The Issue Whether Petitioner's application to relocate B.O.O., Inc., d/b/a Acura of South Florida (Acura of South Florida) from its current location in Hollywood, Florida, to its proposed location in Pembroke Pines, Florida, should be approved.
Findings Of Fact Parties American Honda is a licensee and manufacturer as defined by Section 320.60(8) and (9), Florida Statutes. Acura of South Florida and Case Acura are motor vehicle dealers as defined by Section 320.60(11)(a)1., Florida Statutes. At all relevant times, Acura of South Florida's principal is Craig Zinn (Mr. Zinn); Case Acura's principals are Rick and Rita Case (Mr. Case and Mrs. Case, respectively, and collectively, the Cases). Notice and Standing With respect to notice and standing, the parties have stipulated as follows: On October 15, 2004, notice of American Honda's intent to relocate Acura of South Florida (proposed relocation) to Pembroke Pines from its current location in Hollywood was duly-noticed by publication in the Florida Administrative Weekly. Case Acura has standing to protest the proposed relocation, and timely filed its protest. The Community or Territory The parties have stipulated that the Community or Territory (generally referred to in the industry as a "comm/terr" ) relevant to this proceeding is the area defined by American Honda as the Pembroke Pines comm/terr (Pembroke Pines comm/terr or comm/terr). Both Acura of South Florida and Case Acura are located within the comm/terr, as is the proposed relocation site. The proposed relocation site is located west of both Acura of South Florida and of Case Acura. The Proposed Relocation and Related Market Studies Case Acura is, at all relevant times, centrally located in Ft. Lauderdale in Broward County, Florida. Major Broward County traffic arteries provide ready access to Case Acura from the north, south, east and west within the comm/terr. Acura of South Florida is located south of Case Acura, and just north of the Broward County line. Unlike Case Acura, Acura of South Florida does not offer customers ready access from any direction within the comm/terr. Both Case Acura and Acura of South Florida are located well east of the proposed location. From time to time, as circumstances warrant, American Honda evaluates specific existing or proposed comm/terrs, including the Pembroke Pines comm/terr, by performing a so-called market study. American Honda's market studies are an integral part of the company's strategic and long-range planning process. American Honda's market studies are conducted by teams of experienced and appropriately credentialed experts (market study team(s)). With reference to this case, market studies in the Pembroke Pines comm/terr were conducted in 1997 and again in 2003. The proposed relocation grew out of the results and recommendations of the 1997 market study team. The same results and recommendations were reached again by the 2003 market study team, based upon updated information concerning relevant data which emerged between the two market studies. Both studies documented that Broward County's population had been and would continue for the foreseeable future to "trend west" within the comm/terr. This westward population trend has been and is predicted to continue and to be particularly pronounced among affluent households. Because American Honda manufactures luxury vehicles under the Acura brand, American Honda and its dealers seek to "capture" or "conquer," i.e. attract the business, of such households, while maintaining their existing customer base of affluent households. The teams which conducted both market studies determined that the present configuration of Acura dealers within the comm/terr (dealer network) did not provide adequate representation for American Honda's Acura brand (adequate representation). The lack of adequate representation was a function of the westward population trend. To remedy the situation, and in accordance with Florida law concerning dealer relocation, both market study teams reasonably recommended that Acura of South Florida be relocated to western Broward County. The recommendation was not implemented following the 1997 market study; at that time, and for some years before and after, the owners of Acura of South Florida (Mr. Zinn's predecessors) were beset by illness and management difficulties, and not in a position to undertake the recommended relocation. Likewise American Honda was not in a position to force a relocation upon Acura of South Florida, because it had neither contractual rights nor statutory rights to do so. The 2003 market study team revisited the comm/terr in order to verify or refute the conclusions and recommendations of the 1997 study team in light of all that had transpired since 1997. Upon careful consideration of updated data, the 2003 study team reasonably concluded that the dealer network as it was then configured still failed to afford adequate representation. American Honda's market study teams, as a matter of course, conduct informal interviews with all dealers in the comm/terr when assembling market study data. The 1997 and 2003 market study teams followed this practice. During the 2003 interview with him, Mr. Case was asked whether he would like to move his dealership. Mr. Case replied unambiguously that he was well-satisfied with his present location, where he had become one of Acura's most successful dealers. It is noted that Acura dealers are permitted to market and to sell Acuras anywhere, both within and without the comm/terr in which they are located. The Cases have taken particular advantage of this opportunity, a factor which contributes to Case Acura's significant profitability. Dealer input, and the present success or lack thereof of dealers within a comm/terr, are data considered by market study teams in the context of all the other data. Upon consideration of all relevant data, including the input of the dealers within the Pembroke Pines comm/terr, the 2003 market study team adhered to the conclusion of the 1997 team and recommended implementation of the relocation of Acura of South Florida as proposed in 1997. As Acura of South Florida and American Honda set out to implement the relocation recommendation, Mr. Case had a change of heart and came forward to insist that he was entitled to be the dealer to be relocated. He also insisted that Acura of South Florida remain where it was. In support of these late- asserted demands, Mr. Case testified that he had previously been informed by the "zone manager" for the comm/terr, one Ray Mikiciuk (Mr. Mikiciuk) that Case Acura (and not Acura of South Florida) would be relocated. According to Mr. Case, Mr. Mikiciuk was authorized by American Honda to so advise Mr. Case on American Honda's behalf. Mr. Case also claims that Case Acura would have been the dealership relocated but for a threat by Mr. Zinn to sue American Honda should Case Acura be relocated. Contrary to Mr. Case's testimony regarding the foregoing, the persuasive evidence established that since 1997, American Honda executives supported the market study recommendations for the Pembroke Pines comm/terr, including the proposed relocation. Mr. Mikiciuk is a low level employee; there is no persuasive evidence that Mr. Mikiciuk ever had authority to speak for American Honda with reference to dealer relocations, let alone to bind the company. These facts were well known to Mr. Case. Mr. Case had unfettered access to the highest level American Honda executives over decades of mutually lucrative dealings with American Honda and related subsidiaries. Mr. Case had no reluctance to use these open lines of communication with regard to matters of minor as well as major importance to Case Acura. Yet, he now posits that American Honda, speaking through zone manager Mikiciuk, intended to overrule its 1997 and 2003 market study teams and relocate Case Acura, and reneged only because of Mr. Zinn's threat to litigate. The foregoing scenario is charitably described as counterintuitive. No corroborating evidence was provided. Mr. Case's testimony concerning his dealings with American Honda in regard to the proposed relocation is uncorroborated, unbelievable, and not credited by the fact-finder. Mr. Zinn initiated his purchase of Acura of South Florida in the spring of 2003. By the time the transaction was finalized in December 2003, anticipated future change(s)-- including the westward population trend identified in the 1997 market study--had become substantially more pronounced. Other changes had developed, or were reasonably anticipated to develop in the foreseeable future. For example, Acura of South Florida is presently and permanently foreclosed from providing customers and staff even the basic amenity of on-site parking, inasmuch as the Florida Department of Transportation (DOT) has taken by condemnation a 23-foot strip along the entire dealership frontage. Thirty parking places have been lost. Signage advising the public that they had reached Acura of South Florida is no longer permitted. At its present location, it is impossible for Acura of South Florida to be brought into compliance with Acura's so-called Design Image Standards (DIS) because the dealership property is too small to allow for the expansion required by DIS. American Honda and its network of dealers deem implementation of DIS at every dealership to be crucial to Acura's future success or failure in the marketplace. Additionally, the dealership is a prime candidate to be declared a "non-conforming use" by local zoning authorities. Such designation would render it impossible to obtain necessary permits to make needed improvements in the future. An Objective, Reasonable Standard In order to assess the adequacy of representation afforded by the existing dealer network in the comm/terr and to measure the level of opportunity available in the market, it is necessary to develop an objective, reasonable standard against which to compare the actual market penetration achieved by the existing dealer network, which includes, in this case, Acura of South Florida and Case Acura. A standard is a measure of the level of performance a brand can reasonably expect to achieve in the market with an adequately performing dealer network; that is, an adequate number of dealers performing competitively. The most objective data available for measuring the performance of a dealer network is market penetration data. Market penetration is the ratio of a brand's performance against the competitive industry. Market penetration is a direct measure of both inter-brand and intra-brand competition. Intra- brand competition is competition between competitors of the same brand. Inter-brand refers to competitors of different brands. The first step in developing a reasonable standard is to select a suitable comparison area. When choosing a comparison area, it is essential to select an area that is itself adequately represented. In determining whether a proposed comparison area is adequately represented, national average market penetration is an extremely conservative benchmark, because it includes all of the adequately represented, inadequately represented, and unrepresented areas within the United States. By contrast, the State of Florida is not an appropriate standard comparison area against which to judge the performance of Acura in the Pembroke Pines comm/terr because at relevant times the brand performs below national average in Florida. This is so because Florida has a disproportionate number of areas in which Acura has no dealer representation as well as a disproportionate share of underperforming dealers. National average market penetration is, under all the facts and circumstances of this case, the appropriate starting point for developing a reasonable standard for the Acura brand. The national average must be adjusted, however, to take into account unique consumer preferences over which the dealer network has no control, which can affect market share. Unique consumer preferences in the local market can be accounted for through a process called segmentation analysis. In this process, groups of vehicles in the segments to be analyzed are far more comparable with each other than with other vehicles not in the segments. Consequently, segments contain a group of similar vehicles that, by their design and physical characteristics, meet a certain set of consumer transportation needs. American Honda arranges its Acura vehicles into seven segments: small sporty, sporty luxury coupe, mid-size luxury sedan, full size luxury sedan, near luxury, exotic, and mid- luxury. The segmentation analysis process employed by American Honda accurately reflects the demographic features--including age, income, and education--of consumers who have actually purchased the vehicles in Acura's seven segments. In addition, the segmentation analysis employed by American Honda takes into account other factors which are unrelated to any particular consumer. Such factors include the state of the economy, product quality, and design features. Under all the facts and circumstances revealed in the record, the national average performance for Acura as adjusted for local consumer preferences in the Pembroke Pines comm/terr (the expected standard) is the appropriate standard for measuring the adequacy of representation being provided by existing Acura dealer networks and for establishing the level of opportunity available to Acura dealers in the Pembroke Pines comm/terr. At all relevant times, national average penetration, adjusted for local consumer preferences, produces an expected standard in the comm/terr of 10.58 percent, while the comm/terr is 10.3 percent of the retail industry segments in which Acura competes. For the year 2005 through June 30, the expected standard for the Pembroke Pines comm/terr is 11.37 percent while the Pembroke Pines comm/terr is 10.92 percent of the retail industry segments in which Acura competes. The reasonableness of the expected standard is confirmed by the fact that Acura has achieved or exceeded the standard in the recent past or currently meets or exceeds the standard in several markets in Florida; a sixth market in recent years has missed the standard only once, by four-tenths of a point in 2004. The persuasive data established that the expected standard is reasonable and can be achieved in the comm/terr if the Acura brand is adequately represented. Taking the foregoing factors into account, national average, adjusted for local consumer preferences, is the appropriate standard by which to judge the adequacy of representation being provided by the existing Acura dealer network and the level of opportunity available in the comm/terr. Impact on Manufacturer American Honda's Acura brand is, at relevant times, losing available sales in the comm/terr due to the inability of the existing Acura dealer network to penetrate the comm/terr at reasonably expected levels in light of the opportunity available. The persuasive evidence established that the gap between reasonably expected levels of penetration and the actual dealer network performance will grow. Taking reasonably anticipated future changes into account, the evidence of record established that the manufacturer will enjoy increased sales and overall increased customer convenience as a result of the proposed relocation. Investment of and Potential Impact Upon Existing Dealers Mr. Zinn and the Cases have invested significant dollar amounts to perform their obligations under their respective American Honda/Acura franchise agreements. They have likewise invested significant sweat equity, and expect to continue to manage their dealerships in a hands-on manner. The Cases contend that their investment in their Acura dealership will be at risk should the proposed relocation proceed. There was no persuasive evidence to support this contention. Rather, Case Acura is well positioned; well capitalized; and highly likely to respond positively to inter-brand competition arising from the proposed relocation. The Cases are aggressive and highly experienced dealers. It is reasonable to anticipate that the Cases will not lose sales; profit; reasonable opportunity for growth; or growth in the value of their multi-million dollar investment in Case Acura. Likewise, other existing dealers in the comm/terr are reasonably expected to grow and to maintain the value of their investments if the proposed relocation goes forward. Additionally and more specifically, the evidence is sufficient to establish that existing dealers in the comm/terr will be positively impacted by increased sales and service opportunities if the proposed relocation goes forward. Based upon the foregoing, the evidence is sufficient to establish that the proposed relocation is warranted and justified based on economic and marketing conditions, including future changes and present, accelerating trends in the comm/terr, which continues to grow rapidly in terms of population and of affluent households, which factors present increased sales and service opportunity for dealers. These opportunities are likely to be captured if the proposed relocation goes forward, and unlikely to be captured if it does not. Coercion of Existing Dealers There have been no efforts by American Honda to coerce any existing dealer to consent to the proposed relocation. Protesting Dealer Compliance with Dealer Agreement Case Acura is at all relevant times in compliance with the terms of its dealer agreement. Distance and Accessibility Congested traffic conditions in the western portion of the comm/terr militate heavily in favor of the proposed relocation. The proposed relocation will provide consumers with an increased level of convenience, and stimulate inter-brand competition. The market studies and common sense demonstrate that affluent consumers will not travel substantial distances to purchase an Acura when a variety of other luxury cars are more conveniently available. Other luxury vehicle dealers have taken note of the rapid growth of affluent homes in west Broward, and have provided and continue to provide improved accessibility. Acura's current dealer network in the comm/terr has not kept pace with American Honda's need to offer its existing and prospective customers an adequate level of accessibility, convenience and service. Benefits to Consumers Obtained by Geographic or Demographic Changes The evidence is sufficient to establish that consumer benefits will occur as a result of the relocation of Acura of South Florida. Such benefits cannot be obtained by expected demographic or geographic changes in the comm/terr. Adequacy of Interbrand and Intrabrand Competition and Consumer Care The evidence is sufficient to establish that the performance of Acura in the comm/terr is below reasonable levels under the appropriate standard, thereby reflecting inadequacy of inter-brand and intra-brand competition. With regard to consumer convenience, the evidence is sufficient to establish that it is necessary to locate a dealership within in the western portion of the comm/terr, where existing and potential Acura customers have moved and continue to move in large numbers, in order to provide them adequate customer care, including sales and service facilities. Relocation Justification Based on Economic and Marketing Conditions The evidence is sufficient to establish that the proposed relocation is warranted and justified based on economic and marketing conditions, including future changes. Western Broward County continues to grow at a rapid rate in terms of affluent population, households, and increased sales and service opportunities which are likely to be captured if the proposed relocation goes forward. Volume of Existing Dealers Registrations and Service Business The evidence is sufficient to establish that the volume of registrations and service business is hindered by the present configuration of the dealer network in the comm/terr, and that the volume of registrations and service business by existing Acura dealers in the comm/terr will improve if the proposed relocation goes forward.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles issue a final order approving American Honda's application to relocate Acura of South Florida. DONE AND ENTERED this 25th day of October, 2006, in Tallahassee, Leon County, Florida. S FLORENCE SNYDER RIVAS 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 25th day of October, 2006. COPIES FURNISHED: James D. Adams, Esquire Adams, Quinton & Paretti, P.A. 80 Southwest 8th Street, Suite 2150 Miami, Florida 33130 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Alan N. Jockers, Esquire Craig Zinn Automotive Group Corporate Offices 2300 North State Road 7 Hollywood, Florida 33021 Dean Bunch, Esquire Sutherland, Asbill & Brennan, LLP 3600 Maclay Boulevard, South, Suite 202 Tallahassee, Florida 32312-1267 Fred O. Dickinson, III, Executive Director Department of Highway, Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Judson M. Chapman, General Counsel Department of Highway, Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0635
The Issue Whether the application to relocate the Honda dealership owned by Bengal Motor Company, Ltd., d/b/a Miami Honda should be granted.
Findings Of Fact Bengal Motor Company, Ltd., d/b/a Miami Honda (Miami Honda) submitted its application to relocate its Honda dealership pursuant to Section 320.642, Florida Statutes. The requested relocation is from 3100 Northwest 36th Avenue, Miami, Florida, to a location that is 1350 feet west of the corner of Northwest 57th Avenue and Northwest 167th Street, Miami Lakes, Florida. The existing location is in the vicinity of the Miami International Airport. The proposed location is on the Palmetto Expressway. Miami Honda purchased the real estate for the proposed location without assistance from American Honda and has entered into an agreement with American Honda to relocate to that location if its relocation application is granted. Hollywood Imports, Ltd., Inc., d/b/a Hollywood Honda (Hollywood Honda) timely protested the relocation with the Department of Highway Safety and Motor Vehicles pursuant to the provisions of Section 320.642, Florida Statutes. The parties agree that the relocation is subject to protest and that Hollywood Honda has standing to bring this protest as it is within 12.5 straight line miles of the proposed location. See, Section 320.642(3)(b)1., Florida Statutes. American Honda has decided to relocate Miami Honda to the Miami Lakes area instead of adding a new dealer in Miami Lakes. Section 320.642, Florida Statutes, sets forth the criteria for relocation if a protest is filed. Section 320.642(2)(a), Florida Statutes, provides as follows: (2)(a) An application for a motor vehicle dealer license in any community or territory shall be denied when: A timely protest is filed by a presently franchised motor vehicle dealer with standing to protest as defined by subsection (3); and The licensee fails to show that the existing franchised dealer or dealers who reg- ister new motor vehicle retail sales or retail leases of the same line-make in the community or territory of the proposed dealership are not providing adequate representation of such line-make motor vehicles in such community or territory. The burden of proof in establish- ing inadequate representation shall be on the licensee. Section 320.642(2)(b), Florida Statutes, sets forth factors 1/ which may be considered in determining the adequate representation issue, as follows: (2)(b) In determining whether the existing franchised motor vehicle dealer or dealers are providing adequate representation in the comm- unity or territory for the line-make, the de- partment may consider evidence which may in- clude, but is not limited to: The impact of the establishment of the proposed or relocated dealer on the consumers, public interest, existing dealers, and the licensee; provided, however, that financial impact may only be considered with respect to the protesting dealer or dealers. The size and permanency of investment reasonably made and reasonable obligations incurred by the existing dealer or dealers to perform their obligations under the dealer agreement. The reasonably expected market penetra- tion of the line-make motor vehicle for the community or territory involved, after con- sideration of all factors which may affect said penetration, including, but not limited to, demographic factors such as age, income, education, size class preference, product popularity, retail lease transactions, or other factors affecting sales to consumers of the community or territory. Any actions of the licensee in denying its existing dealer or dealers of the same line-make the opportunity for reasonable growth, market expansion, or relocation, in- cluding the availability of line-make vehicles in keeping with the reasonable expectations of the licensee in providing an adequate number of dealers in the community or territory. Any attempts by the licensee to coerce the existing dealer or dealers into consenting to additional or relocated franchises of the same line-make in the community or territory. Distance, travel time, traffic patterns, and accessibility between the existing dealer or dealers of the same line-make and the loca- tion of the proposed additional or relocated dealer. Whether benefits to consumers will likely occur from the establishment or relo- cation of the dealership which the protesting dealer or dealers prove cannot be obtained by other geographic or demographic changes or expected changes in the community or territory. Whether the protesting dealer or dealers are in substantial compliance with their dealer agreement. Whether there is adequate interbrand and intrabrand competition with respect to said line-make in the community or territory and adequately convenient consumer care for the motor vehicles of the line-make including the adequacy of sales and service facilities. Whether the establishment or relocation of the proposed dealership appears to be warr- anted and justified based on economic and mark- eting conditions pertinent to dealers compet- ing in the community or territory, including anticipated future changes. The volume of registrations and service business transacted by the existing dealer or dealers of the same line-make in the relevant community or territory of the proposed dealership. THE COMMUNITY OR TERRITORY The area that constitutes the "community or territory" (community/territory) as that term is used in Section 320.642, Florida Statutes, is all of Dade and Broward Counties. This area is somewhat unique from a marketing standpoint because it is restricted on the West by the Everglades and on the East by the Atlantic Ocean. These geographic barriers create a concentration of population in a North/South corridor. This area will be referred to as the "Miami Metro", the term used by American Honda. There are presently nine Honda dealers in the Miami Metro. There are five Honda dealers in Dade County and four Honda dealers in Broward County. In comparison, there are five Toyota dealers in Dade County and five Toyota dealers in Broward County. An additional "open point", where a Honda dealer will be added at some undetermined time, has been identified for Plantation, Florida, which is in Broward County. This area has a significant amount of shortfall of Honda sales (compared to sales in other areas of the market area) that indicates that a new dealership would be justified. The relocation to Miami Lakes is not designed to recapture the lost opportunity that presently exists in Broward County. That lost opportunity is a separate problem. Honda considers Toyota and Nissan to be its primary competitors. Honda attempts to have a Honda dealer facing each Toyota dealer. Toyota outsells Honda at a greater percentage in Broward County than it does in Dade County. This discrepancy can be explained, in part, by the fact that Broward County is the home of Southeast Toyota, which is the distributor of Toyotas in the Southeastern United States, and by the fact that until the open point that American Honda has identified for Plantation is filled, Honda has one less dealer in Broward than does Toyota. Although American Honda has identified an open point in Plantation, Florida, and has included that open point in its marketing planning the additional dealership for Plantation is not being pursued by American Honda at this time. It is likely that the addition of a dealership would be subject to protest by existing dealers. It is not likely that a new dealership will exist in Plantation in the next five years. Expert witnesses for both Miami Honda and Hollywood Honda agree that Largo Honda, located in Key Largo, Monroe County, Florida, should be excluded from the Miami Metro. 2/ Data collected from new car registrations 3/ includes the name of the dealer selling the new vehicle and the street address of the purchaser. Retail registration data is analyzed to provide information as to each dealer's market area. The information produced by this analysis, referred to as cross- sale data, is used to determine whether the Miami Metro is one homogeneous, interconnected market or whether it consists of separate identifiable markets. In performing this analysis, each of the existing eight dealers and the proposed location is assigned a primary marketing area, referred to as a PMA. A PMA consists of census tracts 4/ within the Miami Metro and represents the geographical area in which an existing dealer or a proposed dealer would reasonably be expected to have a competitive advantage over competing same-line (Honda) dealers by virtue of its proximity to the customers within the PMA. The PMAs developed by the experts in this proceeding were based upon the exact proposed location of Miami Honda, rather than the existing location or any other hypothetical location. This methodology was reasonable and appropriate. The cross-sale data reflecting shopping patterns of Honda buyers in the Miami Metro demonstrates that customers residing in Dade County primarily purchase from Dade County dealers and that customers residing in Broward County primarily purchase from Broward County dealers. The exception to this is Hollywood Honda, which sells extensively to customers throughout the Miami Metro, including customers in Dade County. REASONABLY EXPECTED MARKET PENETRATION Market penetration is the traditional standard used to measure the performance of a dealer network in a given geographical area, such as a community/territory or a PMA. Market penetration is the percentage of all vehicles registered in a particular area that a particular brand achieves. Market penetration for any area is computed by analyzing all brand-line registrations in the area, without regard to the location of the selling dealer. To determine whether a particular PMA is being adequately represented, it is first necessary to select a standard against which the PMA will be measured. There was a dispute between the expert witnesses in this proceeding as to the appropriate standard against which to measure the PMA for the proposed relocation. The expert for Hollywood Honda used Honda's market penetration for Honda's Southeast Zone, consisting of six states, to determine what should be Honda's reasonably expected market penetration in the Miami Metro. The rationale that supports the use of this standard is not persuasive because of the unique nature of the Miami Metro and because there are many areas in the Southeast Zone within which Honda is not being adequately represented. The use of Dr. Matthews' standard will produce a mediocre target that does not accurately represent Honda's market potential in this unique area. Honda's expert analyzed sales within what he termed the "Balance of Dade" to determine Honda's reasonably expected market penetration in the Miami Metro. The Balance of Dade standard analyzed Honda's market penetration in Dade County with the exception of the PMA identified for the proposed relocation. The PMA for the proposed relocation was excluded from the analysis because it would be inappropriate to compare the area in question to itself. The Broward County portion of the Miami Metro was excluded because it was determined that American Honda is not adequately represented in many areas of Broward County. To develop a reasonable standard, the areas of comparison must be areas in which American Honda is adequately represented by its dealer network. There was extensive testimony by American Honda's expert as to the reasons this standard was used. Mr. Anderson, American Honda's expert, opined that the Balance of Dade standard produced a reasonable and appropriate standard by which to measure Honda's reasonable expected market penetration in this local market area. There was also extensive testimony by Hollywood Honda's expert as to why this standard should not be used. Dr. Matthews, Hollywood Honda's expert, believed that the use of the Balance of Dade standard produced an inappropriately high expectation of what should be Honda's reasonably expected market penetration. Dr. Matthews viewed sales in Dade County to be unreasonably high because of the sales into the market areas by Largo Honda and because of the number of new Honda vehicles sold into Dade County by Honda dealers in Broward County. This conflicting testimony is resolved by finding that the standard selected by American Honda's expert for determining reasonably expected marketing penetration, the so-called Balance of Dade standard, is a reasonable and appropriate standard to determine Honda's reasonably expected market penetration in this local market. By measuring and analyzing each car segment in which American Honda competes in the Balance of Dade, American Honda's expert determined that with a dealer operating at the site of the proposed relocation, its reasonably expected market penetration for the Miami Lakes PMA would be 20 percent of the retail segments in which Honda competes. 5/ ACTUAL PERFORMANCE COMPARED WITH EXPECTED PERFORMANCE Honda market penetration in the Miami Lakes PMA has consistently been below expected levels in 1992, 1993, 1994, and the first half of 1995. Comparing actual penetration with the reasonably expected penetration of 20 percent demonstrates that Honda market penetration in the Miami Lakes PMA has been between 87.2 percent and 90.1 percent effective. The additional new car sales that would have been required to bring the Miami PMA up to its reasonably expected market penetration level were 263 units in 1993, 149 in 1994, and 168 for the first half of 1995. American Honda established that it is not receiving adequate representation in the Miami Lakes PMA. ECONOMIC AND MARKETING CONDITIONS Since 1980, there has been a significant decline in the number of households in the area of Dade County near the airport where Miami Honda is presently located, and a significant increase in the number of households in the Miami Lakes area. Miami Lakes represents a densely populated area which presently has no Honda dealer to serve it. All other densely populated areas of the Miami Metro, with the exception of the Plantation area, have an existing Honda dealer. Demographic factors, such as household income, reflect that the Miami Lakes area is much more affluent than the area surrounding the present Miami Honda location. Current and projected demographic data indicate that Honda's inadequate representation in the Miami Lakes PMA is the result of substantial and continuing growth. The growth pattern in the Miami Lakes area is also typical of the growth pattern for the Hollywood Honda PMA. These growth patterns are expected to continue through the year 2000 so that the opportunities for car sales for Hollywood Honda as well as a dealer in Miami Lakes would be expected to increase as this growth continues. Miami Honda's current facility is located in an industrial area that is blocked on the west from further development by the airport. In the vicinity, there are trailer parks and other low income housing, a cemetery, and a truck depot. Also in the area is a highly industrialized area of the Miami River, where cargo vessels are anchored, and the former headquarters of Eastern Airlines and Pan American Airlines, both of which are empty or partially empty. The present location is not as well suited as the Miami Lakes area for the sale of new automobiles. There are Nissan, Mitsubishi, and Hyundai dealerships in the area where Miami Honda is currently located. These lines are also represented in the Miami Lakes area. Miami Honda is one of the top Honda dealers in the Miami Metro and usually one of the top twenty dealers in the United States. Miami Honda is profitable at its current location, having made a profit of $2.9 million in 1994. The existing sales and service facilities of Miami Honda meet Honda's established guide for minimum facilities requirements. However, these existing facilities are outdated and inefficient. These facilities need to be replaced for Miami Honda to remain competitive. The existing location does not justify the construction of a new facility. It takes approximately 28 minutes to drive from the current Miami Honda location to the Hollywood Honda location. It takes approximately 22 minutes to drive from the proposed Miami Honda location to the Hollywood Honda location. Miami Honda's proposed location is part of an auto row, with the other lines being Toyota, Lincoln/Mercury, Ford, Nissan, Pontiac, GMC, Mitsubishi, Chevrolet, Chrysler Plymouth, Jeep Eagle, and Hyundai. This auto row did not exist ten years ago. Hollywood Honda is located on a similar auto row, with virtually the same lines being represented. Without a representative on the Miami Lakes auto row, American Honda is at a competitive disadvantage in the Miami Lakes area to those competing lines with dealers on the Miami Lakes auto row. The present location of Miami Honda is too close to that of Brickell Honda. The population and household trends of the PMA occupied by Brickell Honda and the PMA presently occupied by Miami Honda shows declining sales opportunity for the two dealers and suggests the need for a relocation of one of the two dealers. Honda has established that it is currently under-represented in the Miami Lakes PMA and that the likely cause of the current under-representation is the absence of a Honda dealer in this PMA. Relocating the Miami Honda dealership to Miami Lakes would strengthen the Brickell Honda dealership and the Miami Honda dealership. The relocation would also be in the best interests of the consuming public because it would bring a Honda dealer into the Miami Lakes area. Honda's chances of achieving a reasonable, adequate level of representations are dependent on how well its dealer network keeps pace with expanding sales opportunities. The proposed relocation would maximize customer convenience in the Miami Metro because the distance the purchasers of new cars would have to drive to reach the nearest Honda dealership would be minimized. It is reasonable to expect that Hollywood Honda would lose sales in the Miami Lakes PMA if the relocation is approved because approximately 34 percent of the sales in the Miami Lakes PMA are presently made by Hollywood Honda. It is also reasonable to expect that these lost sales can be offset by Hollywood Honda concentrating on its marketing opportunities closer to its location. The expected marketing penetration in the market within two miles of the Hollywood Honda dealership is 19.3 percent while the actual penetration is 8.6 percent. While Hollywood Honda is one of American Honda's top dealerships, it is missing opportunity for sales in its immediate marketing area. It is reasonable to expect that the proposed relocation will provoke a competitive response by Hollywood Honda that would positively impact Hollywood Honda's sales. Without a competitive response by Hollywood Honda, it is likely that the relocation of Miami Honda would result in the loss of approximately 250 sales a year for Hollywood Honda, for an approximate monetary loss of $500,000. The decision of American Honda to relocate Miami Honda instead of adding a dealer in Miami Lakes provides the existing dealers, including Hollywood Honda, with the opportunity to take advantage of the growing market within the Miami Metro and the lost opportunity for sales that exist, especially in Broward County. Even when the impacts of the proposed relocation would have on Hollywood Honda are considered, it is concluded that approving the proposed relocation of Miami Honda would strengthen the American Honda dealer network in the Miami Metro and would serve the interests of the consuming public.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order that adopts the findings of fact and conclusions of law contained herein. It is further recommended that the final order approve Miami Honda's proposed relocation. DONE AND ENTERED this 6th day of June, 1996, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of June, 1996.
The Issue The matters presented here concern rules challenges against the Rule 15C- 1.08, Florida Administrative Code, and certain other policies of the Respondent which the Petitioner claims to be rules within the meaning of Subsection 120.52(14), Florida Statutes. The initial challenge in this Petition deals with the aforementioned Rule 15C-1.08, Florida Administrative Code, and the Petitioner, by this attack, argues that the rules provision in question is an invalid exercise of delegated legislative authority within the meaning of Section 120.56, Florida Statutes, due to an alleged impermissible expansion of the statutory scheme for the licensure of new motor vehicle dealers in the State of Florida as contemplated by Section 320.642, Florida Statutes. The Petitioner, by this action, also takes issue with the alleged policy of the Respondent dealing with the acceptance of protests from previously licensed motor vehicle dealers selling motor vehicles of the same manufacturer as the proposed licensee, filed in opposition to the grant of a license to the proposed licensee which protests are filed prior to the time of application on the part of the proposed dealer. The Petitioner, in addition, challenges the alleged policy of the Respondent which would cause the Respondent to accept protests by existing dealers directed against the licensure of a proposed dealer, without reference to whether the protestant is located in the same "community or territory," based upon the fact that the existing dealership is located in a county adjacent to the county of the proposed dealership. Both of the described policies, according to the Petitioner, are invalid for reason that they fail to meet the requirements for rule adoption as set forth in Section 120.54, Florida Statutes, and for reason that they are an invalid exercise of delegated legislative authority within the meaning of Section 120.56, Florida Statutes, in that the policies are contrary to the enabling legislation found in Section 320.642, Florida Statutes. FINDINGS OF FACT 1/ This cause comes on for consideration based upon the Petition for determination of the invalidity of rules filed on June 16, 1981, by Petitioners Yamaha Motor Corporation, U.S.A. (Yamaha) and Daniel P. Schmitt d/b/a Gulfview Yamaha (Gulfview), as received by the State of Florida, Division of Administrative Hearings. The jurisdictional theory for filing this case was that provision Section 120.56, Florida Statutes. Subsequent to the receipt of the Petition, the Director of the Division of Administrative Hearings reviewed the Petition, and following case assignment on June 25, 1981, the case was heard by the undersigned on July 15, 1981. The Petitioner, Daniel P. Schmitt d/b/a Gulfview Yamaha, dismissed his rules challenge on August 7, 1981. This Notice of Voluntary Dismissal was acknowledged by an order of the undersigned dated August 10, 1981. The Notice of Voluntary Dismissal and attending order followed the closure of the case of Yamaha Motor Corporation, U.S.A. and Daniel R. Schmitt d/b/a Gulfview Yamaha, Petitioners, vs. The State of Florida, Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles and Mike Thweatt d/b/a Mike's Yamaha, et al., Respondents DOAH Case No. 81-1104. The dismissal and closure of that Division of Administrative Hearings' case pertained to protests before the Division of Motor Vehicles, filed by existing Yamaha motorcycle dealers and the efforts on the part of the Co-Petitioners in DOAH Case No. 81-1104, to gain a Florida motor vehicle dealer's license for Daniel R. Schmitt. The Schmitt dealership is to be located in Pasco County, Florida. The four (4) protesting dealers located in counties adjacent to Pasco County had filed advance protests to the grant of the new license to Daniel R. Schmitt and had done so three (3) weeks prior to Schmitt's filing for licensure. One of the parties to that action, namely Barney's Motorcycle Sales, Inc., withdrew its protest and the remaining private parties stipulated to a settlement. This now allows Daniel R. Schmitt to be licensed as a Florida motor vehicle dealer, that Petitioner having fulfilled other requirements for licensure. There remains for consideration the claim of Yamaha Motor Corporation, U.S.A., for determination of rules invalidity. Petitioner Yamaha is an importer and distributor of motorcycles manufactured in Japan and the Petitioner controls the marketing of that merchandise in the United States and the grant of franchise agreements to independent dealers in this country, to include those dealers who must be licensed by the Respondent in order to sell motorcycles in the State of Florida. The Respondent, State of Florida, Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles, is the agency assigned the ask of licensing meter vehicle dealerships in the State of Florida, as required by the terms and conditions of Chapter 320, Florida Statutes. In particular, this determination must be made in keeping with Section 320.642, Florida Statutes. 2/ In carrying out its responsibilities under Chapter 320, Florida Statutes, the Respondent has promulgated Rule 15C-1.08, Florida Administrative Code, dealing with the filing of a license application by a new motor vehicle dealer and the protest rights of existing licensed motor vehicle dealers of the same make. Rule 15C-1.08 states: Preliminary filing of an application for a motor vehicle dealer's license; procedure. Any person who contemplates the establishment of a motor vehicle business for the purpose of selling new motor vehicles, for which a franchise from the manufacturer, distributor or importer thereof is required, shall, in advance of acquiring building and facilities necessary for such an establishment, notify the Director of the Division of Motor Vehicles of his intention to establish such motor vehicle business. Such notice shall be in the form of a preliminary filing of his application for license and shall be accompanied by a copy of any proposed franchise agreement with, or letter of intent to grant a franchise from, the manufacturer, distributor or importer, showing the make of vehicle or vehicles included in the franchise; location of the proposed business; the name or names of any other dealer or dealers in the surrounding trade areas, community or territory who are presently franchised to sell the same make or makes of motor vehicles. Upon receipt of such notice the Director shall be authorized to proceed with making the determination required by Section 320.642, Florida Statutes, and shall cause a notice to be sent to tone presently licensed franchised dealers for the same make or makes of vehicles in the territory or community in which the new dealership proposed to locate, advising such dealers of the provisions of Section 320.642, Florida Statutes, and giving them and all real parties in interest an opportunity to be heard on such matters specified in that Section. Such notice need not be given to any presently licensed franchised dealer who has stated in writing that he will not protest the establishment of a new dealership which will deal in the make or makes of vehicles to be included in the proposed franchise in the territory or community in which the new dealership proposes to locate. Any such statements or letters of no protest shall have been issued not more than three months before the date of filing of the preliminary application. The Director may make such further investigation and hold such hearing as he deems necessary to determine the question specified under Section 320.642. A determination so made by the Director shall be effective as to such license for a period of twelve (12) months from the date of the Director's Order, or date of final judicial determination in the event of an appeal, unless for good cause a different period is set by the Director in his order of determination. On the subject of protests by existing dealers, Paragraph 5.A. of the Petitioner's Exhibit No. 5, admitted into evidence, a policy memorandum by the Respondent, contains language which states: Definition for community or territory: All licensed dealers of like franchise in the county in which a new point is being considered. Any geographical distance where the new point would be in a joining county of the same marketing area as an area previously served. (Example - northern boundary of county A and southern boundary of county B.) Surrounding counties where a new point is being considered in a county having no licensed dealers of like franchise. Inspectors are NOT REQUIRED to secure letters of no-protest or protest and DO NOT indicate to the new applicant that a license will be issued at District office level. Dealers in adjoining counties to the county of the new dealer of similar make, where there is no existing dealer in the proposed dealer's county, may file protests in advance of the new dealer's application. The Respondent will not accept protests in advance from dealerships in other counties in this State which are not adjacent to the county of the proposed dealership. A protest in advance accepted by the Department may form the basis for a Section 120.57, Florida Statutes, hearing on the question of new dealer license. Letters of advance protest are valid for one or two months. Nonetheless, they remain in the permanent file of the Department and if an application is received more than one to two months after the advance protest, the protestant will be contacted to ask him to state whether he still would be in opposition to the grant of a new license. The existing dealer must respond within a time certain. The Department will accept license protests claims from any dealer in the same county as the proposed dealership on those occasions when an application for new dealership has been filed for location in a county where there is an existing dealer of the same manufacture. Under those facts, the Department will also accept protests from any dealer outside of the county where the proposed dealership is to be located, if the existing dealer of similar make has a "geographical conflict" with the applicant, meaning the protestant is just across the county line in the same "general marketing or trade area." The criteria for determining the "geographical conflict" between an existing and proposed dealership are premised upon an examination of map distances. Any protest filed by a similar make dealer in an adjacent county to the proposed dealer, where there is no dealership in the county in which the proposed dealership would be located, will always be accepted by the Respondent. In addition to the participatory rights of existing dealers previously discussed, when an application is received for a new dealer license, those existing dealers who sell the same make of motor vehicle, who are located in the county of the proposed new dealership are notified of their rights to protest the grant of the new dealer license pursuant to Section 320.642, Florida Statutes. If there are no dealers in the county where the proposed dealership would be located, then a determination is made by the Department on the question of whether there exists other dealerships in the same "trade or marketing area" or "territory or community" of the applicant and if such dealers exist who sell the same make of motor vehicle, they are notified of their right to protest under the above-referenced provision of law. Should the determination be made that there are no existing dealers in the same county, or "territory or community," as that of the proposed dealership, then no existing dealers of similar make of motor vehicle are notified of their right to protest the proposed dealership. In making determinations in the notification process, after receipt of the application of the proposed dealer, the Department uses the term "territory or community" and the term "surrounding trade area" interchangeably; however, at times, "surrounding trade area" is considered to be smaller than "territory or community" and at other times larger. The ultimate determination of the rights of protesting dealers to participate in the de novo hearing, held pursuant to Section 120.57, Florida Statutes, to consider the propriety of granting a new dealer license under the terms and conditions of Section 320.642, Florida Statutes, are determined through that hearing process; notwithstanding the fact that they have been allowed to file protests in advance of or subsequent to the filing of an application for a new license and have received further notification of the pendency of a request for a new dealer license by the methods as stated before. In considering those motor vehicle dealers who sell motorcycles, their greatest sales success occurs during a limited number of months within the year, and it is important that the motorcycle dealer be in business during that season.
The Issue Whether existing Mazda dealers are providing adequate representation of the Mazda line-make in the community or territory in which Mazda Motor of America, Inc., proposes to add a dealer.1/
Findings Of Fact The Parties MMA is a “licensee” as defined by section 320.60(8), Florida Statutes. SMM is a “motor vehicle dealer” as defined by section 320.60(11). Notice and Standing On August 9, 2013, notice was published in the Florida Administrative Register announcing MMA’s intent to establish Brickell Mazda as a dealer for the sale of Mazda vehicles at 618 Southwest Eighth Street, Miami, and for the service of Mazda vehicles at 665 Southwest Eighth Street, Miami (jointly referred to as the Proposed Point). These two parcels of real property are situated 71 feet apart and directly across from each other on opposite sides of Southwest Eighth Street, a three-lane one-way street that is not a limited access highway. The proposed additional dealer would be located in Miami-Dade County, Florida, which has a population of more than three million persons. SMM is an existing franchised Mazda dealer operating from a facility located at 18010 South Dixie Highway, Miami, Florida. SMM timely protested the proposed additional dealer. During several 12-month periods within the 36 months preceding publication of notice of the proposed additional dealer, SMM made more than 25% of its retail sales of new Mazda vehicles to persons who registered those vehicles within a radius of 12 and one-half miles of the proposed location of the proposed additional dealer. If Brickell Mazda is permitted to open at the Proposed Point, its Mazda sales operations and its Mazda service and parts operations will open on the same day, and it will operate its Mazda sales and service operations at the Proposed Point until completion of construction of a new Mazda sales and service facility to be located within two miles of the Proposed Point. Community or Territory The first issue to be addressed in this protest is the identification of an appropriate “community or territory” (Comm/Terr), which is the relevant geography within which to judge the performance of the Mazda brand. Section 320.642, Florida Statutes, does not provide any specific criteria for geographically defining the Comm/Terr. In determining the geographic boundaries of the Comm/Terr, consideration is given to the areas assigned to Mazda dealers by MMA. MMA assigns to each of its dealers a geographic area known as a Statistical Observation Area (SOA), which is comprised of United States (U.S.) Census Bureau census tracts close to each dealer. A dealer’s SOA is the area in which a dealer has a geographic advantage with respect to consumers, who generally will shop for a new vehicle at the closest dealer, unless they are dissatisfied with that dealer for some reason. In determining the geographic boundaries of the Comm/Terr, consideration is also given to the buyer behavior of new Mazda consumers--what is the geographic area where consumers in that area buy the majority of their new vehicles from dealers in that area, and where the dealers in that area sell the majority of their new vehicles to consumers in that area. The Comm/Terr should also have “connectivity” meaning that the areas within the Comm/Terr are reasonably connected from a buyer behavior point of view. MMA defines the Miami Metro market as an area encompassing all of Miami-Dade County, all of Broward County, a portion of northern Monroe County (consisting of the upper Keys), and a portion of southern Palm Beach County. MMA employs the 2010 version of U.S. Census Bureau census tracts to define the Miami Metro market. Sharif Farhat, MMA’s expert witness, testified that the proper Comm/Terr in this case is the geographic area within the four Miami-Dade SOAs–-Ocean Mazda (Ocean), Mazda of North Miami (North Miami), SMM, and the open point (formerly Potamkin Mazda’s SOA), which shall be referred to hereinafter as the “Miami Comm/Terr.” Joseph Roesner, SMM’s expert witness, agreed that the Miami Comm/Terr is the proper Comm/Terr. Based on a consideration of all relevant evidence, the proper Comm/Terr in this case is the Miami Comm/Terr. Within the Miami Comm/Terr, Mazda’s competitors are represented in the areas near SMM, Ocean, and North Miami, and also in the open point SOA where Brickell Mazda is proposed, but where there is no current Mazda dealer. Historical Network Changes, Existing Dealer Network For over 16 years, from April 1992 until Potamkin Mazda (Potamkin) closed in March 2009, there were four Mazda dealerships operating in Miami-Dade County–-Ocean Mazda, North Miami/Marlin Mazda, SMM/Kendall Mazda and its predecessors, and Potamkin. If the operations of Williamson Mazda and Spitzer Mazda in Homestead are considered, there were five Mazda dealerships operating in Miami-Dade County for some of those years. It has only been since March 2009, or a little over five years, that there have been only three Mazda dealerships operating in Miami-Dade County. The current Mazda dealers in Miami-Dade County are Ocean (9.3 miles from the Proposed Point), North Miami (13.8 miles from the Proposed Point), and SMM (14.6 miles from the Proposed Point). In 2012, within the SOA of the Proposed Point, North Miami registered the most new Mazda vehicles (204) and SMM registered the least (73), whether measured by number of units or percentage of registrations in the SOA. Brickell Mazda will be the first Mazda dealer added since the 2008/2009 downturn in the automotive industry, and the fourth Mazda dealer in the Miami Comm/Terr, with no plans by MMA to add a fifth dealer. Prior to SMM opening in October 2007, Kendall Mazda (Kendall) operated at 18010 South Dixie Highway, Miami. Kendall lost its floor plan (the bank credit line used to purchase new vehicles from MMA), and it sought bankruptcy court protection. On March 19, 2007, SMM’s parent company, South Motors Company of Dade County, purchased the Kendall dealership property from the trustee for the Kendall bankruptcy. When South Motors Company of Dade County purchased the property, SMM did not yet have a Mazda dealership agreement. Prior to its closing, Kendall received negative local publicity, caused in part by that dealership not paying off loans on customers’ trade-in vehicles. Kendall’s actions could have damaged Mazda in the market place. Before being awarded a Mazda franchise by Mazda and opening the Mazda dealership, SMM knew of the problems caused by the prior dealer, and expected that SMM would struggle to be profitable because of issues with Kendall. SMM even considered not opening the dealership. However, SMM expected that, in time, it could overcome these issues and decided to open the dealership. SMM was awarded its Mazda franchise by Mazda and did not have to purchase the franchise rights from another Mazda dealer. Not only did SMM not pay any money for acquiring the franchise, but MMA provided $200,000.00 in monetary assistance to SMM specifically to assist in establishing itself in the market. Kendall’s actions no longer impair SMM’s performance as a Mazda dealer. Potamkin was previously located in the open point SOA where the Proposed Point is located. Potamkin’s location was 9.3 miles from Kendall, which is where SMM is located today. The Proposed Point is 14.6 miles from SMM and will provide better spacing between Mazda dealers. Potamkin’s dealership facility was located on four different properties, the leases for which were expiring in February 2009. Potamkin told MMA that it wanted to either close or sell the dealership. The proposed buyer was a prior Mazda dealer, but MMA did not consider him to be a successful dealer and was not interested in him as a buyer for the Potamkin point. Potamkin closed in March 2009, the same year that General Motors and Chrysler filed for bankruptcy and many dealers, not just Mazda dealers, were struggling financially on the heels of the financial crisis and the bottoming out of the automobile market the year before. MMA made the decision to negotiate a voluntary termination of Potamkin and temporarily close the point, in order to provide Ocean and SMM two years to absorb the sales and fixed operations business of Potamkin. In making this decision, MMA conducted a risk/benefit analysis. One potential benefit was that Ocean and SMM might be able to increase sales and profitability. Other benefits were that MMA could “control the point and plan for the future” and “attract a top tier dealer candidate.” The risk was that Ocean and SMM would not be able to “absorb sales and fixed operations business.” MMA believed closing Potamkin would also help the “crowded” Miami dealer representation, caused by Ocean’s relocation to within four miles of Potamkin. MMA approved Ocean’s relocation because Ocean’s dealership facility was in the direct flight path of jets landing at Miami International Airport, and the noise disrupted sales and service operations. There is no evidence that Potamkin voluntarily terminated because there were four Mazda dealers in Miami-Dade County. MMA kept the SOA formerly assigned to Potamkin as an open point and did not assign any of Potamkin’s market area to Ocean or SMM. The Proposed Point is further away from both Ocean and SMM than was the prior Potamkin location. After Potamkin closed in 2009, Ocean and SMM were not able to increase their sales to “absorb” Potamkin’s sales business or achieve an acceptable level of sales in the market area previously served by Potamkin. Furthermore, SMM was not able to increase its profitability, and it continued to operate at a loss, which has been the case since the dealership opened in 2007. SMM’s losses decreased in 2010, but then increased in 2011 and 2012. Mario Murgado is an experienced and successful new car dealer who expressed interest to MMA in becoming a Mazda dealer. Mr. Murgado was born in Havana, Cuba, is fluent in Spanish and English, and is experienced in marketing and selling new motor vehicles to Hispanic and non-Hispanic customers in the Miami market. Mr. Murgado owns several successful automobile dealerships on Southwest Eighth Street in Miami, which is within the open point SOA formerly assigned to Potamkin, including Honda, Buick, GMC, and Pontiac. This area is within “Little Havana,” one of the most densely Hispanic populated areas in Miami. Mr. Murgado also owns and operates Audi and Infinity dealerships in Stuart, Florida. Mr. Murgado entered into a Letter of Intent with MMA in which he agreed that “the Permanent Dealership Site shall meet Mazda’s design and image standards” and which contains specified minimum square footage requirements at the proposed Brickell location. On August 9, 2013, MMA gave notice of its intent to allow the establishment of Brickell Mazda at the Proposed Point.2/ Adequacy of Representation in the Community or Territory-– Statutory Criteria After establishing the proper Comm/Terr, section 320.642(2)(b) outlines 11 factors to be balanced when determining whether or not current representation in the Comm/Terr is adequate. Impact of the Proposed Additional Dealer on Consumers, Public Interest, Existing Dealers, and MMA Impact on Consumers and Public Interest The Miami Comm/Terr is currently served by three Mazda dealers located in the northern (North Miami), western middle (Ocean), and southern (SMM) portions of the market. The proposed Brickell Mazda location would service the eastern middle portion of the Miami Comm/Terr. Each of the three existing dealers is located in a large cluster of other dealers that offer competing line-make vehicles. These locations provide consumers with convenient access to cross shopping opportunities. The proposed additional dealer would also be located next to a Honda, Buick, and GMC dealership. The travel distance from the proposed location to SMM is 15.4 miles. From the proposed location to Ocean is 10.5 miles. From the proposed location to most of North Miami, the travel distance is 14.5 miles. The proposed location is approximately 2.4 miles east of the former Potamkin, which would place it further away from its nearest competing Mazda dealership, Ocean. The existing road network provides consumers access to one or more Mazda dealers via major arterial roadways: North Miami is accessed from Interstate 95 or the Florida Turnpike, major north/south arteries; Ocean is accessed from the Dolphin Expressway, a major east/west artery, the Palmetto Expressway, a major north/south artery, or the Florida Turnpike; and SMM is located on U.S. 1, a major north/south artery, and is also accessible from the Florida Turnpike. Drive times between the existing Mazda dealerships vary dramatically based upon traffic congestion, which can be notoriously heavy. Consumers would have convenient access to the proposed Brickell Mazda location from U.S. 1, the Dolphin Expressway, and Interstate 95. The Proposed Point is on Southwest Eighth Street (Tamiami Trail/U.S. 41), which is an east-west three-lane main artery leading into downtown Miami. Brickell Mazda will provide a shuttle service for Mazda customers who work in downtown Miami. Downtown Miami workers and residents would have the greatest enhanced accessibility to Mazda sales and service due to the close proximity of the proposed location to downtown. On average, Mazda consumers in the Miami Comm/Terr have to travel 10.2 miles to a Mazda dealer, which is the highest distance of all brands in the Miami Comm/Terr, placing the Mazda brand at a significant disadvantage to other competitors offering more convenience in terms of travel distance. The establishment of Brickell Mazda would reduce the average distance to the nearest Mazda dealer in the Miami Comm/Terr from 10.2 miles to five miles, which would place Mazda in the middle of its competitors in terms of customer convenience based on travel distance. The proposed additional dealer will benefit consumers by providing an additional choice for Mazda sales and service at a new facility owned and operated by an experienced and successful automobile dealer and shortening the travel distance for some consumers in the Comm/Terr. More specifically, the addition of a new Mazda dealer at the proposed Brickell location will make sales and service of Mazdas significantly more accessible to the growing residential population of downtown Miami. Impact On Existing Dealers The analysis of the potential impact on existing dealers begins with an assessment of the opportunity for Mazda sales in the Miami Comm/Terr in addition to the sales occurring historically. These are additional sales available to existing dealers who compete aggressively that will offset any potential impact resulting from Brickell Mazda’s establishment. These additional sales come from two sources–-sales by competitors (conquest sales) and Mazda sales by Mazda dealers outside the Miami Comm/Terr into the Miami Comm/Terr (in-sell). Based on 2012 registration data, there were 1,729 additional conquest sales available if the Miami Comm/Terr achieves the Broward average.3/ A significant number of these conquest sales are located in and around the central part of the Miami Comm/Terr where Brickell Mazda is proposed. Based on 2012 registration data, there are 775 additional in-sell registrations available to Mazda dealers in the Miami Comm/Terr. The total of these conquest sales and in-sell sales is 2,504 units, which is a significant missed opportunity. Brickell Mazda’s potential sales of 647 within 20 miles, and 56 beyond 20 miles, total 703 units, leaving an additional 1,801 units available to the existing dealers. Another way to measure impact is to examine the change in the existing dealers’ expected sales based on the changes to their SOAs that would occur if Brickell Mazda is established. The changes in the SOAs reflect changes in each dealer’s geographic advantage. All of the existing dealers have significant sales opportunities within their assigned SOAs, and should suffer no negative impact after Brickell Mazda opens. SMM had the opportunity to capture 84 additional sales just as a result of in-sells made by North Miami alone in 2012, which are more sales than SMM made into the open point SOA the same year. SMM argues that the addition of another Mazda dealer in the Comm/Terr will necessarily result in each of the existing dealers receiving a lesser share of total sales. However, this argumemt was not supported by credible testimony. To the contrary, a review of the data regarding the addition of a new Mazda dealership in other markets demonstrates that there is a likely benefit to existing dealers. For example, after the addition of a Mazda dealer in Wesley Chapel (Tampa area), registration effectiveness increased 65.5%, indicating that the result was an effective, aggressively-competing dealer network. The sales performance of the existing dealers also improved, indicating no negative impact on sales relative to their historical sales. After the addition of a Mazda dealer in Jacksonville, Mazda’s market share increased 29% because of conquest sales, and in-sell sales decreased. After the addition of a Mazda dealer in Royal Palm Beach, following the closing of two Mazda dealers, and at a very difficult time for the automotive industry in 2008 and 2009, Mazda’s market penetration was better than in the state of Florida as a whole, and the SOA with a Mazda dealer had improved sales performance. These case studies indicate that the addition of a Mazda dealer, where there is inadequate performance, results in increased Mazda market penetration due to increased customer satisfaction, and that existing dealers are not negatively impacted because of the new dealer. Financial Impact on South Motors4/ SMM is wholly owned by South Motors Company of Dade County, which also owns and operates several other automobile dealerships in South Florida. Since commencing operations in 2007, SMM has continually operated at a loss, averaging approximately $750,000 in losses each year since 2008.5/ SMM executives have made no decision and have not even discussed whether to close the dealership if losses continue. Ricardo Lujan, Vice President of Finance for South Motors Company of Dade County, testified that SMM can “continue to increase our revenues and get to profitability,” but he will recommend that SMM close if Brickell Mazda is established because new vehicle sales will be split among four dealers instead of three. This erroneously assumes that the number of new vehicle sales is a “fixed pie,” which ignores conquest sales and in-sell sales available in the Miami Comm/Terr to dealers willing to compete for automotive sales and service, as well as future growth in the market. Mr. Roesner acknowledged that a new Mazda dealer in a market can generate new excitement in the Mazda brand and cause people who would not otherwise do so to buy new Mazda vehicles, resulting in increased conquest sales. The mere existence of Brickell Mazda with new Mazda signage may cause people to take note of the brand. The increase in sales has the potential to lead to increased service business for existing Mazda dealers. Mr. Roesner estimates that based on 2012 sales volume, SMM would lose between 67 and 135 new Mazda sales if Brickell Mazda is established. This calculation ignores the fact that SMM failed to capture 233 units sold to customers in SMM’s SOA by other Mazda dealers. In short, Mr. Roesner’s financial analysis merely states that SMM will lose more business with the addition of Brickell Mazda without considering the opportunity that currently exists for SMM and all Mazda dealers in the Miami Comm/Terr. Further, if SMM operates according to Mr. Roesner’s financial analysis, SMM will never be profitable--even if Brickell Mazda is never established. Mr. Roesner’s financial analysis fails to include any calculation of the new car sales volume necessary for SMM to break even. Using Mr. Roesner’s calculations and assumptions, Mr. Farhat analyzed SMM’s break-even point and determined SMM would have to more than double its annual sales in its new car department, and also double its volume in every other department to break-even, regardless of whether Brickell Mazda is established. In short, if Mr. Roesner’s financial/sales analysis is to be believed, SMM will not be able to grow sales and will never be profitable even if Brickell Mazda does not open. SMM’s financial problems and inability to make a profit result from poor dealership operations, not the opening of Brickell Mazda, and only SMM can address and rectify its own operational issues. There is no competent, substantial evidence in the record that Brickell Mazda’s opening will cause SMM to go out of business. Impact on MMA With the addition of Brickell Mazda, MMA will have greater market penetration (as discussed in greater detail below) and a more competitive dealer network in the Miami Comm/Terr, resulting in increased sales of MMA vehicles, and more satisfied Mazda customers, which will enhance the Mazda reputation to the benefit of MMA and its dealers. Investment of Existing Dealers SMM has invested $6.6 million in its dealership operations, and its parent company, South Motor Company of Dade County, has invested $6.8 million in the facilities from which SMM operates. The undisputed testimony establishes that the other existing Mazda dealers in the Comm/Terr have made similar facility investments. SMM’s investment does not include the dealership property, which is owned by SMM’s parent company, South Motors Company of Dade County. SMM’s investment in its Mazda dealership is substantially less than what it would be in the ordinary course of business, because it does not own the dealership property and has entered into an interest-only, below-market-rate lease with South Motors Company of Dade County. SMM’s investment is also less because many of its ordinary business expenses are paid by South Motors Company of Dade County. Reasonably Expected Market Penetration Market penetration, or registration performance, is a measure of the share of the retail automobile market which a line-make achieves during a defined period of time in a particular geographic area. In the automobile industry, market penetration is calculated by dividing the number of new vehicles of a line-make that are registered by the number of all new vehicles of competing line-makes that are registered. Thus, for instance, the calculation of the 2013 Mazda market penetration in the Comm/Terr would be: Total Number of New Mazda Registrations in the Comm/Terr during 2013 divided by the Total Number of New Competitive Line-Make Registrations in the Comm/Terr during 2013. Appropriate Benchmark Identifying an Appropriate Comparison Area In determining whether Mazda is currently achieving a reasonably expected level of market penetration in the Comm/Terr, a standard or benchmark for market penetration must first be established against which Mazda’s performance is compared. That benchmark must be reasonable, and should be neither too high nor too low. In determining a standard to measure performance in the Miami Comm/Terr, market penetration in another geographic area (“comparison area”) is assessed in order to arrive at a level or standard of performance that can reasonably be achieved in the Miami Comm/Terr. The comparison area must be independent of the Miami Comm/Terr, so that the Miami Comm/Terr is not being measured against itself. A smaller comparison area close to the Miami Comm/Terr is superior to a larger comparison area that is farther away because the larger area will include dealers in diverse areas whose performance could be affected by market occurrences such as buy-sells, relocations, and facility changes, and because the larger area will include areas that have no Mazda dealer. For a larger comparison area, such as the U.S. or Florida, it is appropriate to consider only the areas that have a Mazda dealer, known as U.S. Represented SOAs or Florida Represented SOAs. The combined SOAs of the three Mazda dealers in Broward County, Florida--Gunther and the two Lou Bachrodt dealerships–- comprise a smaller comparison area adjacent to the Miami Comm/Terr in the same state and climate. The larger comparison areas suggested by SMM, of U.S. Represented and Florida Represented, are not appropriate benchmarks to determine adequate representation in the Miami Comm/Terr because over the period of 2010 through July 2013, the Broward SOAs consistently achieve higher market penetrations and demonstrate what an adequately represented market can achieve. MMA’s use of regional averages or other comparison areas in standardized reports to dealers is not a reason to use Region as the comparison area in this case. Instead, a more thorough analysis of the South Florida market is appropriate in determining adequacy of performance, as required under section 320.642. Using the Broward SOAs as the comparison area (Broward average) results in the dealers in the Miami Comm/Terr being compared to dealers in Broward County, and not to dealers in distant and diverse parts of the U.S. or Florida. The dealers in the Broward SOAs are in the same advertising market as the dealers in the Miami Comm/Terr; were in the same dealer advertising group with the Miami Comm/Terr dealers until March 2012; and, like the Miami Comm/Terr dealers, had no dealer advertising association after March 2012. Another key factor weighing in favor of using the Broward SOAs as the comparison area is the similar Hispanic population to the Miami Comm/Terr. While not as high as the Miami Comm/Terr, the Broward SOAs have high percentages of Hispanic population compared to most other SOAs in Florida. Segmentation Analysis The second step in determining the benchmark is segmentation analysis, the process by which any differences in product popularity caused by consumer purchase preferences between the Miami Comm/Terr and the benchmark area are addressed. This analysis accounts for any differences between the Miami Comm/Terr and the Broward SOAs for consumers purchasing certain types of vehicles, such as trucks or SUVs, and not others. MMA’s product lines are broken down into various segments, such as subcompact, mid-size, and SUV, and then Mazda registrations in those segments are compared to industry registrations in those same segments. By dividing the number of Mazda registrations in each segment by the number of industry registrations in each segment, the actual penetration rate in each segment in the Miami Comm/Terr is obtained. The overall actual Mazda penetration rate in 2012 in the Miami Comm/Terr for all segments was 3.43%. This is computed by dividing the total actual Mazda registrations within the Mazda Comm/Terr by the actual industry registrations. These same computations using the actual Mazda and industry registrations in the Broward SOAs yield the actual penetration rate in each segment for 2012 in the Broward SOAs. The number of expected registrations in 2012 in the Miami Comm/Terr in each segment is computed by multiplying each segment’s actual penetration rate in the Broward SOAs by the number of industry registrations in that same segment in the Miami Comm/Terr. The overall expected Mazda penetration rate in 2012 for all segments in the Miami Comm/Terr is 5.29%, computed by dividing the number of expected registrations of 4,320 (Mazda registrations in Miami Comm/Terr if Mazda captured what the Broward SOAs dealers captured) by 81,721 (total competitive registrations in the Comm/Terr). Mazda’s expected registrations, or market penetration, for other years can be computed by multiplying the expected penetration rate for that time period by the number of actual industry registrations in the Miami Comm/Terr for that time period. For example, applying the 2012 Broward average expected penetration rate of 5.29%, Mazda’s expected registrations in the Miami Comm/Terr were 4,320 registrations, while its actual registrations were only 2,800. Confirmation of the Benchmark as Reasonable The third step in determining the benchmark is to test the reasonableness of the benchmark by determining if it has been achieved. There are many areas in Southeast Florida, including areas in Miami-Dade, Broward, and Palm Beach counties, that achieve or exceed the Broward average of 5.29%. The Broward average of 5.29% has also been consistently achieved or exceeded in various markets in Florida over a period of time from 2010 to July 2013. Although the Broward average includes Gunther, one of MMA’s highest selling dealers, this is not a valid reason to reject it as the benchmark because the Broward average of 5.29% is achieved in numerous areas in Southeast Florida, and over time in various other markets in Florida. Mr. Roesner proposed alternative benchmarks of U.S., comprised of the entire U.S.; the Region, comprised of several states in addition to Florida; and the entire state of Florida. Mr. Roesner’s Florida benchmark includes many areas with no Mazda dealer representation. Mr. Roesner’s U.S., Region, and Florida benchmarks are not appropriate benchmarks because those areas are too diverse or different from the Miami Comm/Terr to permit a meaningful comparison. Based on a consideration of all relevant evidence, the appropriate comparison area is the Broward SOAs, and the segment- adjusted Broward average of 5.29% is a reasonably expected market penetration level for adequate representation in the Miami Comm/Terr. Performance of Dealer Network in Miami Comm/Terr Compared to Reasonably Expected Market Penetration Mazda’s performance in the Miami Comm/Terr (actual market penetration) is measured relative to the segment-adjusted Broward average (expected market penetration) to determine if the dealer network in the Miami Comm/Terr is providing adequate representation. For the years 2010 through July 2013, the Miami Comm/Terr performed well below the reasonably expected Broward average performance. Specifically, in 2010, the Miami Comm/Terr performed at 68.7% of the reasonably expected Broward average, with a loss of 1,604 new vehicle registrations; in 2011, at 67.4% of reasonably expected Broward average and 1,535 lost registrations; in 2012, at 64.8% of reasonably expected Broward average and 1,520 lost registrations; and calendar year to date (CYTD) July 2013, at 65.8% of reasonably expected Broward average and 1,659 lost registrations (on an annualized basis). The Miami Comm/Terr’s performance in the 60th to 70th percentile range is not a low “C” average; rather it is considered very low achievement because the Broward average is considered to be reasonably expected, and not superlative, performance. In another words, 100% is merely average and to be expected. The Miami Comm/Terr is performing well below a reasonable level of performance, and its performance has been consistently below average-–65% of Broward SOAs. Mr. Farhat credibly testified as to the import of this performance-- consumers are saying they’re dissatisfied with the Mazda effort, the Mazda Network. Consumers in Broward County are buying at a certain rate. Consumers in this area [the Miami Comm/Terr] are buying at 50 or 60 percent of that rate. So consumers are telling Mazda they’re not happy. This is not an adequately represented [market]-–there’s not enough competition. There’s not enough convenience. And it’s displayed in ultimately, you know, their purchases. They put their money where their mouth is, and it’s not going to Mazda. The fact that the Miami Comm/Terr’s performance has been consistently below the Broward average indicates inadequate performance by the Mazda dealer network. This below-average performance is evident throughout the Miami Comm/Terr in all four of the SOAs–-Ocean, SMM, North Miami, and the open point. North Miami’s performance (although still below the Broward average) is better than the other SOAs’ performance and indicates that a stronger performing dealer can do better, so that improved performance is available with a stronger dealer effort. The Miami Comm/Terr’s performance is still inadequate when compared to the more conservative benchmark, suggested by SMM, of the Florida Represented average. The Miami Comm/Terr’s performance declined in each year from 2010 through CYTD July 2013 as measured by the Florida Represented average, indicating inadequate performance and consumer dissatisfaction with the level of Mazda dealership competition. Specifically, in 2010, the Miami Comm/Terr performed at 95.2% of Florida Represented average, with a loss of 179 new vehicle registrations; in 2011, at 94.3% of Florida Represented average, with a loss of 191 registrations; in 2012, at 84.3% of Florida Represented average, with a loss of 522 registrations; and CYTD July 2013 (MMA gave notice of establishing Brickell Mazda in August 2013), at 80.8% of Florida Represented average, with a loss of 759 registrations (on an annualized basis). This same below average and declining performance measured against the Florida Represented average is evident in the Ocean, SMM, and open point SOAs. North Miami’s performance is better as measured against the Florida Represented average, which indicates the very conservative nature of the Florida Represented as a benchmark. However, even North Miami’s performance is declining under the Florida Represented average, dropping over 20% from 2010 to CYTD July 2013. As Mr. Farhat testified, under either the Broward or Florida Represented benchmarks, his conclusions are the same-- So the pattern, I think, is similar. The conclusion is, ultimately, relative to the reasonable benchmark, which is the Broward County SOAs, the Miami Comm/Terr, and in particular, areas south of the Lehman [North Miami] SOA are inadequately represented. There is very poor performance. There is significant incremental opportunity. And even to the more conservative Florida benchmark, you have the same conclusion: Areas below or South of Lehman are not adequately represented by the existing Mazda dealer network. Based on a consideration of all relevant evidence, it is determined that there is an inadequate level of representation of Mazda in the Miami Comm/Terr. Consideration of All Factors Which May Affect Market Penetration The “market penetration” factor requires not only a determination of the appropriate comparison and analysis of how the existing dealers are penetrating their market, but requires “consideration of all factors which may affect said penetration, including, but not limited to, demographic factors such as age, income, education, size class preference, product popularity, retail lease transactions, or other factors affecting sales to consumers of the community or territory.” § 320.642(2)(b)3., Fla. Stat. In addition to the segmentation analysis discussed above, which takes into consideration vehicle size and class preference, both MMA and SMM presented extensive evidence regarding the potential effect of the Miami Comm/Terr Hispanic population, and the lack of Spanish-language advertising by MMA and the Miami Comm/Terr Mazda dealer group. SMM argues that there are unique demographic factors in the Comm/Terr which explain why Mazda’s market penetration dropped from 2011 to 2012 and through July 2013. Further, SMM argues that MMA’s failure to conduct advertising in Spanish, in the Miami Comm/Terr, resulted in Mazda’s declining market penetration. These arguments were not supported by credible evidence. Miami-Dade County makes up the vast majority of the Comm/Terr. The population of Miami-Dade County is 67% Hispanic. By contrast, the population of Broward County is just 27% Hispanic. Within Miami-Dade County more than 50% of the Hispanic population is Spanish dominant, meaning that they speak mostly or only Spanish. Spanish dominance is high across Hispanic nationalities and socio-economic levels. A vast majority of the Hispanic population in Miami- Dade County are Latin Americans who immigrated to this Country. The population of Miami-Dade County is such that Spanish speakers immigrating to the county are not required to assimilate by learning English. Even those Spanish speakers who also speak English are able to live their daily lives without communicating in English. A large portion of the Miami-Dade County population consumes Spanish media, in the form of El Nuevo Herald (the Spanish language version of The Miami Herald); the numerous Spanish language radio stations; and the four Spanish broadcast television (TV) stations. Spanish broadcast TV stations are the most popular in Miami-Dade County. The two top-rated six o’clock TV newscasts in Miami-Dade County are on Spanish stations. Among broadcast TV viewers, greater than 50% watch Spanish TV stations between the hours of 6:00 p.m. and 11:00 p.m. Because of the high concentration of Hispanics in Miami-Dade County, along with the high percentage of Hispanics that are Spanish dominant and the popularity of Spanish media, Spanish advertising is very common throughout Miami-Dade County. There are three categories or “tiers” of advertising in the automotive industry–-Tier 1, Tier 2, and Tier 3. Tier 1 advertising is designed to promote the Mazda brand to a national audience; for example, a Mazda automobile advertisement during a sporting event. MMA pays for all Tier 1 advertising. Tier 2 advertising is designed to advertise the Mazda brand in connection with specific offers available to potential customers in a market area, and usually includes some reference to the local dealers. Dealer groups, known as Dealer Marketing Groups (DMGs), purchase Tier 2 advertising with funds derived from two sources: 1) member dealers contribute on a per-car basis for all cars purchased from MMA (currently 1.5% of base MSRP)6/; and 2) MMA contributes an additional amount (currently $.50 for each dollar contributed by dealers). DMGs are formed when dealers in the same media market area, known as a Dominant Market Area (DMA), voluntarily join together to pool their advertising dollars to fund advertising in their DMA. South Motors, Ocean, and North Miami are not part of a DMG. If a dealer is not a member of a DMG, the per-car contribution that would otherwise go to the DMG is kept by the dealer and can be used for advertising. DMGs work with MMA to make advertising buys in the local media. MMA’s advertising agency will propose advertising content and buys, and the DMGs decide how and on what ads to spend their money. Prior to DMGs, Mazda dealers joined Tier 2 marketing groups known as voluntary or “Vol” groups, which were similar to DMGs, and used dealer contributions and matching funds from MMA to engage in Tier 2 advertising. The Vol groups disbanded in 2012 when the DMG program began. Not all Mazda dealers are in DMGs. A single point market (only one Mazda dealer) does not have a DMG because with no pooling of funds, the dealer can make its own decision about advertising content and buys. In multi-point markets (more than one Mazda dealer), if the dealers voluntarily agree to form a DMG, MMA will support them. If dealers in a market decide not to form a DMG, MMA does not attempt to force them. If MMA were to provide funds for Tier 2 advertising in markets where there is no DMG, it would discourage dealers from participating in DMGs and contributing to the cost. MMA has 18 multi-point markets in the Southeast Region, and ten do not have DMGs. The Mazda dealers in Nashville and Winston-Salem formed DMGs and later disbanded them. MMA currently has six multi-point markets in Florida with DMGs and two multi-point markets without DMGs. There are two DMGs in Florida with some, but not all, dealers participating-–West Palm and Orlando. In Palm Beach County, there are two high-volume dealers in the southernmost part of the county who agreed to form a DMG because the dealers to the north do not compete with them. In Orlando, there is one dealer in Ocala who is on the fringe of the DMG and does not strongly compete with the five Orlando dealers in the DMG. MMA prefers not to have DMGs with less than all dealers participating because of the “free rider” problem, where the non-participating dealers may benefit from the advertising paid for by the participating dealers. In both West Palm and Orlando, all of the dealers are aware of and have consented to the formation of the DMGs without the participation of all dealers in these DMAs. Tier 3 advertising is designed to persuade individual local consumers to do business with a particular dealership; for example, advertising of the dealership in local media, the internet, or on billboards. Each individual dealership pays for its Tier 3 advertising. MMA reimburses a portion of each dealership’s Tier 3 advertising costs by crediting the dealer’s account with amounts known as Co-Op funds. In addition to Co-Op funds, if a dealer is not a member of a DMG, the per-car contribution that would have gone to the DMG is returned to the dealer and can be used for additional Tier 3 advertising. In addition to providing funds for the three advertising tiers, MMA periodically has available regional marketing funds used for additional regional advertising or events, or to assist dealers with grassroots events or additional local advertising. MMA ran Tier 1 advertising in English during all times relevant to this proceeding. Tier 1 advertising provides the same coverage in all markets for all dealers. Beginning in 2013, MMA increased its Tier 1 advertising to be “always on” for all dealers 52 weeks a year. Since October 2010, the majority of Mazda Hispanic advertising has been at the Tier 2 level by the Vol groups or DMGs. MMA’s decision to shift Hispanic advertising to the Tier 2 level is consistent with its overall marketing strategy to put greater emphasis on local versus national media. MMA’s marketing strategy allows DMGs to focus on Hispanic advertising in markets where there is a large population of Spanish-dominant speaking consumers. DMGs vote and determine whether to engage in Hispanic advertising. DMGs in some markets have elected to engage in Hispanic advertising. Currently, DMGs engage in Hispanic advertising in the following markets–-Tampa, Orlando, West Palm, Los Angeles, Sacramento, San Francisco, Houston, Dallas, and the lower Rio Grande Valley. In 2013, MMA investigated the feasibility of a Tier 1 national Hispanic advertising effort, but concluded that Hispanic advertising was best done at the Tier 2 and 3 levels. MMA is not the only manufacturer that does not engage in Hispanic advertising at the Tier 1 level–-Kia and Hyundai do not conduct Tier 1 Hispanic advertising. In addition, at various times from 2010 to 2013, Hyundai, Buick, Mitsubishi, Volvo, GMC, Smart, Subaru, and Mini have not engaged in Tier 1 Hispanic advertising on local Spanish TV stations in the Miami- Dade/Broward market. MMA decided not to do Tier 1 Hispanic advertising because over two-thirds of the national Hispanic audience either speak English fluently or speak both English and Spanish. Miami-Dade and Broward counties comprise one market for advertising purposes (Miami-Dade/Broward Market). MMA’s Tier 1 advertising reaches a national audience (which would include the Miami-Dade/Broward Market) through its national TV, digital, and print categories. Through 2012, MMA engaged in Tier 1 English and Hispanic advertising in the Miami-Dade/Broward market, including Tier 1 Hispanic advertising on local Spanish TV stations. In 2013, MMA continued its Tier 1 English advertising in the Miami-Dade/Broward Market and also conducted a small amount ($5,663.00) of Tier 1 Hispanic advertising on local Spanish TV stations. Garage Team Mazda is MMA’s contracted advertising agency and tracks MMA’s media planning and spending. Garage Team Mazda prepares summaries of MMA spending on Tier 1 and Tier 2 advertising. MMA and Garage Team Mazda compute the actual advertising dollars spent in the Miami-Dade/Broward Market by taking the percentage of U.S. households defined by Nielsen to be in the Miami-Dade/Broward Market (1.4%) and applying that percentage to the total national spending. For the fiscal year ending March 2010, MMA spent $30,407,616.00 on Tier 1 TV advertising, of which 1.4%, or $425,706.00 was spent in the Miami-Dade/Broward market. For the fiscal year ending March 2011, MMA spent $35,715,344.00 on Tier 1 TV advertising, of which 1.4%, or $500,014.00 was spent in the Miami-Dade/Broward Market. For the fiscal year ending March 2012, MMA spent $80,401,232.00 on Tier 1 TV advertising, of which 1.4%, or $1,125,617.00 was spent in the Miami-Dade/Broward Market. For the fiscal year ending March 2013, MMA spent $87,530,735.00 on Tier 1 TV advertising, of which 1.4%, or $1,225,430.00 was spent in the Miami-Dade/Broward Market. For the fiscal year ending March 2014, MMA spent $108,065,318.00 on Tier 1 TV advertising, of which 1.4%, or $1,512,914.00 was spent in the Miami-Dade/Broward Market. These sums represent only Tier 1 advertising on national TV, and do not include other Tier 1 advertising such as national radio, print, spot TV, digital, etc. Tony Garcia, SMM’s advertising expert, testified that MMA’s spending on general and Hispanic advertising in Miami-Dade and Broward counties has been decreasing, and as a result Mazda “gets lost in the shuffle.” However, Mr. Garcia based his conclusions on advertising spending figures that include only a limited number of local TV stations; and, even for those stations, the figures do not include national broadcast advertising. As a result, Mr. Garcia does not know what additional Tier 1 advertising each manufacturer is doing. The Tier 1 spending in Mr. Garcia’s report could reflect as little as 5% or more than 75% of Tier 1 spending in the Miami-Dade/Broward Market; and, thus, Mr. Garcia did not know the true percent of spending for Tier 1 advertising of each brand. With regard to Tier 2 spending, Mr. Garcia did not know whether the data he relied on included all Tier 2 spending by dealer advertising associations or whether the data correctly segregated Tier 1 and Tier 2 spending. Mr. Garcia also testified that MMA’s Mazda advertising is not reaching an important segment of the market, specifically Hispanics. However, Mr. Garcia does not know what portion of the Hispanic population that speaks “mostly Spanish” is not reached by English language advertising. Mr. Garcia also does not know how likely Hispanics are to purchase new motor vehicles, but admits that is something a new car dealer would want to know before spending money on Hispanic advertising. Roughly 12.5% of the Miami-Dade population speak only Spanish. Before the DMG program started in 2012, all Mazda dealers in Miami-Dade and Broward counties belonged to the Vol group and engaged in Tier 2 English and Hispanic advertising. The Miami-Dade/Broward Mazda Vol group did not agree on Hispanic advertising and compromised on spending a very small amount on Hispanic advertising. The Miami-Dade/Broward Mazda Vol group disbanded at the start of the DMG program. Hispanic advertising placed by the Vol group continued to run in the Miami-Dade/Broward Market until February or March 2012. After the Vol group disbanded, the dealers in the Miami-Dade/Broward Market did not agree to form a DMG because some dealers were not interested. Mazda dealers are free to engage in Hispanic advertising at the Tier 3 level and, in fact, can use the funds that would otherwise go to the DMG, along with Co-Op funds which are reimbursed by MMA. MMA cannot force its dealers to join a DMG. Less than all of the dealers can form a DMG, but this was not proposed by SMM, Ocean, or North Miami. Mazda dealers can also request reimbursement for advertising, including Hispanic advertising, from the Region’s yearly marketing funds. In January 2013, SMM requested regional marketing funds to reimburse expenses of a “grass roots event.” The request was not approved due to a lack of funds left in the regional budget for the fiscal year ending March 31, 2013. The open point SOA is 63.79% Hispanic, the second- highest Hispanic density of all the Mazda SOAs in Florida. In 2012, SMM sold 73 new Mazda vehicles to customers in the open point SOA, while North Miami sold 204. The disparity in the ability of these two dealers to penetrate the open point SOA-- under the same conditions of no DMG and no Hispanic Tier 2 advertising--belies the contention that Mazda’s performance in the open point SOA is affected by a lack of Hispanic advertising. If the lack of Tier 1 and/or Tier 2 Spanish language advertising is hampering SMM’s ability to sell to customers in the open point SOA, North Miami would not be able to sell almost three times as many vehicles to customers in the same highly Hispanic SOA. The disparity points to differences in individual dealer operations, not a lack of Hispanic advertising. SMM also contends that the cessation of Tier 2 advertising, in any language, in March 2012 is responsible for Mazda’s declining market penetration in the Miami Comm/Terr. However, as noted above, the performance of all the SOAs in Broward and Dade counties had already peaked in 2010 and had started to decline in 2011. After the Miami-Dade and Broward dealers’ DMG ceased, the per-car contributions by the dealers were returned by Mazda to the dealers, which funds may be spent on advertising or other purposes. Based on a consideration of all relevant evidence, it is determined that the economic and marketing conditions in the Miami Comm/Terr are not likely causes of the inadequate representation and, in fact, support the need for the establishment of Brickell Mazda. Based on a consideration of all relevant evidence, it is determined that the Hispanic population in the Miami Comm/Terr and the end of Tier 2 Hispanic and/or English advertising in 2012 are not likely causes of the inadequate representation. Action by MMA Denying Existing Dealers Opportunity for Reasonable Growth and Market Expansion There is no evidence establishing that MMA has taken any action to deny existing dealers an opportunity for reasonable growth and market expansion. Attempts by MMA to Coerce Existing Dealers to Consent to the Proposed Additional Dealer There is no evidence establishing that MMA attempted to coerce existing dealers to consent to the proposed additional dealer. Distance, Travel Time, Traffic Patterns, and Accessibility Between Existing Dealers and the Location of the Proposed Additional Dealer As discussed in greater detail above, SMM, Ocean, North Miami, and the proposed Brickell Mazda location are all accessible by major north/south and east/west thoroughfares. Travel times between existing dealers and the proposed location will vary significantly depending upon traffic conditions. The drive time between the Proposed Point and SMM is approximately 20 to 25 minutes but will take longer if there is congested traffic. The establishment of Brickell Mazda will reduce the average distance to the nearest Mazda dealer in the Miami Comm/Terr in half and eliminate any significant drive time for those who live and work in the immediate downtown Miami area. Benefits to Consumers Not Likely to be Obtained by Geographic, Demographic, or Other Expected Changes As discussed above, it is likely that consumers will benefit from Brickell Mazda’s opening, through greater convenience in accessing Mazda sales and service, and increased competition among competitive dealerships and Mazda dealers, resulting in lower prices and improved facilities with better customer care and service. Whether the Protesting Dealer is in Compliance with Its Dealer Agreement SMM is in compliance with its Mazda franchise agreement. Adequacy of Interbrand and Intrabrand Competition and Adequacy of Convenient Consumer Care, including Adequacy of Sales and Service Facilities The presence of interbrand competition (Mazda dealers vs. other brand dealers) and intrabrand competition (Mazda dealers vs. other Mazda dealers) in the Miami Comm/Terr is also assessed as a factor influencing consumer behavior. With respect to intrabrand competition, existing dealers strenuously compete for new Mazda vehicle sales and service business throughout the Comm/Terr. Each of the three existing Mazda dealers in the Comm/Terr sells into the SOAs in which the other dealers are located, and into the open point SOA in which the proposed additional dealer would be located. However, Ocean and SMM consistently lagged behind North Miami in terms of market performance. With respect to interbrand competition, every line- make that Mazda competes with is represented by at least one dealer in the Comm/Terr (all line-makes except for Smart have more than one dealer). The evidence is that there is inadequate interbrand competition because consumers are not buying Mazda vehicles at the rate projected by the Broward average benchmark, thus indicating their dissatisfaction with the Mazda dealer network in the Miami Comm/Terr. Whether the Proposed Additional Dealer is Justified Based on Economic and Marketing Conditions The Miami Comm/Terr, which is composed of the four SOAs of North Miami, Ocean, SMM, and the open point, constitutes a big market, by any measure, with a 2012 population of roughly 3,080,000. The four SOAs all have significant concentrations of populations, with the open point SOA having the greatest density of population. Mr. Farhat testified that this indicates a “hole for the Mazda network” where Brickell is proposed, and where there is no current convenient Mazda dealership. The same pattern is true for households in the Miami Comm/Terr, with high household density and past and projected growth both throughout the area and in the open point SOA. A general pattern of population, household, and employment growth, while not a direct predictor of new vehicle sales, does indicate more new vehicle sales over time. Based on the overall population and number of households, the Miami Comm/Terr is a very large, strong, and growing market in terms of new vehicle sales opportunities. Employment in Miami-Dade County has also grown steadily since the bottom of the recent economic recession in 2009, another positive indicator for new vehicle sales. Households with median incomes between $25,000 and $85,000 (potential Mazda purchasers based on buyer reports), are found throughout the Miami Comm/Terr, a further indicator of new Mazda vehicle sales opportunities. Mr. Farhat assessed the number of Mazda dealerships relative to competitor dealerships to calculate Mazda’s “shelf space,” or share of franchise. Mr. Farhat calculated that Mazda’s share of franchises in the Miami Comm/Terr of 3.1% is low compared to 4.9% in the Broward SOAs and 4.7% in the Florida Represented SOAs, which has caused Miami Comm/Terr consumers to buy other brands and not Mazda. Mazda has three dealers in the Miami Comm/Terr. Only four other competitive brands (Fiat, Subaru, Mini, and Smart) have three or fewer dealers. Fourteen other competitive brands have four or more dealers. MMA wants to be located where its competitors have dealers. Using regression analysis, Mr. Farhat testified to the direct correlation between shelf space and higher market share, and concluded that the Miami Comm/Terr needs “4.8 Mazda dealers, or, essentially, more than four, which is five” dealers in order to be able to achieve the Broward average. Using the more conservative Florida Represented standard, Mazda would still need more than four dealers to achieve the same shelf space as its competitors, indicating that the Miami Comm/Terr is too big for just three Mazda dealers. Based on a consideration of all relevant evidence, it is determined that the economic and marketing conditions in the Miami Comm/Terr support the need for the establishment of Brickell Mazda. Volume of Registrations and Service Business Transacted by Existing Dealers As discussed above, the existing dealers are not meeting the Broward average or the Florida Represented benchmark for registrations. Registrations have been declining in the Miami Comm/Terr for the last three years. With only three Mazda dealers, the Miami Comm/Terr currently provides the greatest sales opportunity per dealer among all Florida markets. If Brickell Mazda is added, the Miami Comm/Terr will have four Mazda dealers and will still present substantial opportunities for sales, ranking as the second largest opportunity per dealer just behind Orlando. The same is true with respect to expected service opportunities as measured by units in operation per dealer. With three dealers, the Miami Comm/Terr currently provides the largest service opportunity per dealer among all Florida markets. If Brickell Mazda is added, the Miami Comm/Terr will still be a very large service market, ranking fourth in opportunity per dealer behind Orlando.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: A final order be entered by the Department of Highway Safety and Motor Vehicles granting the application to establish Miami Automotive Retail, Inc., d/b/a Brickell Mazda, as a dealer for the sale and service of Mazda vehicles, with sales to be located at 618 Southwest Eighth Street, Miami, Miami-Dade County, Florida 33130, and service to be located at 665 Southwest Eighth Street, Miami, Miami-Dade County, Florida 33130. DONE AND ENTERED this 1st day of August, 2014, in Tallahassee, Leon County, Florida. S MARY LI CREASY 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 1st day of August, 2014.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File and Relinquishing Jurisdiction by Jessica E. Varn, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s Notice Of Withdrawal of Proposed Dealer Agreement from Consideration by Respondents and Motion to Dismiss as Moot, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File and Relinquishing Jurisdiction as its Final Order in this matter. Accordingly, it is hereby ORDERED that this case is CLOSED. DONE AND ORDERED this AY day of May, 2013, in Tallahassee, Leon County, Florida. Bureau of Issuance Oversight Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A338 Tallahassee, Florida 32399 Filed with the Clerk of the Division of Motorist Services this 4 day of May, 2013. 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. JB/jdc Copies furnished: Dean Bunch, Esquire Nelson, Mullins, Riley and Scarborough, LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 dean.bunch@nelsonmullins.com John W. Forehand, Esquire South Motors Automotive Group 16165 South Dixie Highway Miami, Florida 33157 john.forehand@southmotors.net David Seymour Leibowitz, Esquire Braman Management Association 2060 Biscayne Boulevard, 2"! Floor Miami, Florida 33137 davidl|@bramanmanagement.com Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 rsox@dealerlawyer.com Jessica E. Varn Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS BMW OF NORTH AMERICA, LLC, Petitioner, vs. SOUTH MOTOR COMPANY OF DADE COUNTY, d/b/a SOUTH MOTORS BMW, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. POMPANO IMPORTS, INC., Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. POMPANO IMPORTS, INC., Respondent. a a aU OOOO ee Oe eee Case No. Case No. Case No. 12-3385 12-3386 12-3387 BMW OF NORTH AMERICA, LLC, Petitioner, vs. Case No. 12-3389 SARASOTA AUTOMOTIVE MANAGEMENT, LLC, d/b/a BMW OF SARASOTA BERT SMITH OLDSMOBILE, INC., d/b/a BERT SMITH INTERNATIONAL CAPITAL EUROCARS, INC., d/b/a CAPITAL BMW IMPORT CITY, INC., d/b/a QUALITY BMW REEVES IMPORT MOTORCARS, INC., Respondents. BMW OF NORTH AMERICA, LLC, _ Petitioner, vs. Case No. 12-3390 BRAMAN MOTORS, INC., d/b/a BRAMAN BMW PALM BEACH IMPORTS, INC., d/b/a BRAMAN MOTORCARS, Respondents. ORDER CLOSING FILES AND RELINQUISHING JURISDICTION This case came before the undersigned on the Petitioner's Notice of Withdrawal of Proposed Dealer Agreement from Consideration by Respondents and Motion to Dismiss as Moot, filed January 29, 2013, and the undersigned being fully advised, it is, therefore, ORDERED that: 1. The final hearing scheduled for May 13 through 17, 2013, is canceled. 2. The files of the Division of Administrative Hearings are closed. Jurisdiction is relinquished to the Department of Highway Safety and Motor Vehicles. DONE AND ORDERED this llth day of February, 2013, in Tallahassee, Leon County, Florida. aw JESSICA E. VARN 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 11th day of February, 2013. COPIES FURNISHED: Jennifer Clark, Agency Clerk Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-430 2900 Apalachee Parkway, Mail Stop 61 Tallahassee, Florida 32399 John W. Forehand, Esquire South Motors Automotive Group 16165 South Dixie Highway Miami, Florida 33157 john. forehand@southmotors.net Dean Bunch, Esquire Nelson, Mullins, Riley, and Scarborough LLP Suite 202 3600 Maclay Boulevard, South Tallahassee, Florida 32312 dean.bunch@nelsonmullins.com David Seymour Leibowitz, Esquire Braman Management Association 2nd Floor 2060 Biscayne Boulevard Miami, Florida 33137 davidl@bramanmanagement.com Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 rsox@dealerlawyer.com STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS BMW OF NORTH AMERICA, LLC, Petitioner, v8. Case No. 12-3385 SOUTH MOTOR COMPANY OF DADE COUNTY, d/b/a SOUTH MOTORS BMW, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. Case No. 12-3386 POMPANO IMPORTS, INC., d/b/a Vista BMW of Pompano Beach, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. . Case No. 12-3387 POMPANO IMPORTS, INC., d/b/a Vista BMW of Coconut Creek, Respondent. Filed January 29, 2013 8:53 AM Division of Administrative Hearings BMW OF NORTH AMERICA, LLC, Petitioner, vs. SARASOTA AUTOMOTIVE MANAGEMENT, LLC, d/b/a BMW OF SARASOTA; BERT SMITH OLDSMOBILE, INC., d/b/a" BERT SMITH INTERNATIONAL; CAPITAL EUROCARS, INC., d/b/a CAPITAL BMW; IMPORT CITY, INC., d/b/a QUALITY BMW; and REEVES IMPORT MOTORCARS, INC., Respondents. BMW OF NORTH AMERICA, LLC, Petitioner, vs. BRAMAN MOTORS, INC., d/b/a BRAMAN BMV, and PALM BEACH IMPORTS, INC., d/b/a BRAMAN MOTORCARS, Respondents. Case No. 12-3389 Case No. 12-3390 NOTICE OF WITHDRAWAL OF PROPOSED DEALER AGREEMENT FROM CONSIDERATION BY RESPONDENTS AND MOTION TO DISMISS AS MOOT Comes now BMW of North America, LLC ("BMW NA") and notifies the Administrative Law Judge that it has withdrawn its notice to Respondents concerning the proposed dealer agreement which is the subject of this proceeding. withdrawal of notice, BMW NA moves to dismiss this matter as moot. motion, BMW NA states: As a result of this In support of its 1. On July 17, 2012, BMW NA notified Respondents of its intent to offer them the superseding/merged BMW Center Agreement for BMW passenger cars and BMW light trucks ("the Merged Agreement"), which was proposed to supersede, modify and replace the existing BMW Dealer Agreement for BMW passenger cars and the existing BMW SAV Center Agreement for BMW light trucks (collectively "the Existing Agreements"). 2. Respondents filed complaints with the Department of Highway Safety and Motor Vehicles ("DHSMV"), contesting the terms of the proposed Merged Agreement. These complaints were transferred by the DHSMV to the Division of Administrative Hearings. 3. On January 29, 2013, BMW NA, by letters attached hereto as Exhibit A, notified Respondents, as follows: BMW of North America, LLC ("BMW NA") hereby withdraws its notice, transmitted to you on July 17, 2012, with respect to the superseding/merged BMW Center Agreement (‘Agreement’) for BMW passenger cars and BMW light trucks. You and your successors may remain on your current forms of: dealer agreements: the BMW Dealer Agreement for BMW passenger cars (‘Old Agreement’) and the BMW SAV Center Agreement for BMW light trucks (‘SAV Center Agreement') or sign the Agreement which was offered to you, at any time in the future. 4. Inasmuch as BMW NA has withdrawn the July 17, 2012 notice that entitled Respondents to file their protests, and confirmed to Respondents that they and their successors', have the option to remain on the Existing Agreements unless, at any time in the future, they elect to sign the Merged Agreement, Respondents’ protests should now be dismissed as moot. ' Motor vehicle dealerships, and equity interests therein, are transferable to buyers as provided in Section 320.643, Florida Statutes. 3 Respectfully submitted, Lh. bL Dean Bunch dean.bunch@nelsonmullins.com C. Everett Boyd, Jr. everett. boyd@nelsonmullins.com Nelson Mullins Riley & Scarborough LLP 3600 Maclay Blvd., S., Suite 202 Tallahassee, FL 32312 Telephone: (850)907-2505 Attorneys for BMW of North America, LLC CERTIFICATE OF SERVICE I HEREBY CERTIFY that the forgoing was served by electronic transmission, this at day of January, 2013, upon the following: | Jennifer Clerk, Agency Clerk clark. jennifer@hsmv.state.fl.us Dept. of Highway Safety Neil Kirkman Bldg., Room A-430 2900 Apalachee Parkway, Mail Stop 61 Tallahassee, FL 32399 John W. Forehand, Esq. john. forehand@southmotors.net 16165 South Dixie Highway Miami, FL 33157 Richard N. Sox, Esq. rsox@dealerlawyer.com Nicholas A. Bader, Esq. nbader@dealerlawyer.com 2822 Remington Green Circle Tallahassee, FL 32308 David Leibowitz, Esq. davidl@bramanmanagement.com Timothy Grecsek, Esq. timothyg@bramanmanagement.com Braman Management Association 2060 Biscayne Bivd., Second Floor Miami, FL 33137 ~ Attorney
Findings Of Fact On March 8, 1988, Seacrest Cadillac, Inc., filed an application with the Department for a motor vehicle dealer license to establish a new Cadillac dealership in Port Richey, Florida on U.S. Highway 19. Port Richey is located in Pasco County. Thereafter, pursuant to the provisions of Section 320.642, Florida Statutes, Larry Dimmitt Cadillac, Inc., a Cadillac dealer currently operating in Clearwater, Florida, filed a protest to the application with the Department and requested formal hearing. The general geographic area pertinent to the issue herein is the Cadillac, Tampa Multiple Dealer Area, (MDA). An MDA is an area in which more than one dealer of a line-make shares a contractual Area of Primary Responsibility, (APR), with one or more other dealers of the same line-make. The MDA is defined by contractual agreement between the manufacturer and its dealers: in this case Cadillac Motor Division of General Motors Corporation and the relevant Cadillac dealers within the area. The Cadillac, Tampa MDA is comprised of Hillsborough, Pinellas, Pasco and Hernando Counties. Three existing Cadillac dealers are in operation in this area. Dimmitt is located on U.S. Highway 19 north of State Road 60 in the Countryside Mall area of Clearwater in Pinellas County 21 miles south of the proposed Seacrest location and approximately 40 minutes driving time away. Dew Cadillac is located in downtown St. Petersburg, also Pinellas County, at Third Avenue South and Third Street, 40 miles south of the proposed Seacrest location and approximately 1 hour and 19 minutes driving time away. Morse Cadillac, (previously Bay Cadillac), is located in Tampa, Hillsborough County, at the intersection of Florida and Fletcher Avenues, 35 miles and approximately 58 minutes driving time away. There are also Cadillac dealers in Lakeland, Lake Wales, and Bradenton, but these dealerships are not included in the Cadillac, Tampa MDA and based upon sales and registration information concerned with Cadillac consumer behavior, these dealers and the areas they serve are not a part of the community or territory relevant to this hearing. 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. Comparing AGSSA 4 with other AGSSAs in the Tampa MDA shows that AGSSA 4 has, during the last two years, shown a substantial gain in market share joined in gain only but to a lesser degree by AGSSA 2. It should be noted that these statistics are based on vehicle registrations, not sales. During she past two years, both Dimmitt in Clearwater and Morse in Tampa have relocated further north toward the area of AGSSA 4 and Morse underwent a change in ownership during the same period. Respondent asserts that these changes in dealership location and ownership "have had a profound impact in terms of what has and will happen in AGSSA 4." A review of Cadillac registrations in AGSSA 4 for the period 1985 through June, 1988 reflect that Morse increased its penetration from just over 10% to 25% within the AGSSA and this factor, when coupled with Dimmitt registrations in the AGSSA, make up approximately 87% of all Cadillacs registered in the AGSSA. While improvement has been shown, it is clear that those two dealerships, neither one of which is located within the AGSSA, account for a preponderance of Cadillac sales within the AGSSA. The fact remains that Cadillac sales within the AGSSA are still far below expected penetration. The fact that Cadillac's performance in AGSSA 4 would rank it 40th out of 148 markets nationwide, if it were an MDA in its own right, is not dispositive of any issue here. The question is not whether Cadillac is selling cars but whether Cadillac is selling the number of cars it should be selling. Comparing AGSSA 4 as it currently exists as a part of the Tampa MDA with other MDA's is invalid. Respondent presents evidence to indicate that based on 1988 registration data AGSSA 4 meets or exceeds in its Cadillac market share the performance of the Tampa MDA, the Tampa District, the Florida zone, the nation as a whole, and the median MDA average and that only AGSSA 2 and 3 in the Tampa MDA have performed as well as AGSSA 4. This is meaningless, however, if market conditions in the area indicate a substantially higher potential than is being achieved. If so, then the representation is inadequate. Accepting as accurate Respondent's assertion that many manufacturer's use 85% of a "standard" as the criteria to determine a dealer's acceptable efficiency or adequacy, and recognizing that AGSSA 4 achieves a Cadillac market penetration in excess of 85% of "the national average, the Florida zone, the Tampa District, and the Tampa MDA for 87 and 88," that figure, as well, is meaningless unless it is accompanied by an explanation of the "standard" applied by the manufacturer. Here, General Motors Corporation, by its intention to award a dealership within the geographical AGSSA 4 to Seacrest, is apparently not satisfied that its market share in AGSSA 4 is acceptable regardless of the fact that registrations within the AGSSA exceed 85% of the registrations in other geographic entities. Respondent suggests another test be used to evaluate the adequacy of representation of Cadillac in the AGSSA 4 area. This is based on gain/loss registrations compared to accepted retail penetration standards and is the difference between actual Cadillac retail registrations in an area and the number of registrations that would have occurred had it achieved the average penetration within that area be it national, zone, district, MDA or AGSSA. These analyses are theoretical and are based on percentages unadjusted to reflect reasonable expectations for the demographic makeup in the market. If adjusted for demography, Respondent contends, AGSSA 4 would reflect a lower penetration because of its relatively low household income. Utilizing this suggested analysis reflects that in each year between 1985 and 1987, when compared against the Florida zone, the Tampa District, or the Tampa MDA, AGSSA 4 lost sales. The maximum number occurred in 1986 when, as compared against the Florida zone, AGSSA 4 would have lost 69 sales. In each year, however, as compared to the national average, AGSSA 4 exceeded the national standard and in 1988, it exceeded not only the national figure but the other three categories as well. Since the number is so small, and since the trend is upward, Respondent urges, there is no justification to support a new single line Cadillac dealership and establishment of such a dealership would cannibalize the surrounding dealers. This argument is not persuasive, however, as it appears based on a less than adequate methodology. While comparisons against standards are used not only by automobile manufacturers but also by other product and service venders, and while both General Motors and USAI regularly use comparisons against the nation, zone, and MDA, those elements which make up the parts of the analysis must be supportable and those utilized here do not so appear. As was stated previously, Dimmitt has shown an increase in its sales in the AGSSA 4 area since its move to its current location closer to the boundary of the AGSSA. Part of the increase is undoubtedly related to the move but another part also may be related to the fact that it has substantially increased its advertising in the area. Dimmitt asserts it is one of the largest Cadillac facilities in the Florida zone and was built with a view toward servicing an increasing market. No doubt this is so. On balance, however, it would appear that with the increasing population in the Pasco County area of AGSSA 4, which is spreading to the north, away from Dimmitt rather than closer to the AGSSA 3 boundary, and considering the fluctuation in household income due to the attraction of different income groups by the construction of related residential areas, and the basic statistics which show that at the current time, AGSSA 4 is not achieving a reasonable potential expected of it, it would appear that AGSSA 4 is not adequately served by the exiting dealerships in AGSSA 1, 2 and 3. This is due primarily to the distance factor and not the caliber of service rendered by the existing dealers. Convenience to the customer, remembering that Cadillac customers are, for the most part, older citizens, is an important consideration and with the aforementioned expected population surge, it is considered unlikely that the establishment of a new dealership in AGSSA 4 would have a permanent or long lasting adverse effect on the dealers not serving the area.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the application of Seacrest Cadillac, Inc. to establish a Cadillac dealership in the vicinity of AGSSA 4, (Port Richey), be granted. RECOMMENDED in Tallahassee, Florida this 13th day of March, 1989. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of March, 1989. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 88-2252 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONERS: 1. & 2. Accepted and incorporated herein 3. - 5. Accepted and incorporated herein 6. - 15. Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein & 21. Accepted and incorporated herein Accepted and incorporated herein Accepted - 26. Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted Accepted and incorporated herein as pertinent - 33. Accepted and incorporated herein 34. - 36. Accepted and incorporated herein Accepted and incorporated herein - 41. Accepted and incorporated herein Not a Finding of Fact but a comment on the evidence - 45. Not a Finding of Fact but a comment on the evidence Accepted but not relevant Not a Finding of Fact but a comment on the evidence BY RESPONDENT DIMMITT: Accepted and incorporated herein Accepted and incorporated herein - 5. Accepted and incorporated herein 6. & 7. Accepted 8. - 10. Accepted and incorporated herein 11. & 12. Accepted and incorporated herein Accepted Accepted and partially incorporated herein & 16. Accepted and incorporated herein Accepted and incorporated herein Accepted & 20. Accepted and incorporated herein Accepted but qualified by the possibility of change in demographics. - 27. Accepted and incorporated herein Accepted & 30. Accepted Accepted Accepted and incorporated herein - 35. Not totally supported by the evidence. Accepted in part and rejected in part. 36. & 37. Accepted and incorporated herein Accepted Accepted and incorporated herein Accepted Accepted & 43. Accepted and incorporated herein Accepted & 46. Accepted and incorporated herein Accepted and incorporated herein - 50. Accepted Rejected as contra to the weight of the evidence & 53. Accepted but given limited weight due to questionable relevance Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted Repetitive of Findings of Fact 36. & 37. - 61. Accepted and incorporated herein but not an issue. Dimmitt's performance of service and customer satisfaction was not questioned. COPIES FURNISHED: Dean Bunch, Esquire 101 North Monroe Street, Suite 900 Tallahassee, Florida 32301 Edward Risko, Esquire Office of the General Counsel General Motors Corporation New Center One Building 3031 West Grand Blvd. Detroit, Michigan 48232 Michael A. Fogarty, Esquire Post Office Box 3333 Tampa, Florida 33601 Daniel D. Myers, Esquire 402 N. Office Plaza Drive Suite B Tallahassee, Florida 32301 Michael J. Alderman, Esquire Office of General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
The Issue Whether Ed Morse Chevrolet should be granted a license to establish a new Chevrolet dealership in Seminole, Florida. If existing Chevrolet dealers are not providing adequate representation in the relevant territory or community the application should be granted.
Findings Of Fact Morse's application seeks a motor vehicle license for a new Chevrolet dealership at 8350 Park Boulevard, Seminole, Pinellas County, Florida. Quinlan and Ross, each a licensed dealer at the time of the filing of the application, separately filed letters of protest to the application and the case was forwarded to the Division of Administrative Hearings for a formal hearing. When Ross was purchased by Mahan, that protest was dropped. The Tampa Bay area is a Multiple Dealer Area (MDA) with each of the existing eight Chevrolet dealers/franchises covering all of Pinellas County and large portions of Hillsborough and Pasco Counties. Four of these dealers, Quinlan, Ross (now Maher), Tarpon and Dimitt are located on U.S. 19 in Pinellas County. Tarpon is located at approximately 21.8 miles north, Dimitt is located approximately 12.4 miles north, Quinlan is located approximately 6.4 miles north, and Maher is located approximately 7 miles southeast, respectively, of the proposed Morse location. It is appropriate to consider the contractual area assigned to multiple dealers, the Tampa MDA, in determining which area they should attempt to service. Since no one from GM ever informed any representative of these dealerships that they would be judged by looking at an area smaller than the Tampa MDA, Respondent contends it would now be unfair to consider other than the entire area in which they contracted to serve to determine whether GM was being adequately represented. GM, on the other hand, points out that dealers surrounding the Tampa MDA are not included within any homogeneous, interconnected shopping area within the Chevrolet, Tampa MDA and are not part of the relevant community or territory. Further, in the Tampa MDA, a natural barrier, Tampa Bay, separates Hillsborough County from Pinellas County and there is little cross-shopping for automobiles between dealers in the areas on opposite sides of Tampa Bay. The Tampa MDA is broken down into Areas of Geographic Sales and Services Advantage, (AGSSA) each representing an area where a dealer enjoys a competitive advantage over other dealers of the same line-make due to geographic locations, viz. proximity to the dealer. AGSSA 1 is the northern part of Clearwater, plus eastern Pinellas and Hernando Counties, in the area of Dimitt Chevrolet. AGSSA 2 is the southern part of Clearwater in the area of Quinlan Chevrolet. AGSSA 3 is the Seminole area of Pinellas County in the area of the proposed Morse dealership. AGSSA 4 is the southern part of Pinellas County, including St. Petersburg, in the area of Maher Chevrolet. AGSSA's 5, 6, 7, and 10 are generally located in Hillsborough County. AGSSA 8 is northern Pinellas and southern Pasco County in the area of Tarpon Chevrolet. AGSSA 9 is northern Pasco County and includes Harbor Chevrolet in Hudson. AGSSA's 3 and 10 are currently open points. AGSSA's are comprised of census tracts or, where census tracts cannot be used, other geographic descriptions, such as zip codes, C-towns and NTC's. Based on customer buying patterns, there are three separate market areas within the Chevrolet Tampa MDA. AGSSA's 1, 2, 3, 4, and 8 (St. Petersburg, Clearwater, Tarpon Springs (on the west side of Tampa Bay) is one distinct market while AGSSA's 5, 6, 7 and 10 (Tampa and Brandon) constitute a separate area. AGSSA 9 (Hudson) constitute a separate but less distinct area than the other two larger areas. GM concedes that Quinlan Chevrolet and the other Chevrolet dealers in Pinellas County have complied with terms of their dealership agreement with GM; that these dealers' sales and service facilities comply with the minimum standards established by GM; and that each is adequately representing the AGSSA in which it is located. The three dealerships closest to the proposed site were each rated effective dealers by GM in 1987. Respondent contends that no "identified plot not yet cultivated" exists in AGSSA 3. To support this position is the fact that only one other AGSSA in the Tampa MDA (AGSSA 7) outperformed AGSSA 3 in 1987; Chevrolet registrations in AGSSA 3 (where no dealer is located) were better than in AGSSA 2 and 4 (where Quinlan and Maher are located); and were better than the Tampa MDA rate. Yet the buy-rate analysis, which refers to the number of households in an area divided by the number of registrations in that area, for AGSSA 3 shows that it takes 131 households before one Chevrolet retail registration occurs, while the buy-rate for the Tampa MDA is 113.89. This fact supports GM's position that the area (AGSSA 3) is underrepresented rather than the populace does not buy as many cars per household or that households in AGSSA 3 are adverse to buying Chevrolet automobiles. Of the five AGSSA'S in Pinellas community or territory, Chevrolet is represented by a dealer located in all but AGSSA 3. Vehicle registration data compiled by R.L. Polk was used by GM and Quinlan in their respective analyses and is accepted as an authoritative source of such data within the automobile industry. The evidence here submitted clearly proves the proposition that statisticians and economists can, by selecting from the same pool of data, arrive at diametrically opposed conclusions and opine that their determination is the only appropriate conclusion to reach. GM contends that the national average retail market penetration is the proper standard by which to compare the penetration in AGSSA 3, while Quinlan contends the Tampa MDA penetration rate is the proper standard. Without detailing the extensive testimony presented to support the opinion of the respective experts, it is sufficient to say the national penetration standard is accepted as the appropriate standard. Chevrolet market penetration for both cars and trucks, for the Pinellas community or territory and the Tampa MDA has been substantially lower than the national average since 1986. In comparison to all other Florida markets, both the Pinellas community or territory and the Tampa MDA are generally in the bottom third of all markets while over 40 markets for cars and over 35 for trucks in Florida equal or exceed the national average penetration for Chevrolet. As a general rule, penetration rates are higher in single dealer areas than in multiple dealer areas. Considerable evidence was submitted that Chevrolet sales, i.e. penetration, was higher in inland areas than in coastal areas where foreign imports have had the greatest impact on car sales. Since Tampa MDA is a coastal area, Quinlan contends that the penetration rate in the Tampa MDA and AGSSA 3 should be compared with other coastal areas. Quinlan selected 6 MDA's, of the 11 having the lowest penetration rates by Chevrolet in the entire United States, to prove that the penetration rate in the Tampa MDA and AGSSA 3 is well above the average of those 6 selected and, therefore, AGSSA 3 is not underrepresented. GM, on the other hand, offered the comparison of the Chevrolet penetration rate in Pensacola, which is well above the national average, to the Tampa MDA and AGSSA 3 penetration rates to show AGSSA 3 is underrepresented. Both of these examples represent extremes and confirm the validity of the national average penetration as the appropriate norm. Using this norm, Chevrolet is underrepresented in AGSSA 3. GM presented evidence showing product popularity, age and income statistics of the Pinellas community compared to the nation. By dividing automobiles into five groups comprising subcompact, compact, mid-size, regular and high group, GM presented statistical evidence showing that the differences between the sales of these classes of vehicles in the Pinellas community and nationwide was small during the years 1986, 1987 and the first six months of 1988. Similar evidence was presented regarding truck sales. Respondent points out that the disparity in price of vehicles within each class casts doubt upon the validity of these classifications. For example, expensive sports cars are frequently classed as compact or subcompact, whereas their retail price exceeds the price of many vehicles included in the high group. Statistical evidence was presented by GM comparing the age of residents of the Pinellas community and AGSSA 3 with the population age nationwide to determine if these differences could account for the low penetration of Chevrolet products in the area in question. Again, no statistical difference in resident's ages was found to account for the low penetration rate compared to the national average. Respondent contends these comparisons are invalid and irrelevant because nationwide Chevrolet sales are higher in the 16-24 and 25-34 age groups which age groups are vastly underrepresented in AGSSA 3. GM also presented statistical evidence comparing the income of the residents of the Pinellas community and AGSSA 3 with the national average income. These comparisons are sufficiently close that the low penetration rate in Pinellas County compared to national average cannot be explained by income characteristics. However, those with annual income below $15,000 were omitted in the comparison. Respondent points out that many elderly residents of Pinellas County with incomes less than $15,000 annually could well have substantial savings and be economically capable of purchasing a new automobile. Neither party presented hard evidence to support their opinions regarding the validity of not including those with annual incomes of less than $15,000. However, it is noted that elderly people with substantial assets have some, if not most, of those assets producing income which, when added to social security benefits, could easily exceed $15,000 annually. Between 1970 and 1988, the population of the Pinellas community comprising AGSSA's 1-4 and 8 has increased from 582,232 to 910,310. During the same period, households increased from 222,827 to 417,202. Since 1970, the number of Chevrolet dealers in this area has held steady at four. The growth of these five AGSSA's have leveled off during the past few years and the area is no longer a rapid population growth area. Respondent submitted evidence that AGSSA's 2 and 4, those closest to the proposed new dealer location, have reached a near saturation point in population. However, these were opinions of individuals residing in the area and were not supported by numbers of building permits issued, changes in telephone and cable TV subscribers, etc. Automobile buyers today shop competitively to obtain the best price for a specific car. A 1983 survey by J.D. Power nationwide shows some 58 percent of Chevrolet buyers visited at least one dealer of another brand before buying a Chevrolet. Existing dealers in the Tampa MDA who testified in these proceedings were unanimous that there is keen competition among dealers for the new car buyer and that most buyers visit several dealers looking for the best price for the car they ultimately buy. An additional dealer will, to some extent, increase this competition between dealers. However, this competition is not just between the same line-make dealers. It is between all dealers selling cars in the price range in which the buyer is looking. It is not inconceivable that GM is looking to recapture some of the market share it lost to foreign imports during the last twenty years. By consolidating some of their operations with Japanese car makers, purchasing Japanese developed engines for some GM cars, and manufacturing components overseas for GM cars assembled in this country, GM has positioned itself to compete more effectively against foreign imports. AGSSA 3 is one location that could contribute to this endeavor. Respondent contends the appropriate way to measure the Tampa MDA Chevrolet dealers' performance is to compare their performance, in terms of penetration rates, against other similar MDA's. This is done through regression analysis. The regression analysis performed by Respondent's expert used penetration rates in 158 MDA's nationwide. By selecting MDA's from this group and labeling them comparable to the Tampa MDA, a reasonable penetration rate for the Tampa MDA was found to be 8.51 percent in 1987 and 8.60 percent for the first six months in 1988. Selecting different "comparables" would have resulted in a different "reasonable" penetration rate. By carefully selecting the MDA's to be used as comparables almost any "reasonable" penetration rate can be found. Respondent also challenges GM's use of six months registration data through June of 1988 alleging that it is flawed because seasonal factors were not considered which might influence or alter the penetration rates actually obtained by GM for the entire 1988. While this is true, no evidence was submitted to establish a seasonal pattern of car registrations in the Tampa MDA which would indicate inaccuracy in the use of such six months data. Respondent contends GM should compare penetration rates in Tampa MDA with other coastal MDAs where Chevrolet penetration rates are below the national average and to correct for the penetration rates and markets where GM has manufacturing/assembly facilities for that line-make where the penetration rates are high. If this line of reasoning is followed, GM would never be able to demonstrate need for a new dealer. Respondent attributed road construction along U.S. 19 to loss of business for Quinlan for the past two years this widening of U.S. 19 has been ongoing. While this widening of U.S. 19 undoubtedly disrupted customers coming to Quinlan's showrooms, the construction also affected the other dealers along U.S. 19. No evidence was presented to show the dollar value lost to Quinlan, or the sales drop for new Chevrolets during this construction work. The fact that this road construction slowed and inconvenienced vehicular traffic on U.S. 19 in Pinellas County is not disputed.
Recommendation It is Recommended that the application of Morse Chevrolet, Inc., to establish a Chevrolet dealership at 8350 Park Boulevard, Seminole, Pinellas County, Florida, be GRANTED. DONE AND ENTERED this 19th day of July, 1989, in Tallahassee, Leon County, Florida. K. N. AYERS Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of July, 1989. APPENDIX Treatment accorded Petitioner's proposed findings. 1-2. Included H.O.#s 1, 2. 3. Included in Preliminary Statement. 4-6. Included in H.O.#4. 7-8. Included in H.O.# 5. Included in H.O.# 6. Included in H.O.# 7. 11-12. Included in H.O.#8. Included in H.O.#9. Accepted. Included in H.O.#12. Included in H.O.#13. 17-18. Included in H.O.#16. Accepted. Included in H.O.#16. 21-22. Included in H.O.#20. 24. Accepted insofar as included in H.O.#20. 25-26. See H.O.# 14 otherwise included in H.O.# 21. Included in H.O.# 22. Included in H.O.#15. Accepted. Included in H.O.# 16. Included in H.O.# 16. Included in H.O.# 16. Included in H.O.# 15. Accepted that one track in AGSSA 3 exceeding national average is near Quinlan location. Accepted. Accepted. 37. See H.O.# 14. Included in H.O.# 19. Accepted. 40-42. Included in H.O.# 23. 43. Accepted. 44. See H.O.# 14. Included in H.O.# 25. Accepted. Included in H.O.# 23. 48-49. Included in H.O.# 24A. 50. See H.O.# 26. 51-52. See H.O.# 14. 53. See H.O.# 14. 54. See H.O.#s 25-26. 55.-57. Accepted. Included in H.O.# 15. Rejected as mere testimony of witness. Included in H.O.# 5. Included in H.O.# 16. Included in H.O.# 5. Included in H.O.# 18. 64-65. Included in H.O.# 28. 66. Included in H.O.# 29. 67. See H.O.# 14. 68. See H.O.# 14. Included in H.O.# 28. Included in H.O.# 28. Included in H.O.# 21. Rejected as recitation of witness testimony. Included in H.O.# 22. Rejected as recitation of witness testimony. 75-76. Rejected as irrelevant. Treatment Accorded Respondent's Proposed Findings Included in H.O.# 4. Included in H.O.# 3. Accepted as grammatically correct. Rejected as opinion. Accepted. Rejected. 9-10. Rejected. Rejected. See H.O.# 11. Included in H.O.# 11. Included except for last sentence which is rejected. Rejected. Included in H.O.# 11. Rejected. 17-18. Accepted insofar as included in H.O.# 24. Rejected as irrelevant. Rejected. Rejected. Accepted as testimony of witness. 23-24. Included in H.O.# 25. Accepted. Accepted. Accepted insofar as included in H.O.# 26. Rejected as immaterial. Included in H.O.# 10. Irrelevant. Included in H.O.# 4. 32-33. Irrelevant. Included in H.O.# 10. Accepted. Accepted. See H.O.#10. Rejected. 38-47. Accepted insofar as included in H.O.# 20, 21 and 22. Rejected. Rejected insofar as inconsistent with H.O.#s 20, 21 and 22. Accepted insofar as included in H.O.# 21, otherwise rejected. Rejected. 52-53. Rejected. Rejected insofar as inconsistent with H.O.# 22. Rejected. See H.O.# 14. Rejected. See H.O.# 14. Rejected. See H.O.# 14. Rejected. See H.O.# 14. Rejected. See H.O.# 14. Rejected. See H.O.# 14. Rejected. See H.O.# 14. 62. See H.O.# 14. 63. Rejected. 64. See H.O.# 14. 65. Rejected. See H.O.# 14. 66. See H.O.# 14. Rejected. See H.O.# 14. Rejected. Accepted except for last sentence. 70-71. Included in H.O.# 3. 72. Accepted. 73 Accepted. Rejected. Rejected. Irrelevant. Irrelevant. Irrelevant. Irrelevant. Rejected. 81. See H.O.# 14. 82. See H.O.# 14. Accepted that market share fluctuations are due to many factors. Accepted. Accepted. Rejected. Rejected. Rejected. Rejected. Rejected. 91-92. Rejected as argument - not fact. Rejected. Rejected. 9 5. Rejected. Rejected. Accepted. 98. See H.O.# 14. Included in H.O.# 18. Rejected. See H.O.# 14. Rejected. See H.O.# 14. Rejected. See H.O.# 14. Rejected. See H.O.# 14. 104-105. Rejected insofar as inconsistent with H.O.# 29. Accepted insofar as included in H.O.# 19. Accepted insofar as included in H.O.# 19. Rejected. See H.O.# 14. Rejected. See H.O.# 14. Rejected. See H.O.# 14. Rejected. See H.O.# 14. Rejected. See H.O.# 14. 113-116. Rejected. See H.O.# 31. 117. Accepted. 118-121. Rejected as irrelevant. 122. Rejected. Rejected. Rejected. Rejected. COPIES FURNISHED: Dean Bunch, Esquire 101 North Monroe Street Tallahassee, FL 32301 Vasilis C. Kastafanas, Esquire P. O. Box 1873 Orlando, FL 32802 William J. Whalen, Esquire New Center One Building 3031 West Grand Boulevard Detroit, Michigan 48232 Joseph H. Letzer, Esquire Robert H. Rutherford, Esquire 3000 South Trust Tower Birmingham, Alabama 35202 Enoch Jon Whitney General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, FL 32399-0500 =================================================================
Conclusions This matter came on for determination by the Department upon submission of an Order Closing File by P. Michael Ruff, an 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 Order Closing File as its Final Order in this matter. ORDERED that this case is CLOSED and no license will be issued to Flyscooter, LLC and Sunstate Powersports, LLC to sell motorcycles manufactured by Taizhou Zhongneng Motorcycle Co. Ltd. (ZHNG) at 825 Mason Avenue, Daytona Beach (Volusia County), Florida 32117. DONE AND ORDERED this 4, of June, 2009, in Tallahassee, Leon County, Florida. L 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 ofPiotor Vehicles this — day of June, 2009. 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: Siegfried Kientoff Sunstate Powersports, LLC 825 Mason Avenue Daytona Beach, Florida 32117 David Levison Mega Powersports Corp. 390 North Beach Street Daytona Beach, Florida 32114 Daniel Pak Flyscooters, Inc. 7307 Edgewater Drive, Building H Oakland, California 94621 Michael J. Alderman, Esquire Assistant General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Rm. A-432 Tallahassee, Florida 32399-0504 P. Michael Ruff Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator Florida Administrative Law Reports Post Office Box 385 Gainesville, Florida 32602
Findings Of Fact On July 31, 1986, Petitioner Chevrolet World, Inc. (hereinafter "Chevy World"), filed an application for licensure with the Department of Highway Safety and Motor Vehicles (hereinafter "Department"), seeking to become a licensed Chevrolet dealer in Orlando, Orange County, Florida. Chevy World is owned by Don Mealey, who also owns another Chevrolet dealership in Orlando known as Don Mealey Chevrolet, Inc. The new dealership would be located in a development known as "Lee Vista Center," immediately north of the Orlando International Airport. The Jacksonville Zone for the Chevrolet Division of General Motors (hereinafter "GM"), is divided by GM into MDAs (Multiple Dealer Areas) and SDAs (Single Dealer Areas). There are five MDAs in the Jacksonville Zone: West Palm Beach, Miami, Orlando, Jacksonville, and Tampa. The Orlando MDA consists of all of Orange and Seminole Counties plus two census tracts in the extreme southern portion of Volusia County which are immediately adjacent to Seminole County. There are four Chevrolet dealers currently operating within the boundaries of the Orlando MDA as established by GM: (a) Roger Holler Chevrolet in Winter Park, (b) Don Mealey Chevrolet in Orlando (owned by the owner of the applicant in this case), (c) Century Chevrolet (hereinafter "Century"), in Winter Garden, and (d) Ken Rummel Chevrolet in Sanford. Within each MDA, GM further subdivides the area into AGSSAs (areas of geographic sales and service advantage) and places one dealer in each AGSSA. GM designates five (5) AGSSAs for the Orlando MDA. The open point is located in AGSSA 5. Theoretically, each dealer is supposed to have the greatest opportunity for sales and service in his own AGSSA when compared to other Chevrolet dealers. Although GM lists only four Chevrolet dealers in the Orlando MDA, it is undisputed that more than those four dealers advertise in and serve the Orlando market area. For example, the Southern Bell telephone directory yellow pages for Orlando lists six Chevrolet dealers who advertise in Orlando, and this list does not include Ken Rummel's Chevrolet dealership, which GM does include in the Orlando market area. Additionally, John Larkin, the owner and president of Century and one who is familiar with the competition among dealers in Orlando, testified that there are ten Chevrolet dealerships which advertise in and serve the Orlando market. These include Bill Seidel Chevrolet in Clermont, Florida; Vanganoway Chevrolet in Eustis, Florida; Cecil Clark Chevrolet in Clermont, Florida; Fred Bonson Chevrolet in Deland, Florida; Ken Rummel Chevrolet in Sanford, Florida; Roger Holler Chevrolet in Winter Park, Florida; Don Mealey Chevrolet in Orlando, Florida; Burchfield Chevrolet in St. Cloud, Florida; Sterling Chevrolet in Kissimmee, Florida; and Century in Winter Garden, Florida. This evidence was not disputed by GM. Given this large number of dealers which impact the Orlando market, the market in Orlando for Chevrolet cars is highly competitive. The critical substantive question in this case is whether the existing dealers are adequately serving the market. A proper definition of the market is obviously important. GM failed to prove that its MDA properly defines the relevant market area for this proceeding. It offered no explanation as to why the relevant market is not the Orlando statistical metropolitan area which encompasses a three-county area: Seminole, Orange, and Osceola Counties. In fact, one of GM's own witnesses, Dr. Ronald Rubin, testified that the boundaries of the Orlando statistical metropolitan area would be appropriate parameters for the Orlando market area. Dr. Rubin could not state that the Orlando MDA accurately defines or describes the Orlando market or that AGSSA 5 would actually be the marketing area or community with respect to a new dealer located therein. Given the facts that GM offered no explanation other than its own discretion why its MDA should be smaller in area than the Orlando statistical metropolitan area and that many Chevrolet dealers outside the boundaries of GM's MDA have a significant impact on Chevrolet sales in Orlando, the relevant territory or community is the Orlando statistical metropolitan area and not only the Orlando MDA. The smaller artificially-configured market areas established by GM (Orlando MDA and AGSSA 5) are specifically rejected because they are only a portion of the market area impacted by the Chevrolet dealers in the Orlando statistical metropolitan area and because there was no competent showing by GM that the Orlando MDA and AGSSA 5 bear scrutiny. While an MDA or AGSSA might in an appropriate case be the proper area of scrutiny, GM has not carried its burden of proving that this is such an appropriate case. Because the relevant community or territory is the Orlando statistical metropolitan area, the sales performances and penetration rates for the Chevrolet dealers in Kissimmee, St. Cloud, Eustis, Deland, and Clermont, in addition to the four dealers located in the Orlando MDA, must all be considered in determining whether the existing dealers in the Orlando statistical metropolitan area are adequately representing Chevrolet in that market. GM presented no credible evidence as to the penetration rates in the Orlando statistical metropolitan area by all the dealers who compete there. Consequently, GM has not carried its burden of proving that the existing Chevrolet dealers are not providing adequate representation for GM in the relevant market area. GM's evidence that there were 552 new car in-sells within the Orlando MDA by outside Chevrolet dealers supports a conclusion that the MDA is not the real or relevant market; it does not prove the propositions for which it is cited--(a) that the Chevrolet dealers within the Orlando MDA are not adequately serving the market and/or (b) that the customers are or were dissatisfied with those dealers. There is no evidence in the record to support a conclusion that these 552 customers, or any one of them, were displeased with the Orlando MDA dealers; for example, there was no polling data or other information from those customers offered by GM which would have indicated such displeasure. The number of in-sells into the MDA is more likely the result of dealers within the metropolitan statistical area but outside GM's artificial MDA (e.g., the Chevrolet dealer in Kissimmee, Florida) competing with MDA dealers. Thus, the number of in-sells is probative of a conclusion that GM's artificially- drawn MDA boundaries are skewed and are not indicative of the relevant territory or community for purposes of this proceeding, thereby casting doubt on substantially all of GM's studies and conclusions that penetration rates in the Orlando market area are disproportionately low. Additionally, as proven by the uncontroverted testimony of Dr. Ostlund, the AGSSAs established by GM for the Orlando MDA were not drawn in accordance with GM's own established guidelines. First, AGSSAs are supposed to be determined by and drawn in accordance with natural and man-made barriers or boundaries; however, none of the AGSSAs in the Orlando MDA are divided by or established in accordance with natural or man- made boundaries or barriers. Second, the AGSSAs established by GM are supposed to account for and be established in accordance with shopping patterns; however, there is no analysis in the AGSSA documents for the Orlando MDA concerning non-automotive shopping patterns, and the information concerning automotive shopping patterns does not support the AGSSA lines drawn by GM. Third, contrary to GM's own guidelines, there is no evidence that any of the AGSSA boundaries have been drawn with the factor of traffic flow taken into account. Moreover, the evidence presented by GM clearly indicates that the statistical relationship between the residence of each dealer's customers and the AGSSA boundaries is weak. In other words, each dealer is located within an AGSSA and, according to GM's AGSSA guidelines, is expected primarily to impact the sales area within that AGSSA; however, the actual sales figures for each of the dealers reveal little if any correlation between the location of its customers and the AGSSA boundaries. Again, the appropriateness of the AGSSAs is contraindicated. An AGSSA could, of course, in an appropriate case be a submarket appropriate for scrutiny. The burden of showing the appropriateness is on GM. In a case such as this where GM not only fails to meet its burden but the evidence shows that GM's own standards for drawing AGSSAs have not been followed, it cannot be concluded that the use of any particular AGSSA suggested by GM is appropriate. Consequently, GM's calculations and conclusions, premised upon these AGSSAs, are not supported by credible evidence. Aside from this failure by GM to prove that it properly analyzed the relevant market area, GM failed to take other factors into account in assessing the adequacy of the existing dealers' representation. One of these factors was the closing of one of the four Orlando MDA dealers for most of 1985. From February 1, 1985 to November 1, 1985, Chevrolet was without a dealership in Sanford, Florida, because Ken Rummel was in the process of moving the Chevrolet dealership located there to a new location. While Mr. Anderson admitted that he was aware of Ken Rummel's closure and the probable negative effect this closure would have on market penetration efficiency, his studies did not account for this fact. As testified by Dr. Matthews, a primary flaw in GM's use of national penetration rates to conclude that inadequacy exists in the Orlando market is the lack of any comparative analysis of the different MDAs to determine whether factors peculiar to the Jacksonville Zone or the Orlando MDA are causing the alleged shortfall in penetration rates. The closure of Ken Rummel Chevrolet for most of 1985 illustrates that a comparative analysis of markets was not performed by Mr. Anderson or GM. The closure of one of the four Chevrolet dealers in the Orlando MDA for most of 1985 would have a significant negative impact on market penetration for that year, but GM apparently made no correction or adjustment in its analysis to take this important fact into account. Another factor which GM did not take into account before asserting that poor penetration efficiency of the Orlando MDA dealers indicated that an additional Chevrolet dealer was needed in the Orlando market is the extensive leasing of new Chevrolets which occurs in Orlando and the heavy sales of "brass- hat" cars by the Chevrolet dealers and current-model, low-mileage fleet cars by fleet rental companies. As defined by GM for sales and registration purposes, a fleet customer is any person or company who purchases ten or more cars or trucks of any brand anywhere in the country during a twelve-month time period. In 1985, 29.9 percent of industry car registrations in the Jacksonville Zone were fleet registrations. The national rate was 17 percent. For Chevrolet, 49 percent of all car registrations in the Jacksonville Zone in 1985 were fleet registrations, while nationally the rate for Chevrolet was only 21.8 percent. Stated differently, the dealers in the five MDAs in the Jacksonville Zone (3 percent of the total of all MDAs) accounted for over sixteen percent of all fleet sales in the United States. It is uncontroverted that the Orlando market has significantly higher levels of fleet sales than other parts of the country. GM has itself concluded that the extraordinary number of passenger car and truck fleet sales into the Orlando market area has a negative effect on passenger car and truck sales and registration effectiveness. In spite of this, none of the studies presented by GM took this into consideration. GM cannot properly do what it seeks to do here, that is, compare Orlando to national or regional or so called "typical" markets while admitting this difference without accounting for the impact of these fleet sales in the market. Additionally, many of these fleet companies who purchase new fleet cars from the dealers and manufacturers (e.g., Avis, Hertz, National, Budget, etc.) in turn sell those cars to consumers in the Orlando area. Typically, these rental cars sold by the large fleet companies are current-model, low- mileage cars, many of which are Chevrolets. Because there is no difference in the profile of a typical new car customer and a customer who will buy a current- model, low-mileage car from a fleet company, the sale of these fleet rental cars in Orlando diminishes the market demand for new retail Chevrolets. The reason for this deleterious effect on market demand for retail Chevrolets is that the current-model, low- mileage rental units can be sold by the rental companies for lower prices. This fact was admitted by Jacksonville Zone Manager Hall when he testified that sales of current model rental cars by rental companies has an adverse impact on new car sales. As further evidence that the heavy concentration of fleet sales by Chevrolet dealers and sales of current-model, low-mileage rental cars by fleet companies negatively affect new car retail penetration rates, Century introduced a letter from Don Mealey to R. J. Bresnahan (the former Jacksonville Zone Manager for Chevrolet) dated May 29, 1984. In this letter, Don Mealey, an existing dealer in the Orlando MDA and the owner of the applicant herein, delineated the problems of market penetration caused by fleet companies selling current-model, low-mileage rental cars. Mr. Mealey stated in his letter that prospective new car customers in Orlando have a "multitude of options available to them. They can shop a franchised new car dealer or they may choose from one of many outlets retailing low mileage, current models at a price considerably less than normal dealer invoice. The net effect of this second level system on the total market is incalculable." This observation by Mr. Mealey is consistent with GM's own admissions and the testimony of Century's officials during this hearing. Mr. Mealey further highlighted in his letter the large number of Chevrolet cars operating in Orlando which are registered elsewhere but which do not appear on the sales and registration reports for Orlando. "[C]ertain major rental companies purchase or lease Chevrolet's [sic] which are registered in Dade, Broward, or other Florida Counties. These vehicles are rented in Orlando, serviced in Orlando, and most often are sold in Orlando but do not appear as new vehicle sales or registrations. If these phantom units appeared on the R.L. Polk report, the overall Chevrolet market share would improve Again, Mr. Mealey's observations are consistent with other evidence adduced in this case. Despite these admissions by Petitioner GM and Mealey (an agent of Petitioner Chevy World), regarding fleet sales, Mr. Anderson denied that the large volume of fleet sales in the Orlando market has had a negative impact on the retail car penetration rates for Chevrolet dealers in the Orlando MDA. He offered no evidence in support of his conclusion. Mr. Anderson's position is unsupported by the facts in the record and belies common sense. Mr. Anderson's and GM's failure to properly account for and to factor into their analysis the impact of fleet sales on Chevrolet penetration rates discredits their contention that the present dealers are inadequately representing the market. Initial fleet sales impact retail penetration, as do resales of current model cars. Potential new car purchasers will generally not view current-model, low-mileage rental cars sold by fleet companies as distinguishable from new cars offered for sale by a Chevrolet dealer. Perceiving these two groups of automobiles as essentially similar, a customer in the new car market would ignore industry labelling differences between these groups of cars. In short, as established through GM's own witnesses, the Orlando market area, given its heavy concentration of fleet sales, is significantly different from the national market viewed as a whole. This heavy influx of fleet sales into the Orlando market area is strong evidence why penetration rates in the artificial Orlando MDA are lower than the national average. The typical customer is most interested in low prices. To attract these customers, Century advertises for sale "brass-hat" cars, which are vehicles used previously by GM officials and sold at GM auctions. There is no difference in the profile of a typical new car customer and a customer who will, and often does, buy a brass-hat vehicle. Brass-hat vehicles are purchased by Century at GM auctions to serve as price leaders in advertisements and sticker sales to encourage customers to visit Century's facilities. During 1986, Century sold an average of forty-three brass-hat vehicles per month, a large portion of which were Chevrolets. The local Chevrolet dealers in the Orlando market buy a large number of the brass-hat vehicles sold at the auctions conducted by GM in Orlando. Brass-hat vehicles, regardless of the model or mileage, are not treated as new cars by GM; thus, Chevrolet dealers, such as Century, do not get credit from GM for a new car sale when a customer purchases a brass-hat vehicle. Moreover, the Chevrolet dealers do not receive credit with respect to R. L. Polk registrations for the sale or registration of brass-hat vehicles. As is the case with current-model, low-mileage rental cars sold by fleet companies, it is unlikely that, if the physical attributes of the brass- hat vehicle are the same or substantially similar to the attributes of a new car, a potential customer will view those two classes of cars differently. Consequently, brass-hat vehicles are competitive with new retail cars in the marketplace and decrease the sales rates for the new cars because the brass-hat vehicles are priced lower. GM did not account for the significant levels of brass-hat vehicles sold in the Orlando market. No study was performed by GM to analyze what effects brass-hat sales had on new car sales effectiveness and penetration rates. Accordingly, GM's studies and conclusions are flawed insofar as they attempt to support a finding that the present Chevrolet dealers are providing inadequate representation in the Orlando market. Century and other Chevrolet dealers lease a large number of new cars. The leasing of new Chevrolets in Orlando diminishes the demand for the sales of new Chevrolets because the same profile of customers is involved, and at times leasing has financial advantages over purchasing. GM does not regard the lease of a new car as a retail sale. Again, Mr. Anderson's studies are flawed because they did not assess the negative effects which extensive leasing (as occurs in the Orlando market) has on penetration rates for new Chevrolet cars. In addition to the failure of GM to analyze the negative impact which Ken Rummel's closure in 1985 and the heavy concentration of leasing, fleet sales, brass-hat sales, and sales of current-model, low-mileage cars by fleet companies had on Chevrolet retail penetration rates in Orlando, the studies actually performed by GM were statistically and quantitatively suspect in many respects. Because the thrust of GM's proof focused on Mr. Anderson's five-point test, the five-point test must be analyzed in order to determine whether it is an accurate, reliable, and statistically proper analysis of the Orlando market, in general, and the adequacy of the existing dealers' representation, in particular. First, nearly every witness agreed that the mere fact that new car registrations in a particular market area fall short of national or Zone registration rates does not indicate, without further examination, that the existing dealers are not providing adequate representation in that market area. In determining whether the Orlando market is being adequately represented, Mr. Anderson testified that he would first ascertain whether the market penetration for Chevrolet in the Orlando MDA exceeded or fell below Zone and national retail penetration rates. Then, Mr. Anderson employs a five-point test to determine what is a reasonable level of market penetration for the particular market area. The first two steps in this five- point test entail a comparison of the demographic characteristics in terms of age and household income of the Orlando market area vis-a-vis the nation as a whole. The third step in the five- point test is an analysis of product popularity, i.e., an analysis which seeks to determine whether the particular line- make is popular in a certain market area. The fourth step is an assessment of the market to determine whether national or Zone penetration rates are being achieved or exceeded in certain defined areas within that market. Finally, the penetration rates for the areas surrounding the market in question are analyzed to determine whether national penetration rates are being achieved in these outlying areas. This five-point test for assessing local market penetration effectiveness is flawed in several respects and thus is an unreliable and inaccurate analysis. While GM did present demographic evidence that Orlando, compared to national statistics, was underrepresented in the 0-15 and 65-over age categories, there was no proof offered by GM that this population age data proved that Chevrolet sales potential was in any way enhanced. There were no Chevrolet customer age profiles submitted by GM, or any quantitative analyses performed by GM indicating that Chevrolet penetration rates varied in accordance with the age of the customers. Accordingly, GM's demographic evidence concerning age distributions in Orlando vis-a-vis the nation is statistically unpersuasive and proves nothing. The same finding is compelled with respect to the income levels in the Orlando market area. There was no evidence offered by GM that income levels relate in any way to Chevrolet retail penetration or can be analyzed as a determinant of interbrand competition. GM's use of product popularity statistics is not persuasive because it also failed to consider line-make popularity by model. Without such additional studies it cannot be accurately concluded that the Orlando market area can be compared, in a statistically acceptable manner, to the national market in terms of product popularity. The fourth factors analyzed by Mr. Anderson--whether certain census tracts within the Orlando MDA have retail Chevrolet penetration rates which meet or exceed the national average--is likewise a statistically unacceptable test for adequacy of representation or for the use-of national figures to demonstrate inadequacy. As established by the uncontroverted testimony of Drs. Ostlund and Matthews, this condition will undoubtedly exist in any market. Given the small total penetration numbers present in any census tract, it is not unrealistic to expect that some census tracts might have Chevrolet penetration rates which exceed a national average. Random penetration rates of one or two cars could mean the difference between exceeding or falling below national rates in a given census tract. Thus, the mere fact that one or more tracts have Chevrolet penetration rates above the national average does little to address the question whether there is adequate representation throughout a defined market area encompassing numerous census tracts. Stated otherwise, it would not be unusual to find census tracts in any defined market which exceed or fall below national penetration averages. Customers living in different census tracts are not homogeneous in terms of age, income, line- make preference, etc. Thus, the fact that there may be some census tract areas within a defined market area where penetration rates exceed some national penetration average is not a proper basis to infer that the entire market area should be able to achieve or exceed the same penetration rates. The fifth and final factor analyzed by Mr. Anderson and GM to support their assertion that the existing Chevrolet dealers in the artificial Orlando MDA are not providing adequate representation because they are not achieving national retail penetration rates is whether the market area outside the MDA but inside the Orlando metropolitan statistical area has higher penetration rates than the rates in the MDA. GM has concluded that higher penetration rates have been achieved in the areas outside the MDA boundaries. The inference which GM seeks to draw from this fact is that the Chevrolet dealers, located within the MDA, are not making adequate sales. The flaw in this argument is that such a shortfall will ordinarily (if not always) exist where the MDA is not coextensive with the SMSA, irrespective of whether the existing dealers within the MDA are adequately representing Chevrolet in the market. The reason for the discrepancy in the penetration rates is twofold. First, the SMSA is generally larger than the MDA and encompasses more rural and semi-rural areas. Historically, customers from rural or semi-rural areas have favored traditional domestic line-makes like Chevrolet over other line-makes. Second, import manufacturers do not have as extensive a dealer organization as traditional domestic manufacturers such as GM and have tended to concentrate their sales efforts in larger urban areas, thereby increasing the options of urban customers and decreasing the penetration rates for domestic line-makes such as Chevrolet. Consequently, the fact that Chevrolet may have achieved greater market penetration within the Orlando SMSA but outside the Orlando MDA proves little if anything about the adequacy of representation of Chevrolet by the existing dealers. In addition to the flaws existing in each of Mr. Anderson's five factors, the entire five-point test is significantly flawed and statistically unreliable. Curiously, this is not disputed by GM. The question of-the propriety of the five-point test arose as follows. Mr. Anderson testified first, saying not that this is a proper test but only that this is the test he used, admitting he knew of no authoritative text which supported its use. Drs. Ostlund and Matthews testified the test was inappropriate to judge the question presented. Mr. Anderson never denied this conclusion, and GM by offering no rebuttal evidence on this point and chose to leave the inappropriateness of the five-point test unrebutted. Thus, no conclusion can be reached except that it is inappropriate. Moreover, the test was not applied to the other Chevrolet MDAs in the United States to determine the accuracy and relevancy of the test. Neither in the five-point test nor in any of his other studies did Mr. Anderson address the quantity of dealer facilities that already exist in the Orlando market, a factor which is highly important on the adequacy-of representation issue. Finally, Mr. Anderson did not testify that he had used this test consistently in his testimony in other Florida cases before the Division of Administrative Hearings. To support its contention that an additional Chevrolet dealer is needed in Orlando, GM placed great emphasis on the fact that the population in Orlando had experienced significant growth over the years. However, the mere fact that Orlando has experienced a population growth is not evidence that an additional Chevrolet dealer is needed in the market, nor does it explain alleged low penetration rates. In fact, rapid growth in a market indicates that many people are moving to the market area. People who have recently arrived in the market area may have less desire to purchase a new car, or less income available for a new car purchase because of moving and new dwelling expenses. Nowhere in the testimony of, or the studies and reports prepared by, Mr. Anderson or any other GM witness is it indicated that this condition in the Orlando market was examined. Indeed, while Mr. Anderson testified that the Orlando area has experienced a high rate of migratory growth, he admitted that he did not analyze the question whether people who recently moved into the Orlando area would more or less likely be in the market for a new car. Moreover, the mere fact that population in the Orlando area has increased while the number of Chevrolet MDA dealers has remained the same (four) does not necessarily indicate the need for an additional dealer. Mr. Anderson's testimony was offered by GM to prove that the population growth in Orlando over the last fifty (50) years has been so large that four dealers can no longer adequately serve the increased number of customers. However, no analysis was conducted whether there exists a corresponding increase in sales and service facilities and operating investments. Moreover, an equally plausible inference to be drawn is that there were too many Chevrolet dealers in 1930. No analysis or study was performed by GM to account for this equally plausible inference. GM also presented evidence concerning the location of the existing dealers and the effectiveness of those dealers to attract customers residing at varying distances from the dealerships, seeking to prove that a dealer's market penetration success bears an inverse relationship with the distance a potential customer must drive to reach that dealership. However, GM's analysis is flawed in several respects. First, this analysis does not take into account the specific geographical location of a dealer in the Orlando market area, and particularly with respect to whether the dealer location is close to areas where few or no customers reside. For example, a dealer like Century is near farmland and a large lake, thereby reducing the possibility that cars will be sold to or registered by customers living in a geographical area closer to that dealership. Furthermore, all MDA dealers will be partial servants of a geographical area because there will always be other same line-make dealers serving that market. Thus, the analysis used by GM does not address the question whether the existing dealers are adequately serving the market. Finally, GM's position in this proceeding that the location of a dealership is not relevant leaves it little room to complain of locations. GM .offered no persuasive evidence that any traffic patterns or congestion in the Orlando market area indicated the need for an additional Chevrolet dealer. In fact, the evidence was to the contrary; there is no significant traffic congestion in the vicinity of the proposed new dealer point location to justify the addition of a dealer. In any event, traffic congestion is generally not an important factor in determining whether an additional dealership is needed in a market because traffic congestion usually occurs during rush hours; typically, potential customers do not shop for new cars during rush hour. GM presented evidence in the form of graphs and charts which allegedly established that the dealers in the Orlando MDA must service a higher number of potential customers than dealers in other Jacksonville Zone MDA's. The inference sought to be established by GM from this data is that there are too few Chevrolet dealers in the Orlando MDA to properly service the larger number of potential customers. However, GM's evidence does not support this inference. First, this analyis is fundamentally flawed because it is premised upon there being only four Chevrolet dealers in the Orlando market area; the evidence presented in this case establishes that ten Chevrolet dealers compete heavily in the Orlando area market. Second, the population/dealer data actually supports Century's position. According to Dr. Matthews' statistically correct computations, each dealer in the Orlando MDA services a population of 206,542; however, the average population serviced by the dealers in the entire Jacksonville Zone is 209,691. Consequently, the Orlando MDA dealers service less population than the average of the other Chevrolet dealers in the Jacksonville Zone. This fact obviously does not compel the conclusion that a new dealer is needed in the Orlando MDA; in fact, it is strong evidence that the present dealers are adequate in number to represent the Orlando market. Mr. Anderson's conclusions regarding registration rates per dealer in the Jacksonville Zone suffer from similar statistical flaws. After removing the Pensacola registration figures from this study and adjusting the Tampa MDA figures to accurately reflect the number of existing Chevrolet dealers, the average number of registrations per dealer point is 9,658. Thus, because the Orlando MDA Chevrolet dealers' registrations per dealer point (8,587) are below average Jacksonville Zone figures, this study also does not prove the need for an additional Chevrolet dealer in Orlando. If another Chevrolet dealer were added in Orlando, the number of registrations per dealer in the Orlando MDA would fall to 6,869, or only 72 percent of the average registrations per dealer in the Jacksonville Zone. Therefore, the studies performed by Mr. Anderson and GM reveal that an additional dealer in Orlando is contraindicated. In this proceeding, Mr. Anderson admitted that the total registrations for the Orlando MDA might vary by nearly twenty percent from the reported sales by the Orlando MDA Chevrolet dealers. Mr. Anderson conceded that this variation could have resulted from an error in R. L. Polk statistics. At no time has Mr. Anderson investigated to determine whether R. L. Polk actually used statistically proper and reliable procedures to gather and verify the registration data. Additionally, Anderson testified that he has personally found R. L. Polk data to be unreliable. Accordingly, the R. L. Polk registration reports and computations utilized by GM throughout its studies and reports have not been proven to be reliable. GM sought to establish that Chevrolet truck penetration rates in the Orlando MDA fell below national penetration rates. From this premise partially flowed GM's argument that an additional dealer was needed to increase Chevrolet penetration rates in the Orlando market area. However, as illustrated by Dr. Ostlund, the use of truck penetration statistics is not probative of inadequacy- of the existing dealers. Commercial customers of trucks, even those purchasing less than ten units per year (thereby not qualifying as a fleet customer by GM's standards) are a substantial portion of the truck market. Generally, these multi-unit, commercial truck customers are not concerned about the location of a dealer. Dr. Ostlund's testimony on this issue was not controverted by GM. The last full year from which GM evaluated sales and registration data was 1985, the year during which one Orlando MDA dealer was closed. GM only used nine-month data in 1986. However, GM's use of nine-month data for calendar year 1986 did not take into account any seasonal factors which could indicate that year-end sales figures would be significantly different. Proper statistical tools, such as regression analysis and exponential smoothing, could have been used to properly interpret the nine-month data and to extrapolate that data over a twelve-month time frame; however, no such commonly accepted statistical devices were used by Mr. Anderson or GM, thereby raising serious doubts as to the statistical accuracy of their conclusions. Moreover, no showing was made by GM that Mr. Anderson could provide competent testimony on such statistical techniques. Furthermore, it does not appear that Mr. Anderson or GM even considered the effect which any seasonal factors had on market penetration in 1986. There was no evidence offered by GM that seasonality patterns of Chevrolet sales were stable from year to year, particularly 1985 to 1986. Therefore, GM's failure to analyze seasonality factors renders unworthy its interpolation of 1985 data to determine annualized 1986 sales figures and penetration rates. In many of its comparative evaluations of the Orlando market and the Orlando dealers' sales and penetration effectiveness, GM utilized data obtained from the Pensacola MDA which is not a part of the Jacksonville Zone. However, it is clear that neither Mr. Anderson nor anyone else at GM performed any studies to determine whether the Pensacola market area was comparable to the Orlando market area or other multi-dealer markets in the Jacksonville Zone. The only justification for utilizing Pensacola MDA data was that Pensacola was in the State of Florida. Dr. Matthews, based on GM's own evidence, concluded that the inclusion of Pensacola in any of the studies was inappropriate. This was not disputed by GM. In the absence of any showing by GM that Pensacola is a comparable market to Orlando, any conclusions or inferences made by GM which in whole or in part are based upon Pensacola MDA data are unsound. GM offered no evidence that the sales and service facilities of the existing Chevrolet dealers in the Orlando market area are inadequate to represent Chevrolet in that market. In fact, Mr. Anderson admitted that he did not evaluate the sales and service facilities of any of the Orlando MDA Chevrolet dealers prior to concluding that they were not providing adequate representation. GM premised its entire case on a comparison between Chevrolet penetration rates in Orlando and Chevrolet penetration rates nationwide and in the Jacksonville Zone. The flaw in GM's presentation was the complete failure to determine whether the Orlando market is a typical market area from which conclusions as to low penetration rates and inadequacy of representation could be so simplistically drawn. More significantly, GM presented no evidence that other manufacturers, domestic or import, were achieving or exceeding their national or Zone penetration rates in the Orlando market. The absence of any evidence concerning penetration rates for other line-makes is particularly damaging to GM's contention that the Orlando area Chevrolet dealers should be achieving higher penetration rates. GM ranked each MDA in terms of market penetration for passenger cars and trucks. The Orlando MDA ranked 129 in passenger car sales penetration effectiveness and 130 in truck sales penetration effectiveness. The inference GM wishes to be drawn from these rankings is that the Chevrolet dealers in the Orlando MDA are ineffective in terms of market penetration and, thus, are not providing adequate representation for Chevrolet in Orlando. However, GM's rank-ordering of the 157 MDAs in the United States in terms of market penetration is statistically unsound because there is no explanation offered for the penetration discrepancies. There was no statistical analysis performed by Mr. Anderson to explain what factors exist in each of these markets, individually or collectively, to cause the penetration rate variations. The evidence is undisputed that there was no showing by GM that any of these markets were comparable, and, in fact, no adjustments were made for the lack of comparability. The placement of all Florida and California dealers in the bottom portion of the rankings suggests a comparability problem not addressed by GM. The evidence established that Century is not optimally located in the Orlando market area. Century is the only automobile dealership of any line-make in Winter Garden, Florida. All other dealerships, domestic and import, have gone out of business due to poor market demand. In order to attract customers in the Orlando market area, Century purchases advertisements in the Orlando Sentinel and on four Orlando television stations. All told, Century spent in excess of $1.1 million in 1986 on advertising. The amount spent on advertising per retail unit by Century was the highest of any dealers in Orlando and double the Zone average. This high degree of advertising was necessitated by depressed industries and low population figures in Century's assigned area of sales responsibility. Ultimately, there is no reason to disagree with the conclusion of GM's own evaluation done in the ordinary course of its business. As found by GM itself on its most recent evaluation of Orlando dealers, all dealers rated (Rummel was too new) were found to be doing an effective job with respect to car sales. Even accepting GM's MDA as the market, during the last full year, Orlando MDA car sales by Chevrolet were 14.1 percent of industry, which exceeded the Zone's rate of 11.9 percent significantly and was statistically indistinguishable from the national average of 14.35 percent. During the same year (1985) the so-called AGSSA 5 out-performed the MDA by posting a 21 percent share of total. In fact, total penetration by GM in AGSSA 5 during that year was better than in 3 of the 4 other AGSSAs. Chevrolet retail share in AGSSA 5 during the last full year for which statistics were presented was nearly the same as the Zone average of 11.5 percent. Because the evidence is uncontroverted that dealerships are not appropriately added solely based on truck penetration, (this being a small percentage of overall sales and numbers of dealers and location being relatively unimportant), GM's own evidence of better than adequate car sales by the Orlando MDA Chevrolet dealers for the last full year of dealership operations, along with GM's own admitted findings that all the Orlando MDA Chevrolet dealers were effective with respect to car sales during the 1985 ratings, compels the conclusion that GM's case was simply not proved.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, therefore, A RECOMMENDED THAT a Final Order be entered denying the application of Chevrolet World, Inc., for licensure as a dealer of Chevrolet vehicles in Orlando, Florida. DONE and RECOMMENDED this 5th day of June, 1987, in Tallahassee, Florida. LINDA M RIGOT 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 5th day of June, 1987.
