The Issue The issue in this cause is whether Petitioners are entitled to a motor vehicle dealership that is proposed to be located in Santa Rosa Beach, Florida.
Findings Of Fact On December 3, 2010, a Notice of Hearing setting the date, time and location of final hearing was issued in this case. The Notice of Hearing was mailed to the last known, valid addresses of the Petitioners, which were also the addresses provided in Petitioners' Notice of Publication. Neither Notice of Hearing was returned. This cause came on for hearing as noticed. After waiting more than 15 minutes, Petitioners failed to appear to prosecute their claim. There has been no communication from the Petitioners, before, during, or since the hearing to indicate that they would not be attending the final hearing. Because of Petitioners' failure to appear, there was no evidence to demonstrate that Petitioners are entitled to a franchise motor vehicle dealership in Santa Rosa Beach, Florida. Absent such evidence, the establishment of the proposed dealership should be denied.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Florida Department of Highway Safety and Motor Vehicles denying the establishment of Petitioners' proposed franchise. DONE AND ENTERED this 15th day of April, 2011, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of April, 2011. COPIES FURNISHED: Dan Rhoad Ruff and Tuff Electric Vehicles, Inc. 1 Ruff Tuff Drive Winnsboro, South Carolina 29180 Thomas B. Waldrop Electric Cart Company, LLC 5480 US Highway 98 West Santa Rosa Beach, Florida 32459 Rachel Miller Hampton Ruff and Tuff, Inc. 230 South West Hollywood Boulevard Fort Walton Beach, Florida 32548 Steve Hurm, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway, Room B-439 Tallahassee, Florida 32399-0500
The Issue The issue is whether Petitioners are entitled to a proposed motor vehicle dealership in Seminole County, Florida.
Findings Of Fact DOAH provided the parties with adequate notice of the final hearing. On December 3, 2008, DOAH mailed a Notice of Hearing to each of the parties, scheduling the final hearing for April 8, 2009. No Notice was returned as undelivered. No party objected to a final hearing on April 8, 2009. On December 3, 2008, DOAH also issued an Order of Pre- hearing Instructions that, in relevant part, required the parties to file a pre-hearing stipulation, which was to include a list of witnesses and exhibits to be called and submitted at the final hearing. No party complied with the Order. The documents forwarded to DOAH by the Department support the findings. The Notice of Publication for a New Point Franchise Motor Vehicle Dealer in a County of More than 300,000 Population was published in the Florida Administrative Weekly, Volume 34, Number 43, on October 24, 2008. On behalf of Respondent, Mr. James Sursely timely filed a protest letter dated November 7, 2008, with Ms. Nalini Vinayak, the administrator at the Department responsible for receiving such protests. The remaining facts are undisputed in this proceeding. The proposed new point franchise motor vehicle dealer is for a line-make identified in the record as Chongqing Lifan Industry Group Co. Ltd. (CHOL) motorcycles. The proposed location is in Seminole County, Florida. Seminole County has a population in excess of 300,000. The proposed new point franchise motor vehicle dealer is located at 3311 West Lake Mary Boulevard, Lake Mary, Florida. Respondent owns and operates an existing CHOL dealership that is located at 306 West Main Street, Apopka, Orange, County, Florida 32712. The proposed dealership is within a 12.5-mile radius of Respondent's dealership. Respondent has standing to protest the establishment of the proposed dealership. The petitioners submitted no evidence that Respondent is "not providing adequate representation" of the same line-make motor vehicles in the community or territory.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order denying the establishment of the proposed franchise dealership. DONE AND ENTERED this 23rd day of April, 2009, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of April, 2009.
Conclusions This matter came before the Department for entry of a Final Order upon submission of a Recommended Order by, Daniel Manry, Administrative Law Judge of the Division of Administrative Hearings, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Recommended Order as its Final Order in this matter. Accordingly, it is hereby ORDERED that Petitioner's, Galaxy Powersports, LLC d/b/a JCL International, LLC and TGT Companies, Inc., d/b/a Extreme Motor Sales, request to establish a new dealership for the sale of motorcycles manufactured by Zhejiang Taizhou Wangye Power Co. Ltd. (ZHEJ) and Filed December 23, 2009 3:50 PM Division of Administrative Hearings. Benzhou Vehicle Industry Group Co. Ltd. (SHWI) at 1918 South Orange Blossom Trail, Apopka (Orange County), Florida 32703 is DENIED. DONE AND ORDERED this y /Id of December, 2009, in Tallahassee, Leon County, Florida. LCARL A. FORD, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Filed with the Clerk of the Division of r¥otor Vehicles this P: day of December, 2009. N alini .DNlerUAdministrator NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. CAF/vlg Copies furnished: Jude A. Mitchell Jude's Cycle Service Post Office Box 585574 Orlando, Florida 32858 Leo Su Galaxy Powersports, LLC d/b/a JCL International, LLC 2667 Northhaven Road Dallas, Texas 75229 Tina Wilson TGT Companies, Inc., d/b/a Extreme Motor Sales 1918 South Orange Blossom Trail Apopka, Florida 32703 Daniel Manry Administrative Law Judge Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Nalini Vinayak Dealer License Administrator Florida Administrative Law Reports Post Office Box 385 Gainesville, Florida 32602
Findings Of Fact Introduction Petitioner, Palm Oldsmobile, Inc. (Palm), made application for licensure on September 10, 1985 with respondent, Department of Highway Safety and Motor Vehicles (agency). According to the application, Palm seeks to establish a new Oldsmobile dealership at 3701 Northlake Boulevard, North Palm Beach, Florida. Oldsmobile is a product line and operating division of petitioner, General Motors Corporation (GM). The application is supported by GM since by law the manufacturer carries the burden of proving Palm's entitlement to licensure. Respondent, Clark Oldsmobile, Inc. (Clark), is a licensed Oldsmobile dealership with facilities at 717 South Olive Avenue, West Palm Beach, Florida. It lies approximately eight miles south of where Palm intends to establish its facilities. Clark has operated continuously as an Oldsmobile dealership in West Palm Beach since 1939. Its present owner assumed ownership and operation of the business in 1961. It is the only franchised Oldsmobile dealership in that city. Clark exercised its rights under Chapter 320, Florida Statutes, and filed a protest to the application. There are two other Oldsmobile dealers in Palm Beach County, Carter Chevrolet- Oldsmobile, Inc. in Pahokee, and Dan Burns Oldsmobile, Inc. (Burns) in Delray Beach, neither of whom opposes this application. By Clark filing the protest, this proceeding ensued. The Oldsmobile Dealer and Planning Network For marketing purposes, Oldsmobile has divided the United States into six regions. The regions in turn are divided into twenty-seven zones. The southeast region (made up of all or parts of eleven states) includes the Jacksonville zone, which roughly comprises peninsular Florida and the lower one-third of the State of Georgia. Within the Jacksonville zone are ninety. two Oldsmobile dealerships, including Clark. There are five major metropolitan areas in the Florida portion of the Jacksonville zone classified into major marketing areas known as multiple dealer areas (MDA) A MDA is an automobile marketing area consisting of contiguous communities and is a demographic or geographic area that is too large to be served by one dealer. As is relevant here, the West Palm Beach community or territory has been defined as a MDA and roughly consists of the densely populated portion of eastern Palm Beach County. Because a MDA is too large to be served by one dealer, Oldsmobile has contractually assigned two dealerships, Clark and Burns, to the West Palm Beach MDA. Oldsmobile has generally divided MDA's into smaller markets known as Areas of Geographic Sales and Service Advantage (AGSSA1 which are used as a dealer network planning tool. Each AGSSA is made up those federal census tracts closest to a proposed or existing dealer and identifies an area of shopping convenience for consumers in the AGSSA. The AGSSA represents the area in which an existing or proposed resident dealer has or would have an advantage over other same line make dealers in the MDA by virtue of the resident dealer's location. Prior to its decision to add a new dealer point in West Palm Beach MDA, Oldsmobile had divided the MDA into two AGSSA's. Under the plan, the northern portion of the eastern half of Palm Beach County was AGSSA 1 while the southern part of the eastern half constituted AGSSA 2. Oldsmobile has now realigned the MDA into three AGSSA's. Under this plan, the AGSSA 1 is that central portion of eastern Palm Beach County generally between 45th Street and Lantana Road. AGSSA 2 lies south of AGSSA 1 and essentially lies north of 45th Street in the northeastern portion of the county. Clerk of located in AGSSA 1, Burns to AGSSA 2, while Palm proposes to locate its new dealership in AGSSA 3. For purposes of this case, the territory or community to be examined is the West palm Beach MDA. A complete description of the MDA is found in GM Exhibits 5 and 6 received in evidence. The West palm Beach MDA constitutes an identifiable and distinct retail marketing area. To determine whether the existing dealers are providing adequate representation with the MDA, the smaller marketing area know as AGSSA 3, GM has proposed to compare the retail penetration (sales) of Oldsmobile in those areas with the penetration achieved on a national level. Although Clark objects to this comparison as a measuring tool for representation, it is found that this standard is appropriate for determining the adequacy of representation by existing dealers. c. Retail Registration Data Market penetration or sales is best determined by using retail registration data provided by R. L. Polk and Company (Polk). Polk is a nationally recognized organization that collects and analyzes automobile registration data nationwide for all lines and makes of automobiles. Among other things, Polk attempts to assign each automobile registration to a specific census tract. By doing so, a manufacturer can then determine its marketing success or lack thereof in a given geographic area. In this proceeding, both parties have utilized such data to analyze market penetration. This analysis compares total industry retail registrations to the retail registrations of a particular line make in a given area. As a forerunner to Palm filing this application, General Motors conducted an analysis of market penetration in the West Palm Beach MDA by reviewing Polk registration data at both the county and census tract levels. The registration data reviewed included every vehicle registered to an address within a particular area of geography (county or census trace) regardless of the sellers dealer. The data also included the components of retail and fleet, as well as a total registration. Market Penetration in the West Palm Beach Area Retail market penetration is a relative concept that compares the retail registrations of one make with all industry registrations in a particular geographic area. Stated differently, it represents the percentage of business that Oldsmobile obtains out of the total universe of business available. For example, in 1985 9.63% of all vehicles registered in the United States for retail use were Oldsmobile. Therefore, Oldsmobile's national market penetration was 9.63%. correspondingly, 6.15% of all retail vehicles registered in the West Palm Beach MDA in 1985 were Oldsmobile. This equates to an MDA penetration of 6.15%, or far below the national average. Retail registration efficiency to national average is the percentage relationship between retail penetration in a geographic area and national penetration. In 1985, the retail registration efficiency of the West Palm Beach MDA to national average was 63.9% (6.15 divided by 9.63), the lowest in the Jacksonville zone. Moreover, since 1981 retail registration efficiency in the West Palm Beach MDA has steadily declined as follows: 1981 1982 1983 1984 1985 MDA Retail Reg: Industry 31,845 31,328 39,273 42,247 43,797 Oldsmobile 2,632 2,294 2,666 2,719 2,693 Olds % of Ind 8.3 7.3 6.8 6.4 6.1 Nat. Retail Reg: Olds % of Industry 9.2 9.6 10.5 10.0 9.6 MDA Efficiency to National 90.1% 76% 65% 64% 63.5% The downward trend in MDA registration performance has continued through March, 1986 as penetration efficiency has dropped to 60%. Moreover, while national penetration stood at 9.3% in March, 1986 the West Palm Beach MDA penetration dropped to 5.6%. Further, from 1981 to 1985, industry retail registrations in the MDA have increased 11,952 vehicles or 38%, while Oldsmobile retail registrations increased only 61 units or 2%. In 1985, the Oldsmobile West Palm Beach MDA ranked 143rd in retail penetration when compared with the 159 largest Oldsmobile markets in the United States. Based on retail penetration, the West Palm Beach MDA has been the worst MDA in the Jacksonville zone since 1983. In fact, due to its poor retail sales performance, Clark has been in a special assistance program (the AGSSA program) since 1974. Despite suggestions and assistance offered by zone personnel to Clark, the market penetration in the MDA has continued to deteriorate. Market Penetration in AGSSA 3 The most current registration data available at the AGSSA level is year end 1985 data. This data reflects that the West Palm Beach MDA retail penetration has been consistently below zone and national retail penetration. AGSSA 1, in which Clark is located, and AGSSA 3 have repeatedly had low penetration. For the years 1983 through 1985, Oldsmobile's retail penetration for the nation, Jacksonville zone, West Palm Beach MDA and the three AGSSA's were as follows: 1983 1984 1985 National 10.51 10.04 9.63 Zone 8.77 8.25 8.00 West Palm Beach MDA 6.89 6.36 6.15 AGSSA 1 5.9 5.47 5.63 AGSSA 2 8.0 7.55 6.83 AGSSA 3 6.26 5.45 5.60 To increase market penetration, the most logical place to locate a new dealer is AGSSA 3 since there is already a dealer (Clark) in AGSSA 1. It has been Oldsmobile's experience that when a new dealer is added in an MDA, the market penetration of all existing dealers is improved. Lost Opportunities "Lost opportunity" is the difference between actual Oldsmobile retail registrations in an area and the number of registrations that would have occurred had a given norm (i.e., national average penetration) been achieved. The number of lost opportunities represents the number of registrations available to the Oldsmobile dealers in the MDA had national average penetration been attained. The following chart depicts the lost opportunities experienced during the last three full years by the MDA as a whole and its AGSSA components. Lost Opportunities Compared to National Retail Penetration I National 1983 1984 1985 Penetration 10.51 10.04 9.63 MDA (1386) (1539) (1507) AGSSA 1 (416) (450) (530) AGSSA 2 (668) (729) (657) AGSSA 3 (302) (359) (319) When the West Palm Beach norm is adjusted for product popularity, the lost opportunity both to Oldsmobile and its dealers in the MDA grows. This adjustment is appropriate since the West Palm Beach MDA and AGSSA 3 have a much higher percentage of "high" category vehicle registrations than is found on a national basis. Conversely, subcompacts are less popular in the MDA than in the nation as a whole. Because Oldsmobile's penetration in the "high" class is greater in the MDA, an adjustment for this product popularity is appropriate. After adjusting for product popularity, the 1985 national average penetration expectation and lost opportunity increase to 10.71% and 1,973 registrations, respectively. There is also a high level of in-sells (cars sold by dealers outside the market) into the MDA and AGSSA 3. When in-sells in the West Palm Beach MDA are considered, the lost opportunity to the MDA dealers increases from 1,507 (or 1,973 adjusted for product popularity) to 2,418 (or 2,884 adjusted for product popularity). Indeed, even Clark agrees there is a shortfall in registration penetration in AGSSA 3 and that lost opportunities exist. Customer Convenience The number and 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. In other words, the lower the distance a customer must travel to a dealership, the higher the convenience to that customer. This is evidenced by the high concentration of retail registration surrounding each MDA Oldsmobile dealer. The Oldsmobile dealer with the best level of convenience has the highest level of sales, and is located in the AGSSA with the highest penetration in the MDA. In this regard, in AGSSA 3, where Oldsmobile has its lowest level of customer convenience in the MDA, its retail registration penetration was also the lowest. Potential buyers in AGSSA's 1 and 2 enjoy far greater convenience to the nearest Oldsmobile dealer does than a potential buyer living in AGSSA 3. For example, the average consumer must travel almost twice as far from his residence in AGSSA 3 to reach an Oldsmobile dealer than to reach a Honda, Ford, Nissan, Volkswagon or Toyota dealer. The average consumer in AGSSA 3 is also substantially closer to a Chevrolet dealer than to an Oldsmobile dealer. Correspondingly, Chevrolet, Honda, Ford, Nissan and Volkswagon have better penetration in AGSSA 3 compared to their MDA average than does Oldsmobile. The sales and service facilities offered by the existing Oldsmobile dealers in AGSSA's 1 and 2, though adequate, are not properly located to conveniently satisfy the needs of existing and potential Oldsmobile customers in AGSSA 3. Interbrand competition is defined as competition among dealers of different line makes such as Oldsmobile, Buick, Pontiac and the like. Proximity has an effect upon such competition. This is borne out by the fact that manufacturers providing convenience to customers in AGSSA 3 have a greater opportunity to enjoy above average penetration performance than manufacturers that do not offer similar levels of convenience. All parties agree that proximity affects intrabrand competition. This is defined as competition among dealers of the same line make (Pontiac versus Pontiac). The proposed Oldsmobile local-ion in AGSSA 3 will be 7.7 air miles from its nearest same line make competitor in AGSSA 1. That distance equals the distance between the AGSSA 3 Ford dealer and its nearest same line make competitor. It is greater than the distance between the Toyota, Nissan, Volkswagon and Chevrolet dealers in AGSSA 3 and their nearest same line make competitor. Therefore, the distance of the proposed Oldsmobile dealer from Clark is consistent with the respective distances between nearest same line make dealers in the MDA. The addition of an Oldsmobile dealer in AGSSA 3 would provide Oldsmobile customers convenience commensurate with the convenience offered by competitive line makes. Further, the customer convenience offered by Oldsmobile in AGSSA 3 would be twice as good as the convenience currently offered by Oldsmobile in AGSSA 3 and would be consistent with convenience offered by Oldsmobile in AGSSA's 1 and 2. Measured by the shortest route in non-rush hour traffic, drive time from the proposed Palm location to the Clark location is relatively long when compared to the convenience levels offered by other line makes. For example, the drive time between the two locations ranges from 12:50 minutes to 13 minutes via Interstate 95. It takes 23 minutes to drive between the proposed location and Clark's location via U.S. 1. A customer living in a typical residential area in AGSSA 3, such as Frenchman's Creek, would travel only 5.7 miles to Palm as opposed to 14.1 miles to Clark's facility. In addition, the travel time would be shortened by some 13 minutes by the insertion of a new dealer point. Oldsmobile's lack of competitive convenience in AGSSA 3 is a significant factor in its inadequate retail market penetration. Clark offered no current data or objective, quantifiable evidence to rebut GM's evidence that customer convenience is directly related to retail market penetration. The Reasonableness of the Penetration Standard Oldsmobile's national average penetration, 9.63%, is a reasonable norm to use in evaluating the West Palm Beach MDA for a number of reasons. First, the area surrounding the MDA exceeds national average. Secondly, Oldsmobile's penetration in another Florida MDA, Tampa/St. Petersburg, has achieved the national average after an Oldsmobile dealer was added in that MDA in 1985. Third, if the norm is adjusted for product popularity, the MDA should achieve a penetration level of 10.71%. Therefore, the national average is a conservative measure of penetration. Fourth, the demographic characteristics of the community approach national average and identify many prospective Oldsmobile purchasers. Finally, some census tracts in the West Palm Beach MDA are already exceeding national average. To develop a reasonable norm, it is necessary to determine what level of penetration an MDA can attain. Selecting a market which is inadequate to develop a standard of adequacy is not proper. It is also improper to compare an MDA with the level it is achieving in a given year and contend that it has reached its full potential. National average is the proper level of performance for an MDA that is performing at substandard levels. Compared to the 1985 national average of 9.63%, only 6.15% of the vehicles registered in the MDA were Oldsmobiles, and in AGSSA 3, only 5.60% of the vehicles registered were Oldsmobile. That deficiency results in a substantial penetration shortfall of 1,507 units compared to national average. That is particularly significant since only 2,664 Oldsmobile were registered in the MDA in 1985. Similarly, the shortfall in AGSSA 3 is 319 units where only 668 Oldsmobiles were registered in 1985. I. The Need for Market Representation The penetration shortfall is a lost opportunity for both Oldsmobile and its dealers. When the 911 units registered in the MDA in 1985 by Oldsmobile dealers located outside the MDA are considered, the total lost opportunity to the MDA dealers approaches 3,000 units. Oldsmobile is not achieving adequate levels of penetration in either the West Palm Beach MDA or in AGSSA 3. The cause of that inadequacy is too few dealers. In Florida, the ratio of population to approved Oldsmobile dealer points is approximately 250,000 to 1. The ratio of registrations per approved dealer point is approximately 10,000 to 1. Based on the size of the market alone, the West Palm Beach MDA could support at least one additional dealer. The relative levels of convenience in the MDA also support additional Oldsmobile representation in AGSSA 3. Oldsmobile provides less convenience to AGSSA 3 buyers than Volkswagon, Honda, Chevrolet, Ford, Nissan, Toyota, Cadillac or Buick. The most recent data available supports the proposition that, in order to have an opportunity to achieve national average or better than national average penetration in an area, a manufacturer must be represented in that area. Of the thirteen major line makes represented in the MDA, six are located in AGSSA 3. only manufacturers represented in AGSSA 3 exceed their MDA average in that AGSSA. 33. The addition of an Oldsmobile dealer in AGSSA 3 would provide levels of convenience already offered Oldsmobile with significant increases during the last five years. For example, the county's population has increased by 23.6% between 1980 and 1985, while AGSSA 3 experienced a 26.1% over the same period. Indeed, the county's population in 1985 stood at 713,253 while the population in AGSSA 3 was 140,007. At the same time, while the growth rates in households, construction, employment, per capita income and various measures of residential and industrial/commercial growth have substantially increased, the rate of growth for these same categories in AGSSA 3 has been even greater. Uncontradicted exhibits offered by GM also reflect that building permit valuations, retail sales and employment have experienced steady increases in recent times, while traffic counts and volume near Palm's proposed facility have grown at a substantial rate. In terms of demographics, Palm Beach County has become more urbanized like other counties in Florida. Its middle and upper middle class groups have grown-in size. This is important since the average Oldsmobile buyer is above the age of 45 and in a household having an income in excess of $40,000 per year. Demographic data also demonstrates that the entire MDA, and AGSSA 3 in particular, have heavy concentrations of household income between $15,000 and $40,000 and at levels above $40,000. Moreover, while there are residents in every age group, in the MDA and AGSSA 3 the older age groups of 55-64 and 65 and older are particularly strong when compared to national demographic data. R. Allocation of Vehicles The Oldsmobile distribution system is based on national allocation. Each dealer's sales rate and available inventory are compared to that of all other dealers in the United States on a car line-by-car line basis. Dealers largely "earn" cars on the basis of how well they "turn" cars. Other manufacturers, such as Buick, use different allocation systems. Every dealer sells all the cars it receives. Based on Oldsmobile's distribution system a dealer may not receive every car it orders if its rate of ordering exceeds its "earned rate." In fact, dealers are encouraged to maintain an order bank in excess of the number of cars they expect Oldsmobile to allocate. This insures that, as Oldsmobile builds cars, dealers Will have orders to be filled. Cars for a new Oldsmobile dealership, such as Palm, are taken from Oldsmobile's national pool prior to allocation being made to all dealers. Thus, the establishment of a new dealership affects each existing dealership in the United States in an equitable manner. Each zone has a limited amount of discretion to provide vehicles over the "earned rate". Clark received allocations above its "earned rate" in years 1984, 1985 and 1986 as follows: January 1-December 31, 1984 222 January 1-December 31, 1985 316 January 1-June 30, 1986 200 TOTAL 738 Every vehicle allocated by Oldsmobile to Clark in excess of Clark's "earned rate" would have gone to another dealer in the zone but for the exercise of managerial judgment and discretion. Any dealer can increase its inventory and allocation by buying vehicles from other dealers. Clark has done so in prior years. Inventory is a factor in sales, but it is certainly not the only factor. In 1984, Clark had the eighth largest inventory in the zone but was twelfth in retail sales. In 1985, Clark had the zone's fifth largest inventory, but was eleventh in retail sales. For 1986, Clark's rank by month as compared to the other dealers in the zone is as follows: Jan Feb Mar Apr Mav Reported Retail Deliveries 11 4 10 15 11 Reported Inventory 2 3 4 3 4 Cooper, another Oldsmobile dealer in the Miami MDA, has consistently outsold Clark in 1986 even though it has had a smaller inventory. In 1978 Clark made a business decision to merchandise Oldsmobiles with diesel engines. Its "earned rate" was not high enough to obtain an increased allocation of diesels so it chose to purchase 751 diesel vehicles from dealers in New York City and Chicago during the years 1978 through 1981. These purchases were made contrary to Oldsmobile's advice. Clark failed to increase its allocation of diesel vehicles due to its inability to negotiate to obtain the retail delivery card from the selling dealers. However, the registrations of Palm Beach County purchasers were reflected in MDA data. Although the diesel product later suffered serious service problems, Clark performed no studies or analyses to determine the impact of these sales upon the loyalty of Oldsmobile customers. Therefore, its contention that the serious service problems affected market penetration is rejected. Moreover, Oldsmobile's own studies showed continued loyalty on the part of diesel customers. Clark did not participate in fleet sales until November, 1985, or until shortly after it filed a protest in this proceeding. At that time Clark sold large numbers of fleet units to its leasing subsidiary. Fleet vehicles are allocated separately from retail units. A dealer will be penalized if it sells a fleet vehicle at retail. Clark lost "earned" cars by engaging in that practice. L. Clark's Sales and Facilities The parties agree that Clark's facilities are adequate. Indeed, its facilities now cover a seven acre area, and include some $1.2 million in improvements made over the past eight years. Clark was recognized by GM in 1985 as one of the top 300 dealers in the country out of 3300 dealers nationwide. This award was based on a combination of sales and customer satisfaction. However, it was largely attributable to Clark's significant fleet sales which occurred in late 1985. During the first part of 1986, Clark was ranked seventy-eighth in the country in sales performance. Clark contends that its new car inventory is much smaller than its competitors, such as Buick and Pontiac, and that this has hampered its ability to increase market penetration. However, even though a given Buick dealer may have more inventory in stock, Oldsmobile dealers have consistently outsold Buick dealers on a national scale.
