercedes and Volvo, with 83, 77 and 71% of expectation respectively, exceeded Cadillac's performance in AGSSA 4, (68.7%). From this, Petitioners claim it is obvious that Cadillac is under-represented in AGSSA 4 and that if it is to achieve its fair market share, it must be represented by a dealership within the AGSSA. This is not as certain as Petitioners would urge, however, since factors other than mere presence within the district contribute to the number of cars of a particular brand sold.
Another factor to consider in analyzing Cadillac's adequacy of representation in the area is the ratio of Cadillac registrations in AGSSA 4 to registration of its legitimate competitors and to compare this ratio to the Florida zone and AGSSAs 2 and 3. Cadillac outsells Lincoln in the Florida zone by 160% and in AGSSAs 2 and 3 by 178%. However, in AGSSA 4, Cadillac sells only 87% of the number of cars that Lincoln does. The same relative comparison holds true for Cadillac's competitors among the large luxury cars. Almost without exception, Cadillac registrations in AGSSA 4 would have to increase two or three fold to equal its registration performance in the Florida zone and in AGSSAs 2 and 3.
Another factor for consideration deals with the ability of the customer to secure competent service in a reasonable period of time at a convenient location. In the early 1980s, population figures showed the majority of people in the Pinellas/Pasco County areas were located in St. Petersburg, (Dew), Clearwater, (Dimmitt), and to a lesser degree, Port Richey. Between 1970 and 1988, the population defined not only by individual but by households has increased significantly in the Clearwater AGSSA and in the Port Richey AGSSAs, but not as much in the St. Petersburg area. People and households in the AGSSA
2,3,4 community or territory more than doubled. In AGSSA 4, alone, both individuals and households quintupled.
It is generally accepted that vehicle registrations correspond to population density with registrations in the community or territory being concentrated primarily in the areas surrounding St. Petersburg, Clearwater and Port Richey, the three separate high group auto shopping areas identified herein previously. Cadillac has no representation in AGSSA 4.
While population has increased radically, however, the number of Cadillac dealers in the community or territory has not increased at all. The two who were in business in 1940 are still operating. In 1970, Cadillac was represented by only two dealers, Dew and Dimmitt. Now, with the population increased between two and five times, Cadillac remains represented by only two dealers and is the only domestic high group manufacturer not represented in AGSSA 4. Pasco County, located in AGSSA 4, is the only county in Florida with a population over 100,000 that does not have a Cadillac dealer. This fact is meaningless, however, unless it relates to a lack of competition in sales or a lack of ability to provide service once a sale has been made.
In that regard, at the present time, Cadillac owners in AGSSA 4 must travel an average of 28.4 miles to get to the nearest Cadillac dealer for service as compared to 7.4 miles average for other domestic high group brands. In AGSSA 2 and 3, the average distance for a Cadillac owner to get to the nearest dealer is 7 miles or less. This substantial difference between 28.4 miles and 7.4 miles is significant as it clearly impacts upon brand selection at purchase time.
This is not to say that either Dimmitt or Dew are not providing quality service in a timely fashion to area Cadillac owners. To the contrary, the evidence present by Dimmitt establishes that it operates a quality service program with innovative and creative customer service benefits and no evidence was presented to indicate service quality or accessibility, at least as to Dimmitt, is lacking.
A nationwide survey conducted in 1983 reflected that at least 36% of Cadillac buyers visited a dealer of at least one other brand before buying their Cadillac. Petitioner contends, and it appears reasonable, that this indicates that not all Cadillac buyers start out intending to buy a Cadillac and if a Cadillac dealer is not readily available, potential Cadillac customers may well select a competing brand rather than expend the extra effort to examine the Cadillac. The same survey also indicated that more than half of those who ultimately bought Cadillacs visited at least one other Cadillac dealership before making their purchase. Consequently, if a potential Cadillac buyer in AGSSA 4 desired to comparative shop among Cadillac dealers, he would have to travel on the average more than 85 miles to do so. This is significantly higher than for other domestic high group brands.
Petitioner also contends that the community or territory has now outgrown a two dealer network located in the lower third of the geographical area involved. In light of the increasing population growth in AGSSA 4 and the fact that the lower disposable income situation there may well not remain static, there is some substance to Petitioner's argument.
"Market share" and "sales penetration" are reliable measures of dealer representation. "Market share" measures a manufacturer's percentage of a given market based upon registration data obtained by R. L. Polk from the various
states, and recorded monthly on a county-by-county, state-by-state, and national basis. "Sales penetration" measures actual unit sales compared with total sales potential using manufacturer warranty data, whether or not the vehicle is registered.
The issue of "expected penetration" discussed previously, reflected that for the AGSSA 2,3 4 community or territory, Cadillac incurred a gross registration loss of 320 vehicles, that is, vehicle registrations shy of the expected number of registrations within the area. This shortfall, Petitioner contends, is compounded by an additional 484 vehicles registered in the AGSSA 2,3,4 community or territory which were sold to residents by Cadillac dealers from outside the community or territory. The total shortfall, then, is 804 vehicles.
If it is assumed that a new dealer in Port Richey would penetrate the market at the same rate as the currently existing dealers in the community or territory, it should register 350 units which equates to 43% of the shortfall, leaving 454 units to Dew and Dimmitt to compete for. If the 804 shortfall figure is accurate, it would appear that adding another dealer to the community or territory would result in increased competition among the existing dealers for the shortfall sales which should, according to Petitioner, result in more sales and a reduction in shortfall. No evidence was introduced to show where the extra-community or territory vehicles were originally sold however. It well may be they were sold by Morse in Tampa, within the MDA, or by dealers from out of the MDA or the zone. How many of them could be recaptured is speculative.
Throughout this discussion so far a distinction has been made between AGSSAs 2,3 and 4 and AGSSAs 1 and 5, considering them basically as independent sections within the Cadillac Tampa MDA. Respondent contends this is improper and prohibited by established case law. Respondent has not, however, shown that a consideration of the entire MDA as the community or territory, as it suggests, with AGSSA 4 as an identifiable plot, would result in a different conclusion.
Respondent contests Petitioner's analysis of market representation with a thrust of its own asserting that AGSSA 4 has exceeded most of the established indicators or standards for the period 1985 - 1988 and when compared to the United States as a whole, has consistently outperformed the nation while currently exceeding the Florida zone average. Review of Respondent's own statistics, however, reveals that while AGSSA 4 has outperformed the national average, with the exception of the first six months of 1988, it has consistently trailed the Florida zone by several percentage points and the Tampa MDA by a narrower margin. In this one regard, Respondent's point of view is extremely short sighted. Comparison against a national average carries far less weight, considering the demographics, than does a comparison with a more localized and comparable population base. 34. Respondent further contends that while nationally Cadillac's registration penetration of high group vehicles has declined almost 10% during that period, AGSSA 4 has shown an increase of almost 5%. It is important to note as well that while the other comparables have been decreasing in percentage of penetration, with the exception of 1986, AGSSA 4's record has improved.
