The Issue The issue is whether Petitioner's establishment of North Tampa Chrysler Jeep Dodge, Inc. (North Tampa), as a successor motor vehicle dealer for Chrysler, Jeep and Dodge line-makes (vehicles) in Tampa, Florida, is exempt from the notice and protest requirements in Subsection 320.642(3), Florida Statutes (2009),1 pursuant to Subsection 320.642(5)(a).
Findings Of Fact Petitioner manufactures and sells Chrysler, Jeep and Dodge vehicles to authorized Chrysler, Jeep and Dodge dealers. Ulm is a party to Dealer Sales and Service Agreements with Petitioner for Chrysler, Jeep and Dodge vehicles. Ulm sells Chrysler, Jeep and Dodge vehicles at 2966 North Dale Mabry Highway, Tampa, Florida 33607. Ferman is a party to Dealer Sales and Service Agreements with Petitioner for Chrysler, Jeep and Dodge vehicles. Ferman sells Chrysler, Jeep and Dodge vehicles at 24314 State Road 54, Lutz, Florida 33559. It is undisputed that Petitioner has had four dealers in the Tampa metro market for a significant number of years. Petitioner's primary competitors also have had four or more dealers in the Tampa metro market. By appointing North Tampa as a successor dealer to Bob Wilson Dodge Chrysler Jeep (Wilson), Petitioner seeks to maintain the status quo of four Chrysler dealers in the Tampa metro market. In April 2008, Petitioner had four dealers in the Tampa metro market that each sold and serviced Chrysler, Jeep and Dodge vehicles. The four dealers were: Ulm, Ferman, Courtesy Chrysler Jeep Dodge, and Wilson. On April 25, 2008, Wilson filed a Chapter 11 petition in United States Bankruptcy Court in the Middle District of Florida (the Bankruptcy Court). At or about the same time, Wilson closed its doors and ceased selling and servicing Chrysler, Jeep and Dodge vehicles. The filing of Wilson’s bankruptcy petition precipitated an automatic stay under Section 362 of the Bankruptcy Code. The automatic stay prevented Petitioner from terminating Wilson’s franchise and dealer agreements (dealer agreements). But for Wilson’s bankruptcy filing, Petitioner would have sent Wilson a notice of termination when Wilson closed its doors and ceased dealership operations. Wilson’s cessation of business adversely impacted Petitioner. In relevant part, Petitioner lost sales and lacked a necessary fourth dealer to provide service to Chrysler, Jeep and Dodge customers in the Tampa metro market. Petitioner desired to reopen a dealership at or close to the former Wilson location as soon as possible to mitigate or eliminate the economic loss. During the automatic stay, Petitioner was legally precluded from unilaterally appointing a successor dealer to Wilson. Wilson still had valid dealer agreements for the Chrysler, Jeep and Dodge vehicles and, therefore, was still a dealer. During the automatic stay, Wilson attempted to sell its existing dealership assets, including the Chrysler, Jeep and Dodge dealer agreements. Any attempt by Petitioner to appoint a successor dealer or even negotiate with a successor dealer, would have undermined Wilson’s efforts to sell the dealerships and maximize the estate for the benefit of the creditors. A sale of the dealership required the consent of Wilson and Wilson’s largest creditor, Chrysler Financial. Petitioner did everything it could to accelerate a sale. However, Petitioner was not a party to the sale negotiations and had no ability to require or force Wilson to sell the dealership or its assets to any particular party or to do so within any particular time period. A preponderance of the evidence does not support a finding that Petitioner did anything to intentionally, or inadvertently, delay or manipulate the timing of a sale. On July 30, 2008, Petitioner filed a motion with the Bankruptcy Court to lift the automatic stay. The motion also sought the termination of Wilson’s dealer agreements. Petitioner filed the motion in the Bankruptcy Court in an attempt to hasten the sale negotiations. Petitioner also wanted to be able to terminate the dealer agreements as quickly as possible in the event that a sale was not consummated. The Bankruptcy Court did not initially grant Petitioner's motion. The court wanted to allow time for a sale of the dealership to proceed. During 2008 and early 2009, Wilson continued to negotiate with potential buyers for the dealership. On January 8, 2009, Wilson's motor vehicle dealer license expired. It became apparent to Petitioner that a sale of Wilson’s assets would be unlikely. Petitioner again asked the Bankruptcy Court to grant Petitioner's motion to lift the stay. On February 9, 2009, the Bankruptcy Court entered an order granting Petitioner's motion to lift the stay. However, the order did not terminate Wilson’s dealer agreements. On February 16, 2009, within a week of the entry of the order lifting the stay, Petitioner sent Wilson a notice of intent to terminate Wilson’s dealer agreements. Wilson received the notice of termination on February 23, 2009, and the termination became effective on March 10, 2009. A preponderance of evidence does not support a finding that Petitioner attempted to manipulate or delay the timing of the termination of Wilson’s dealer agreements. Petitioner began working on establishing a replacement dealership as soon as Wilson’s dealer agreements were terminated. Establishing a replacement dealership is a lengthy process that primarily involves finding a suitable dealer candidate, finding a suitable location and facility, and making sure that the candidate has the necessary capital to start and maintain the dealership. Petitioner talked to several potential candidates to replace the Wilson dealership, including Jerry Ulm, the principal of one of the complaining dealers in these cases. By letter dated June 24, 2009, Mr. Ulm advised Petitioner that he opposed the opening of a successor dealership for anyone else but wanted the successor dealership for himself should Petitioner decide to proceed. Petitioner determined that Petitioner would not be able to locate the successor dealership at the former Wilson facility. Petitioner considered several potential alternative locations for the successor dealership, including property offered by Ferman. Ferman had a vacant site on Fletcher Avenue in Tampa, Florida, which Ferman leased from a third party unrelated to this proceeding. Ferman offered to sublease the property to Petitioner. In a letter to Petitioner's real estate agent dated July 17, 2009, Ferman stated Ferman's understanding that Petitioner intended to use the property to establish a Chrysler, Jeep and Dodge dealership. Petitioner ultimately decided to locate the dealership at 10909 North Florida Avenue in Tampa, Florida. It is undisputed that this location is less than two miles from the former Wilson location. Before establishing the successor dealership, however, Petitioner wrote a letter to the Department on February 5, 2010 (the letter). The letter requested the Department to confirm that the establishment of the successor dealership would be exempt under Subsection 320.642(5)(a)1. from the notice and protest requirements in Subsection 320.642(3). The letter explained that Wilson had filed bankruptcy and ceased operations and that the bankruptcy had prevented Petitioner from terminating Wilson and appointing a successor dealership. The letter also provided the relevant dates of the bankruptcy, the lifting of the stay, and the termination of Wilson dealer agreements and advised the Department of Petitioner's intent to locate the successor dealership within two miles of Wilson’s former location. The letter asked the Department to confirm that the establishment of a successor dealership would be exempt if it was established within one year of March 10, 2009, when Petitioner terminated the Wilson dealer agreements. By separate e-mails dated February 9 and 12, 2010, the Department twice confirmed that it had consulted with counsel and determined that the establishment of a successor dealership to Wilson in the manner outlined by Petitioner would be exempt. Petitioner relied on this confirmation by the Department before proceeding with the appointment of a successor dealership. On February 24, 2010, Petitioner sent a second letter to the Department, stating Petitioner's intention to appoint North Tampa as the replacement and successor dealer for Wilson (the second letter). In the second letter, Petitioner again asserted its understanding that the establishment of North Tampa was exempt from the relevant statutory requirements for notice and protest. On February 24, 2010, Petitioner also submitted to the Department an application for a motor vehicle dealer license for North Tampa. On March 3, 2010, the Department issued a license to North Tampa for the Chrysler, Jeep and Dodge vehicles at 10909 North Florida Avenue in Tampa, Florida. On March 7, 2010, North Tampa opened for business. North Tampa has operated successfully and continuously and employs approximately 30 individuals at the site.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order finding that the establishment of North Tampa as a successor motor vehicle dealer is exempt from the notice and protest requirements in Subsection 320.642(3) pursuant to Subsection 320.642(5)(a). DONE AND ENTERED this 11th day of October, 2010, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of October, 2010.
Findings Of Fact Based on the evidence adduced at hearing, the undersigned makes the following findings of fact: Respondent holds a license issued by Petitioner which permits it to engage in the business of a motor vehicle dealer at 9901 N.W. 80th Avenue, Bay 3C, Hialeah Gardens, Florida. On Friday, September 9, 1988, during normal business hours, Karen Reyes, who is employed by Petitioner as a License and Registration Inspector, visited this location to attempt to conduct an annual inspection of Respondent's records. The doors to the warehouse where the business was supposed to be located were closed and locked and no one was around the dealership. Reyes left a note requesting that a representative of the dealership contact her. She then-departed. Reyes returned to the location on Tuesday, September 20, 1988. Although it was mid-morning, the warehouse doors were closed and locked and there was no one present. Before departing, Reyes left a second note asking that she be contacted by someone from the dealership. The following day Reyes attempted to telephone the dealership. No one answered the phone, however, when she called. Reyes reported her findings to her supervisor. As a result, on October 20, 1988, Respondent's President, Javier F. Rodriquez, was sent a letter in which he was advised that Petitioner proposed to revoke Respondent's motor vehicle dealer license on the ground that Respondent had closed and abandoned its licensed location. The letter further advised that Respondent had the right to request a formal hearing before any final action was taken against it. Rodriquez responded to the letter by requesting a hearing at which he would have the opportunity to present proof that the dealership had not been closed or abandoned. In view of this response, Reyes was instructed by her supervisor to pay another visit to the dealership. She made this visit on Tuesday, November 8, 1988. This time she encountered two men at the location. There were also a couple of cars there as well. One of the men, who claimed to be a representative of the dealership, telephoned Rodriquez's wife and had her speak with Reyes. During their telephone conversation, Mrs. Rodriquez informed Reyes that her husband was still active in the automobile sales business, but that he was conducting his business at their home. At the conclusion of their discussion, Reyes asked Mrs. Rodriquez to have her husband call Reyes' office. Mr. Rodriquez telephoned Reyes' office on November 16, 1988. Reyes was not in, so Rodriquez left a message. Later, that day, Reyes returned the call, but was unable to reach Rodriquez. The following day, Reyes went back to the dealership, where she found the same two men she had met there on November 8, 1988. Rodriquez, however, was not at the dealership. Reyes therefore left. She came back later in the day. This time Mr. Rodriquez was present and he spoke with Reyes. When asked by Reyes why there was no business activity nor records at the licensed business location, Rodriquez responded that the dealership was now open every day from 9:00 a.m. to 4:00 p.m. He provided Reyes with no additional information. Reyes revisited the dealership on Friday, January 13, 1989, Wednesday, January 18, 1989, Thursday, January 19, 1989, and Monday, January 23, 1989, during normal business hours. On each of these occasions, she found no one at the location and the doors to the warehouse closed and locked. She made another visit on Monday, January 30, 1989. Although it was during normal business hours, there was no indication of any activity at the dealership. Furthermore, the sign which had identified the business had been removed. This prompted Reyes to speak with the leasing agent at the warehouse complex. The leasing agent told Reyes that Respondent was no longer occupying space at the complex.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner enter a Final Order revoking Respondent's motor vehicle dealer license. DONE and ORDERED this 27th day of March, 1989, in Tallahassee, Florida. STUART M. LERNER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of March, 1989. COPIES FURNISHED: Michael J. Alderman, Esquire Neil Kirkman Building, A-432 Tallahassee, Florida 32399-0504 Javier F. Rodriquez, President Inrodar Auto Sales, Inc. 9901 N.W. 80th Avenue, Bay 3C Hialeah Gardens, Florida 33016 Charles J. Brantley, Director Department of Highway Safety And Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500 Enoch Jon Whitney, Esquire General Counsel Department of Highway Safety And Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
The Issue The issue in this case is whether a motor vehicle dealer license should be issued to S.G. Silverman, Respondent, by the Department of Highway Safety and Motor Vehicles, Department. Intervenor American Honda Motor Company has the burden of proof in this case, pursuant to Section 320.642, Florida Statutes. The Department must deny an application if existing dealers have complied with their franchise agreements and are providing adequate representation. There is no contention in this case that the existing dealers, Petitioners Satnam Enterprises, Inc., d/b/a Honda of Fort Lauderdale, and International Cycles, Inc., d/b/a Honda International and Intervenor R.B.L. Cycles, d/b/a Boca Honda Sales, have breached their franchise agreement with American Honda Motor Company. The only issue presented is whether they are providing adequate representation in the community or territory. Petitioners' Exhibit 1 was a deposition upon written interrogatories of Edward Lemco taken by Petitioners on September 4, 1985 in Albany, Oregon. Upon the agreement of the parties, the Hearing Officer instructed Petitioners to make Mr. Lemco available following the hearing at a mutually convenient time to place to allow Respondent and Intervenor American Honda Motor Company to cross-examine him, and to submit a transcript of that cross-examination. Petitioners complied with this instruction, confirmed by Order dated September 25, 1985, and filed the deposition of Edward Lemco on November 4, 1985 which is hereby received as exhibit P-1A. Petitioners' Exhibit 14 was a map of the area prepared by the general manager of one of the Petitioners, Surg Soni, and Petitioners were instructed to reproduce the exhibit and provide copies to all parties within twenty days of the hearing. The exhibit, P-14, was returned to Petitioners for this purpose. Since Petitioners have failed to comply with this instruction or to return P-14 to the Hearing Officer, this exhibit is excluded and not received in evidence. Petitioners' remaining fifteen (15) exhibits have been received in evidence. Respondent Silverman offered three (3) exhibits which were received. Intervenor American Honda offered eighteen(18) exhibits, two of which (I-10 and I-ll) were rejected, but the remaining sixteen (16) were received in evidence. The general managers of Satnam Enterprises, Inc. and International Cycles, Inc., Surg Soni and Pablo Canseco, as well as the owner of R.B.L. Cycles, Ron Lipack, testified on behalf of Petitioners and Intervenor, R.B.L. Cycles. S. G. Silverman testified on his own behalf. Intervenor American Honda Motor Company called Joe Prussiano, Jr., former southeastern zone manager, Gerald L. Ford, Ph.D., who was accepted as an expert in market and economic analysis, and Dick Clark, current southeastern zone manager, to testify on its behalf. A transcript of the final hearing was filed on October 22, 1985 and thereafter the parties were allowed ten (10) days to file proposed findings of fact pursuant to Section 120.57(1)(b)4., Florida Statutes, and Rule 221-6.31, Florida Administrative Code. A ruling on each proposed finding of fact has been made in this Recommended Order as reflected in the attached Appendix.
Findings Of Fact On or about January 24, 1985, Respondent S. G. Silverman submitted an application for a license as a motor vehicle dealer to the Department of Highway Safety and Motor Vehicles. The application indicated that his business would be located in the vicinity of Copans and Powerline Roads in Pompano Beach, Broward County, Florida. On or about November 12, 1984, Silverman had received a tentative approval from American Honda Motor Company, Intervenor, of his application for a Honda motorcycle, all- terrain-vehicle and motor scooter franchise. Three Honda motorcycle, all-terrain-vehicle and motor scooter dealerships presently exist within the community or territory to be served by Respondent Silverman. These are: Petitioners Satnam Enterprises, Inc., d/b/a Honda of Fort Lauderdale, and International Cycles, Inc., d/b/a Honda International, and Intervenor R.B.L. Cycles, d/b/a Boca Honda Sales. Petitioners are located in Broward County, south of Silverman's proposed location, and Intervenor is located in the southern part of Palm Beach County, north of Silverman's proposed location. Intervenor R.B.L. Cycles accounts for 10 percent of all American Honda units sold to Broward County residents, and one-third of its sales are to Broward County residents. These three existing dealers have protested the issuance of a license to Respondent Silverman. Based upon the testimony and evidence presented by Gerald L. Ford, Ph.D., who was accepted as an expert in market and economic analysis, American Honda Motor Company is not being adequately represented in the territory or community by these existing three dealers. Specifically this is evidenced by the following: According to R. L. Polk, from 1981 through 1984 American Honda's statewide market share increased from 40.87 percent to 55.73 percent while its market share in Broward County only increased from 45.06 percent to 48.07 percent, and from 45.16 percent to 54.58 percent in Palm Beach County. Thus, while its market share in Broward and Palm Beach Counties exceeded its statewide market share in 1981, American Honda's market share in Broward and Palm Beach Counties lagged behind its statewide market share in 1984. For the five year period from 1980 to 1984, American Honda's market penetration in Broward County averaged approximately 10 percent behind that in the entire state. At the location now occupied by Petitioner Satnam Enterprises, Inc., American Honda had sales of 1064 units in 1981 and Petitioner Satnam Enterprises, Inc. had sales of 1131 units in 1984. At the location now occupied by Petitioner. International Cycles, Inc., American Honda had sales of 961 units in 1981 and Petitioner International Cycles, Inc. had sales of 831 units in 1984. At the location now occupied by Intervenor R.B.L. Cycles, American Honda had sales of 1159 units in 1981, and Intervenor R.B.L. Cycles had sales of 798 units in 1984. Thus, sales of 3184 American Honda units took place at these three locations in 1981, and these three existing dealers had a decrease in sales to 2760 units in 1984. Between 1981 and 1984 an increasing number and percentage of American Honda purchasers from Fort Lauderdale and Broward County went outside the community or territory to make their purchase of an American Honda unit from dealers other than these three existing dealers. Since there are currently fifty-two (52) American Honda dealerships in Florida and the 1984 state population was estimated to be 10,930,389, the current statewide ratio of dealerships to population is 1 to 210,200. If Respondent Silverman's application is approved there will be fifty-three (53) American Honda dealerships in Florida and the ratio will be 1 to 206,234. There are currently two dealerships in Broward County, which had a population of approximately 1,100,000 in 1984. The ratio of dealers to population in Broward County is 1 to 550,000 and it would be 1 to 366,666 if Respondent Silverman's application is approved. Thus, population per dealership in Broward County currently far exceeds the statewide ratio, and would continue to exceed the statewide ratio by a significant amount if the Silverman application is approved. There are a total of six (6) dealerships currently existing in Broward and Palm Beach Counties and a total population in those two counties in 1984 of approximately 1,800,000. If Respondent Silverman's application is approved the ratio of dealers to population in these counties would be 1 to 257,143, which exceeds the current statewide ratio of 1 to 210,200, and the ratio statewide that would exist if this application is approved of 1 to 206,234. While American Honda sales in Broward County were only slightly below the statewide ratio of sales to population in 1981 and 1982, sales per population in Broward County fell significantly in 1983 and 1984 compared to the statewide ratio. There was one sale for every 367 people throughout the state in 1984, but in Broward County there was only one sale for every 503 people. If the ratio of sales to population in Broward County had been the same as the statewide ratio in 1984, 3112 American Honda units would have been sold. In fact, the two existing Broward County dealers sold 1628 units and other dealers sold 644 units to Broward County residents in 1984, for a total of 2272 sold to Broward County residents in 1984. Therefore, there was an estimated unmet sales potential of 840 units in Broward County in 1984. In 1984 each American Honda dealership sold an average of 585 units. Sales in 1984 by Petitioners and Intervenor Cycles exceeded the statewide average of 585 units, and Petitioner Satnam Enterprises, Inc. has shown a significant increase in sales from 1983 to 1984. Despite this performance, however, an unmet sales potential, which exceeded the statewide average sales per dealership in 1984, continued to exist. Recognizing that not every person is a potential purchaser of a motor cycle, motor scooter or all- terrain-vehicle, the "target" population of males between the ages of 14 and 64 has been identified. In 1984 there was an estimated "target" population in Broward County of approximately 327,783 people. Assuming unit sales to this "target" group occurred in Broward County at the same rate as they occurred statewide, there was an unmet need in 1984 of approximately 572 units which is just slightly below the average unit sales for all American Honda dealerships in the state of 585. Broward County's population is projected to grow from approximately 1,149,000 in 1985 to 1,591,700 by the year 2000, which is almost a 39% growth in population, or an annual growth of 2.6%. This exceeds the rate of population growth projected for the state as a whole. Broward County is an economically viable market, ranking second among all counties in such things as total and per capita Effective Buying Income, Buying Power Index, and total per capital Retail Sales. Additionally, Broward County has shown substantial growth in these figures from 1980 to 1984. These are economic indices typically used to gauge the vitality of a market. Based upon the testimony of Surg Soni, general manager of Petitioner Satnam Enterprises, Inc., it is evident that his sales in 1985 have declined approximately 28% from their level in 1984. Most of his potential customers feel that proximity to a dealership is unimportant, and have therefore been willing to travel to other dealerships to make their purchases. Pablo Canseco, general manager of Petitioner International Cycles, Inc., also indicated his sales for 1985 have declined from 1984. However, this decline in sales is consistent with a flattening of sales expected nationally for the motor cycle industry. They, as well as Ron Lipack, owner of R.B.L. Cycles, pointed out that factors other than dealer performance may result in a deficient market share or penetration level such as: the timing of product releases by the manufacturer; pricing policies of the manufactures; the quantity and type of units made available to dealers to sell; the availability of consumer retail financing programs: the existence of manufacturer advertising campaigns, insurance rates in the area. While these additional factors may contribute to a lack of representation in a particular territory or community, the weight of the evidence in this case does not establish that any one, or combination of these factors, is any more significant than overall dealer performance in explaining the lack of representation which has been demonstrated by Intervenor American Honda Motor Company. Broward County is found to be the relevant market area, community or territory under consideration in this case. Petitioners and Intervenor R.B.L. Cycles are found to be existing dealers serving this territory or community to be served by Respondent Silverman due to the proximity of Silverman's proposed location to these dealers, the record of sales by Petitioners and Intervenor R.B.L. Cycles to Broward County residents, and transportation patterns and roadways in the area. "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 reported by R. L. Polk. All- terrain-vehicle sales are not reflected in R. L. Polk data since they are generally not used on roads and highways and therefore are not registered. "Penetration" measures actual unit sales compared with total sales potential using manufacturer warranty data, whether or not the vehicle purchased is registered.
Recommendation Based upon the foregoing, it is recommended that the Department of Highway Safety and Motor Vehicles issue a Final Order approving Respondent Silverman's application for a motor vehicle dealership. DONE and ENTERED this 13th day of November, 1985, at Tallahassee, Florida. _ DONALD D. CONN, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of November, 1985. APPENDIX Rulings on Petitioners' and Intervenor R.B.L. Cycles' Proposed Findings of Fact are as follows: (Unnumbered paragraphs have been consecutively numbered for identification beginning with the last paragraph on page 2) 1,2 Rejected based upon Findings of Fact 3,6. 3 Rejected based upon Finding of Fact 3(c)-(g),(i)(j) and 6. 4-8 Rejected as argumentative characterizations of testimony which are not appropriate proposed findings of fact. Otherwise, rejected as irrelevant, immaterial and not based upon competent substantial evidence in the record. Rejected based upon Findings of Fact 2,5. Adopted in part in Finding of Fact 4, but otherwise rejected as not based on competent substantial evidence. Rejected based on Finding of Fact 6. Rejected based on Finding of fact 6, and otherwise as not based on competent substantial evidence. Rejected as irrelevant and immaterial. Rejected as irrelevant, immaterial and not based upon competent substantial evidence. Rejected based upon Findings of Fact 3,4,6. It is evident that "market share" is not the sole basis for the finding of inadequate representation, but it is a significant factor. Adopted in part in Finding of Fact 3(a). 17-19 Rejected as contrary to competent substantial evidence in the record. 20,21 Rejected based upon Finding of Fact 3(i) and otherwise rejected as not based upon competent substantial evidence. Rejected as irrelevant and immaterial. Rejected based upon Finding of Fact 3 and otherwise irrelevant, immaterial and not based on competent substantial evidence. 24,25 Rejected generally based on Finding of Fact 5. However, the reference in paragraph 25 to the Petitioners' and Intervenor R.B.L. Cycles' sales performance in 1984 is adopted in Finding of Fact 3(h). Adopted in Findings of Fact 2,5. Rejected based upon Findings of Fact 3,4. Rejected based upon Findings of Fact 3,4,6. Rejected based upon Findings of Fact 3,4. Rulings on Respondent Silverman's Proposed Findings of Fact: (Unnumbered paragraphs have been consecutively numbered for identification beginning with the last paragraph on page 1) 1,2 Adopted in Finding of Fact 3. 3,4 Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 3. Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. 8-16 Rejected as irrelevant and unnecessary. These paragraphs largely set forth argument based on the evidence and do not succinctly set forth relevant proposed findings of fact. Rulings of Intervenor American Honda's Proposed Findings of Fact. 1 Adopted in Finding of Fact 1. 2, 3 Adopted in Finding of Fact 2. Rejected as irrelevant and unnecessary. Adopted in part in Finding of Fact 1. Adopted in part in Findings of Fact 1, 2. Adopted in part in Finding of Fact 5. Rejected as irrelevant and unnecessary. 9,10 Adopted in Finding of Fact 3(a). 11 Adopted in part in Finding of Fact 3(k). 12 Adopted in part in Finding of Fact 3(j). 13 Adopted in part in Finding of Fact 3(d). 14 Adopted in part in Finding of Fact 3(f). 15 Adopted in part in Finding of Fact 3(c). 16 Rejected as simply a summary of, and argument on, testimony presented. 17-19. Adopted in part in Finding of Fact 3. 20-21 Rejected as irrelevant and unnecessary. 22. Adopted in part in Finding of Fact 4. COPIES FURNISHED: N. Sandy Konigsberg, Esquire 2310 Hollywood Boulevard Hollywood, FL 33020 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, FL 32301 Julia Sullivan-Waters, Esquire Dennis R. Ferguson, Esquire Post Office Box 1288 Tampa, FL 33601 Elizabeth J. Du Fresne, Esquire Gerald McBride, Esquire 2950 S.W. 27th Avenue Suite 310 Coconut Grove, FL 33133 Robert W. Dickerson, Esquire 611 West Sixth Street 34th Floor Los Angeles, CA 90017 Leonard R. Mellon, Executive Director Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, FL 32301
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File and Relinquishing Jurisdiction by William F. Quattlebaum, 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. Said Order Closing File was predicated upon Petitioner’s Notice of Dismissal, filed April 2, 2012. Accordingly, it is hereby ORDERED that this case is CLOSED. Filed April 9, 2012 8:15 AM Division of Administrative Hearings DONE AND ORDERED this lel} day of April, 2012, 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 in the official records of the Division, of Motorist Services this day of April, 2012. 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 Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 William F. Quattlebaum Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Section
The Issue Whether Volkswagen of America, Inc., should be permitted to establish an additional franchised dealership in Broward County, Florida, as more specifically described in the written notice it provided the Department of Highway Safety and Motor Vehicles advising of its intention to establish such a dealership.
Findings Of Fact Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made: VWoA is a Florida-licensed importer and distributor of Volkswagen (VW) vehicles. It is a wholly-owned subsidiary of Volkswagen AG (VAG). VAG, which is headquartered in Germany, manufactures VW- brand motor vehicles. On a worldwide basis, it produces more vehicles than any other manufacturer except Ford Motor Company and General Motors Corporation. VWoA distributes to its franchised dealerships in the United States and Canada VW vehicles manufactured by VAG. VWoA establishes annual planning volumes or sales objectives for each of its franchised dealerships (based upon the dealership's past sales performance and other pertinent factors). For the first quarter of each year, VWoA's allocation of vehicles to the dealership is based upon the established planning volume for that dealership. In determining the number of vehicles to allocate to a dealership during the remainder of the year, VWoA takes into consideration the dealership's to-date sales performance for the year in relation to VWoA's expectations (as reflected by the dealership's planning volume previously established for that year). VWoA's franchised dealerships (VW dealerships) in the United States are assigned to one of five regions, each headed by a VWoA regional team leader. VW dealerships in Florida are assigned to the Southeast Region. James Wolter has been the regional team leader for VWoA's Southeast Region since January 1, 1999. Each region, including the Southeast Region, is divided into districts, each headed by a VWoA area executive. The area (defined in terms of zip codes) around each dealership in a district in which the dealership is deemed to have a geographic advantage over other VW dealerships because of the dealership's proximity (in terms of distance by air) to consumers living in that area is referred to by VWoA as the dealership's Primary Area of Influence or PAI. Three digit numbers are used to designate each dealership's PAI. VW dealerships in southeast Florida, from Indian River County (to the north) to Dade County (to the south), are assigned to District 22. Charles Westly has been the area executive of District 22 since January 1, 1999. At present, there are 11 existing VW dealerships located in District 22: Vista Volkswagen, whose PAI is 012; Esserman International, whose PAI is 029; Vero Beach Motorsports, whose PAI is 031; South Motors, whose PAI is 041; Gunther Volkswagen, whose PAI is 073; Stuart Volkswagen, whose PAI is 087; Esserman Volkswagen, whose PAI is 095; Deel Volkswagen, whose PAI is 223; Borton Volkswagen, whose PAI is 237; Palm Beach Volkswagen, whose PAI is 241; and Schumacher Volkswagen, whose PAI is 242. Nine of these 11 dealerships are located in Dade, Broward, or Palm Beach Counties (which, collectively, are also known as the "Miami Metro"). The dealerships located in Dade County are Esserman International, South Motors, Esserman Volkswagen, and Deel Volkswagen. The dealerships located in Palm Beach County are Borton Volkswagen, Palm Beach Volkswagen, and Schumacher Volkswagen. Borton Volkswagen, which is operated by Borton, is located at 2201 North Federal Highway in Delray Beach in southeast Palm Beach County. Palm Beach Volkswagen and Schumacher Volkswagen are located to the north of Borton Volkswagen. The dealerships located in Broward County are Vista Volkswagen and Gunther Volkswagen. Although Broward County presently has fewer VW dealerships than either of the other two counties which comprise the Miami Metro, of the three Miami Metro counties, Broward County is (based on 1998 registration data) the largest market in terms of the sale of new automobiles (of all makes). Vista Volkswagen, which is operated by Vista (an entity owned by Charles Dascal, Larry Hoffman, and Richard Buttafuoco, who also have an ownership interest in the entity that operates South Motors) is located 17.2 miles south of Borton Volkswagen at 700 North Federal Highway in Pompano Beach in northeast Broward County. Vista also operates (out of separate facilities and using a separate sales and service staff) a BMW dealership at this location. Gunther Volkswagen is located 11.4 miles to the southwest of Vista Volkswagen at 1660 South State Road 7 (441) in the Fort Lauderdale/Plantation area. It is operated by Gunther Motor Company of Plantation, Inc. (Gunther Plantation), which prior to July 15, 1999, was known as Gunther Motor Company, and, which prior to 1991, was known as Gunther Volkswagen, Inc. Gunther Plantation also operates (out of separate facilities and using separate sales and service staff) Kia and Mazda dealerships on the 15-acre tract on which Gunther Volkswagen is located. Joseph F. Gunther, Jr. (Mr. Gunther) is the President of Gunther Plantation and its majority (51%) shareholder. The remaining 49% of the shares of the corporation are owned by Mr. Gunther's three sons, Joseph F. Gunther III (16%), John Casey Gunther (Casey Gunther) (16%), and Michael Gunther (17%). The elder Mr. Gunther has had an ownership interest in Gunther Plantation and has been actively involved in the operations of Gunther Volkswagen since 1970. In 1970, when Gunther Volkswagen opened (as the third VW dealership in Broward County), VWoA had annual sales in the United States of 569,292 units, which were made through a dealer network of 1,160 dealerships. 6/ Thereafter, as Japanese imports became increasingly popular, annual sales of new VWs (VW sales) in the United States declined. There was also a decline in the number of VW dealerships in the United States starting in 1973. (The number of VW dealerships in the United States peaked at 1,203 in 1972.) In 1993, VW sales in the United States were 49,533 units, fewer than had been made in any year since 1955. By that year, the nationwide VW dealership network was "pretty fragmented." It consisted of 639 dealerships (564 less than had been in operation in 1972), not all of which were at the "right" locations. In 1993, Dr. Ferdinand Piech (an engineer by profession) became the Chief Executive Officer of VAG. Under his leadership, VAG took measures that significantly improved the quality of the product it manufactured. At the same time, VWoA reorganized its management structure and began the task of rebuilding the VW dealership network in the United States by closing underperforming dealerships, relocating dealerships to better locations, and selectively adding new dealerships in markets where it was either not represented or not adequately represented. In the years subsequent to 1993, VW sales in the United States have rebounded significantly. In 1994, 1995, 1996, 1997, and 1998, VW sales in the United States were 97,043, 115,114, 135,907, 137,885, and 219,679 units, respectively. While VW sales in the United States have increased over this period of time, the number of United States VW dealerships has declined each year. At the end of 1998, there were 600 VW dealerships in the United States, 39 less than in 1993 and 603 less than in 1972. VWoA anticipates that VW sales in the United States will continue to rise. It has a sales objective of 306,000 units for 1999 and 348,000 units for 2000. There has also been, subsequent to 1993, a substantial increase in VW sales by dealerships in what is now District 22 (the District 22 area) and by dealerships in the Miami Metro. In 1993, 1994, 1995, 1996, 1997, and 1998, VW sales by dealerships in the District 22 area totaled 1,226, 2,448, 3,041, 3,913, 4,264, and 7,757 units, respectively, and VW sales by dealerships in the Miami Metro totaled 1,187, 2,351, 2,941, 3,816, 4,236, and 7,648 units, respectively. In the first six months of 1999, VW sales by dealerships in the District 22 area totaled 5,739 units, and VW sales by dealerships in the Miami Metro totaled 5,509 units. In 1998, Gunther Volkswagen sold more VWs than any other dealership in the United States. In terms of the total number of VW sales made during 1998, the other VW dealerships in the Miami Metro ranked 44th (South Motors), 56th (Esserman Volkswagen), 57th (Deel Volkswagen), 61st (Vista Volkswagen), 88th (Palm Beach Volkswagen), 100th (Schumacher Volkswagen), 105th (Borton Volkswagen), and 319th (Esserman International 7/) out of the 600 VW dealerships in the United States. Out of the 170 dealerships in VWoA's Southeast Region, the Miami Metro dealerships' sales rankings for 1998 were as follows: Gunther Volkswagen: 1st; South Motors: 10th; Esserman Volkswagen: 13th; Deel Volkswagen: 14th; Vista Volkswagen: 16th; Schumacher Volkswagen: 22nd; Borton Volkswagen: 24th; and Esserman International: 84th. For the first six months of 1999, three of the Miami Metro dealerships were among the top 50 VW dealerships in the United States in total VW sales. Gunther Volkswagen was number one, with 1,829 VW sales; South Motors was number 17, with 708 VW sales; and Vista Volkswagen was number 44, with 548 VW sales. The increases in VW sales in the District 22 area and the Miami Metro have occurred despite supply shortages of certain popular models with features desired by consumers that have resulted in dealerships creating "waiting lists" for these vehicles (a nationwide problem VWoA and VAG are taking measures to rectify 8/); the absence of a VW dealership in Martin County in 1997 and 1998; and having one less dealership in Broward County since the closing of Arnie Smith Volkswagen in or about July of 1995. Arnie Smith Volkswagen was located in an older facility in a deteriorating area on Sunrise Boulevard in Fort Lauderdale, approximately halfway between Gunther Volkswagen and Vista Volkswagen. In addition to being in a bad location, it suffered from management problems and high employee turnover. As a result, its VW sales were declining. (From January of 1995 through July of 1995, its VW sales were 63 units, 43 less than the number of VW sales it had made during the first seven months of the previous year.) Arnie Smith Volkswagen was bought out by VWoA and Gunther Plantation (which at the time was known as Gunther Motor Company). Vista was asked to participate in the buy-out, but declined to do so. The closing of Arnie Smith Volkswagen left VWoA with two dealerships in Broward County, neither of which was located in the rapidly growing western portion of the county. At the time of the closing of Arnie Smith Volkswagen, VWoA believed that the most prudent course of action was to keep the Broward County VW dealership count at two to allow the two remaining dealerships to "get some meat on their bones." These two dealerships, Gunther Volkswagen and Vista Volkswagen, did enjoy an increase in VW sales after the closing of Arnie Smith Volkswagen. In the first half of 1995, when Arnie Smith Volkswagen was still in business, Gunther Volkswagen and Vista Volkswagen had 571 and 121 VW sales, respectively. In the second half of 1995, when Arnie Smith Volkswagen was no longer selling VWs, Gunther Volkswagen and Vista Volkswagen had 664 and 160 VW sales, respectively. Gunther Volkswagen's VW sales in 1996, 1997, and 1998 were 1,657, 1,657, and 2,565 units, respectively. Vista Volkswagen's VW sales in 1996, 1997, and 1998 were 370, 515, and 722 units, respectively. By late 1996 to early 1997, VWoA determined that the time was right to establish another VW dealership in Broward County and bring its dealership count in the county to three (which is the same number of VW dealerships that VWoA had in the county from 1970 until Arnie Smith Volkswagen went out of business in or about July of 1995). After reviewing vehicle registration and sales data, which reflected that its principal competitors with dealerships in the Coconut Creek area of northwest Broward County were outperforming VWoA in that area, VWoA made the further determination that this third Broward County VW dealership should be located in the Coconut Creek area (which, in 1970, consisted of either swamp or farm land and today is one of the fastest growing areas in the nation, with a population having income characteristics that make it a "great spot to be selling . . . new vehicles"). There has been no showing that VWoA, at any time, attempted to coerce any of the existing VW dealers to consent to the establishment of such an additional VW dealership. After determining to establish an additional VW dealership in the Coconut Creek area, VWoA began looking for an operator for this additional dealership, and it also retained the services of a real estate company, the Core Company (which is now known as Travel Pro), to search for a suitable site in the Coconut Creek area for the dealership. Vista and Gunther Plantation were among the candidates VWoA considered to operate the dealership. VWoA had several conversations about the Coconut Creek market with Vista (which recognized that the Coconut Creek area was a "boom" area with considerable market potential). At no time during these conversations did Vista indicate that it was willing to operate full-scale VW dealerships in both Pompano Beach and the Coconut Creek area. After reviewing the qualifications and credentials of the candidates under consideration, VWoA, exercising reasonable and sound business judgment, determined that the principals of Gunther Plantation (which at the time was third in the nation in the number of VW sales) were best suited to operate the additional VW dealership in the Coconut Creek area. It then entered into negotiations with them. Thereafter, some time before March 18, 1998, Vista approached VWoA and proposed that it be allowed to either relocate its Pompano Beach VW dealership to the Coconut Creek area or operate a full-scale VW dealership in the Coconut Creek area, while maintaining a satellite VW dealership with limited sales, service, and parts facilities (as opposed to a full-scale VW dealership) in Pompano Beach. VWoA rejected both alternatives inasmuch as it had already selected an operator for the Coconut Creek area VW dealership. It does not appear that, in denying Vista the opportunity to operate a VW dealership in the Coconut Creek area, VWoA acted unreasonably; nor is there evidence that VWoA, in any other respect, acted in a manner that unreasonably denied Vista the opportunity to grow and expand its VW dealership. Notwithstanding VWoA's rejection of Vista's proposal, Vista still intends to proceed with plans to relocate its Pompano Beach BMW dealership to the Coconut Creek area, a move that would result in an increase in Vista's operating expenses. In middle to late 1997, VWoA acquired property in the Coconut Creek area for a VW dealership. The property is located on the northeast corner of State Road 7 (441) and Collum Road (Coconut Creek Site), which is in Vista Volkswagen's PAI. The Coconut Creek Site is in an area where existing dealerships representing other major brands (including brands against which the VW brand competes) are clustered. (Such clustering promotes inter-brand competition and makes it more convenient for consumers to shop for automobiles.) There are six such "automobile clusters" in Broward County and southern Palm Beach County, one each in the Delray Beach, the Pompano Beach, the Coconut Creek, the Plantation, the Ft. Lauderdale, and the Hollywood/Davie/Pembroke Pines areas. In 1997, these clusters generated the following new vehicle sales: Delray Beach area cluster: 22,270 units; Pompano Beach area cluster: 28,281 units; Coconut Creek area cluster: 29,602 units; Plantation area cluster: 24,225 units; Ft. Lauderdale area cluster: 16,968 units; and Hollywood/Davie/Pembroke Pines area cluster: 31,449 units. VWoA is presently represented in only three of these six "automobile clusters": the Plantation area cluster (where Gunther Volkswagen is located); the Pompano Beach area cluster (where Vista Volkswagen is located); and the Delray Beach area cluster (where Borton Volkswagen is located). The three existing VW dealerships closest to the Coconut Creek Site are Vista Volkswagen, which is 6.9 miles away, Gunther Volkswagen, which is 12.7 miles away, and Borton Volkswagen, which is 16.3 miles away. (There are existing dealerships in the Coconut Creek area representing brands other than VW (Chevrolet, Dodge, Ford, Lincoln Mercury, Mazda, Mitsubishi, and Toyota) that are 6.9 miles or less from their closest intrabrand competitor.) The driving time between the Coconut Creek Site and Gunther Volkswagen is anywhere between 26 and 40 to 45 minutes (depending on traffic). It takes from approximately 17 minutes to 30 to 35 minutes (depending on traffic) to drive from the Coconut Creek Site east to Vista Volkswagen. East-west movement in Broward County has become increasingly difficult over the years as the western portion of the county has become more densely populated. As a result, consumers in Broward County tend to move in a north-south, rather than an east-west, direction to make their vehicle purchases. On March 16, 1998, after a period of negotiation and the exchange of draft agreements, VWoA sent the following letter of understanding to Mr. Gunther and Casey Gunther: 9/ This letter will summarize our understanding of the actions to which you and Volkswagen of America, Inc. ("VWoA") are prepared to commit to establish a new, exclusive Volkswagen dealership for the Gunther organization ("Gunther") in Coconut Creek, FL. The following bullet points are a recap of our meeting on January 30, 1998, and include the following. In light of what we believe to be the potential growth in this market, it is the intent of VWoA to designate Coconut Creek as an open point and to construct a new dealership facility on the property owned by VWoA in Coconut Creek. While the building architecture will be based on the new Volkswagen Corporate Design guidelines, VWoA agrees to seek your input into the size of the building and land requirements needed to operate the dealership. The actual facility construction costs are estimated to be approximately $100 per square foot, but this may vary depending on local requirements and conditions. VWoA will defend its right to designate Coconut Creek as an open point in the event that another dealer in the market protests VWoA's action. Once the facility is completed, VWoA and Gunther will enter into a lease agreement for the land and building. The annual lease will be negotiated based on the cost to purchase the land used by the dealership, the final facility construction costs and local market value. Prior to entering into a new lease for the Coconut Creek dealership, Gunther will have purchased or entered into an intent to purchase from VWoA the existing Gunther Volkswagen, Inc. 10/ building and real property located in Ft. Lauderdale, FL. 11/ It is understood by both parties that it will take time to establish service and parts business at the new point in Coconut Creek, which business will be an integral part of the Volkswagen operations at that facility. The parties further understand that to establish that business will require sufficient New and Used Vehicle sales volumes to generate a gross profit reasonably sufficient to support the facility lease. Because this will be a new point, and because at this time there is not an established sales rate for the Coconut Creek market, VWoA agrees to establish annual new vehicle planning volumes in the following manner: At a minimum, an annual new vehicle planning volume will equal one percent (1%) of the national retail sales objective for the respective year. By way of example only, if the national new vehicle retail objective for a given year is 200,000 vehicles, the planning volume for Coconut Creek would be 2,000 vehicles. 12/ This method of calculating planning volumes will remain in effect for the first three years of operation of the new Coconut Creek point. After the third year, the dealership's new vehicle planning volume will be calculated in the same manner then used by VWoA to establish the planning volume for every Volkswagen dealer. After the first year of operation, the dealership's annual planning volume may be set at a level higher than the calculated 1% of national retail objective if supported by actual retail sales rates at the dealership. All requirements as delineated in the then current Volkswagen Dealer Agreement, Standard Provisions and Operating Standards shall apply to your appointment as a Volkswagen dealer in Coconut Creek. In the event that Gunther elects not to pursue this opportunity to operate an exclusive Volkswagen dealership in Coconut Creek, then Gunther (a) acknowledges VWoA's intent to designate Coconut Creek as an open point and (b) agrees to waive its right to protest the appointment of another dealer operator in Coconut Creek. As previously mentioned, this letter is intended to confirm issues we discussed in January. If you are in agreement with the above, please sign the attached copy of this letter and return it to me. Once we receive the executed copy, we will file the necessary documents with the city and state to obtain their approvals to move forward with our plans. This is an exciting opportunity for both Volkswagen and the Gunther organization, 13/ and we look forward to working closely with you as we get this project underway. Please feel free to give me a call if you have any questions. Mr. Gunther and Casey Gunther both signed this letter on March 25, 1998, indicating that they "concur[red]" with the representations made in the letter. VWoA customarily makes special arrangements concerning allocation of vehicles, like those set forth in the letter of understanding signed by Mr. Gunther and Casey Gunther, with dealers operating newly created VW dealerships to "get the dealership[s] going." This is a reasonable business practice. Following the execution of this letter of understanding, Debra L. Kingsbury, Esquire, VWoA's attorney, sent the following letter, dated April 2, 1998, to Ronald Reynolds, the Administrator of the Department's Dealer License Section: Dear Mr. Reynolds: Pursuant to the requirements of Florida Statutes, Section 320.642, notice is hereby given that Volkswagen of America, Inc. ("VWoA") intends to establish Gunther Motor Company as a dealership for the sale of Volkswagen vehicles at Block 89, Lots 22 and 23, Coconut Creek, Broward County, Florida 33073. This vacant property is on the northeast corner of State Rd. 441 and Collum Rd. VWoA intends to engage in business with Gunther as a dealership on or after April 1, 1999, assuming that no protest is filed. The dealer(s) of the same line-make vehicles in the county where the new dealership will be located and all counties adjoining that county are as follows: County Palm Beach County Borton Volkswagen 2201 N. Federal Highway Delray Beach, FL 33483 Palm Beach Volkswagen 6870 Okeechobee Blvd. West Palm Beach, FL 33415 Schumacher Automotive 3720 Northlake Blvd. Lake Park, FL 33403 Broward County Vista Volkswagen 700 N. Federal Highway Pompano, Beach, FL 33062 Gunther Volkswagen 1660 S. State Road 7 Ft. Lauderdale, FL 33317 Collier County A+ Car World 601 Airport Pulling Rd. Naples, FL 33942 Dade County Deel Volkswagen 3650 Bird Rd. Miami, FL 33133 South Motors of Dade County 16125 South Dixie Highway Miami, FL 33157 Esserman Volkswagen 16825 NW 57th Ave. Miami, FL 33055 The names and address of the dealer-operator and principal investors of Gunther Motor Company are: Dealer-Operator Joseph F. Gunther, Jr. Principal Investors Joseph F. Gunther, Jr. 1660 S. State Road 7 Ft. Lauderdale, FL 33317 If you have questions or require additional information, please do not hesitate to let me know. To the extent that Ms. Kingsbury's letter reflected that Joseph F. Gunther, Jr., would be the "dealer-operator" of the dealership VWoA proposed to establish in Coconut Creek, the letter was inconsistent with the representations made in the March 16, 1998, letter of understanding VWoA had sent to Mr. Gunther and Casey Gunther that the "dealer-operator" of this proposed dealership would be the entire "Gunther organization" (that is, the corporate entity which was owned by Mr. Gunther and his three sons, each of whom had an ownership interest in excess of 10%). 14/ By letter dated April 22, 1998, Mr. Reynolds notified Ms. Kingsbury that a "notice of publication to establish a franchise for Gunther Motor Company" was "published in the Florida Administrative Weekly on April 17, 1998." A copy of the "notice of publication" was enclosed, and it read as follows: Pursuant to Section 320.642, Florida Statutes, Volkswagen of America, Inc. ("VWoA"), intends to allow the establishment of Gunther Motor Company, as a dealership for the sale of Volkswagen vehicles, at Block 89, Lots 22 and 23. This vacant property is on the northeast corner of State Road 441 and Collum Road, Coconut Creek (Broward County), Florida 33073, on or after April 1, 1999. The name and address of the dealer operator(s) and principal investor(s) of Gunther Motor Company is Joseph F. Gunther, Jr., 1660 S. State Road 7, Fort Lauderdale, Florida 33317. The notice indicates an intent to establish the new point location in a county of more than 300,000 population, according to the latest population estimates of the University of Florida, Bureau of Economic and Business Research. Certain dealerships of the same line-make may have standing, pursuant to Section 320.642, Florida Statutes, to file a petition or complaint protesting the application. Written petitions or complaints must be received by the Department of Highway Safety and Motor Vehicles within 30 days of the date of the publication of this notice and must be submitted to: Mr. Ronald D. Reynolds, Administrator, Dealer License Section, Department of Highway Safety and Motor Vehicles, Room A-312, Neil Kirkman Building, 2900 Apalachee Parkway, Tallahassee, Florida 32399-0635. A copy of such petition or complaint must also be sent by U.S. Mail to: Debra L. Kingsbury, Attorney, Volkswagen of America, Inc., 3800 Hamlin Road, Auburn Hills, MI 48326. If no petitions or complaints are received within 30 days of the date of publication, a final order will be issued by the Department of Highway Safety and Motor Vehicles approving the establishment of the dealership, subject to the applicant's compliance with the provisions of Chapter 320, Florida Statutes. As noted above, in 1998, including the time when Ms. Kingsbury wrote to Mr. Reynolds and when the April 17, 1998, edition of the Florida Administrative Weekly was published, the corporate entity that is now known as Gunther Motor Company of Plantation, Inc., was known as Gunther Motor Company. It was not until July 15, 1999, that its name was changed to its present name. On that same day, July 15, 1999, a new Florida corporation, named Gunther Motor Company and having Mr. Gunther as its sole shareholder, was formed. If an additional VW dealership is established on the Coconut Creek Site (Proposed Dealership), it would be assigned a PAI consisting of zip codes that are now included in the PAIs of existing VW dealerships which are located further away from the centroids of these zip codes than is the Coconut Creek Site. (The Proposed Dealership's PAI will be referred to herein as the "Coconut Creek PAI.") In 1998, 782 new retail VWs were registered in what would have been the Coconut Creek PAI had the Proposed Dealership been in operation that year. (Only Gunther Volkswagen's PAI (with 1642) and Deel Volkswagen's PAI (with 942) had more than 782 new retail VW registrations that year.) Of these 782 vehicles, 327 were sold by Gunther Volkswagen (constituting approximately 13% of its VW sales), 219 were sold by Vista Volkswagen (constituting approximately 30% of its VW sales), and 113 were sold by Borton Volkswagen (constituting approximately 20% of its VW sales). VWoA takes the position in this proceeding that it is not adequately represented in the "community or territory" in which the Proposed Dealership is located. To evaluate the merits of this claim, it is first necessary to identify this "community or territory." VWoA and Vista agree, and the undersigned finds, that the relevant "community or territory" in the instant case (Comm/Terr) consists of the PAIs now assigned to Gunther Volkswagen and Vista Volkswagen (the two existing VW dealerships in Broward County) and to Borton Volkswagen (which is the southernmost VW dealership in Palm Beach County). In 1998, there was a total of 3,371 new retail VWs registered in the Comm/Terr. While there is no dispute regarding the identity of the relevant "community or territory" in the instant case, VWoA and Vista are not in agreement as to the standard that should be used to measure the performance of VWoA's dealership network in the Comm/Terr. Dealership network performance is generally assessed based upon the "market share" or "market penetration" (which are synonymous terms) achieved by the brand in the market in question during the applicable time period, compared to the "market share" or "market penetration" the brand was "reasonably expected" to achieve. ("Market share" or "market penetration" is expressed as a percentage, and it represents a brand's share of the total number of new vehicle registrations in the market.) A "reasonably expected" "market share" or "market penetration" for the VW brand in the Comm/Terr may be determined by: (a) selecting an appropriate comparison market area separate from the Comm/Terr (but preferably in the same local area) where the brand appears not to be inadequately represented; (b) ascertaining the brand’s "market share" or "market penetration" in that comparison market area; and (c) utilizing a process called "segmentation analysis" to account for any differences in consumer preferences and demographic characteristics that may exist between the comparison market area and the Comm/Terr. VWoA suggests, and the undersigned agrees, that it is reasonable and appropriate to assess VWoA's performance in the Comm/Terr by comparing it with VWoA's performance in the PAIs for Schumacher Volkswagen and Palm Beach Volkswagen (Palm Beach PAIs), as segment adjusted (Palm Beach Standard). 15/ The undersigned rejects Vista's contention that, to properly evaluate VWoA's performance in the Comm/Terr, VWoA's "market share" or "market penetration" in the Comm/Terr should be compared, not with the Palm Beach Standard, but "with [VWoA's] average penetration in the U.S. major metros, the Southeast major metros, and the Florida major metros" (Vista's Approach). Vista's Approach does not take into account, or make adjustments for, any consumer preferences, such as import bias, 16/ and demographic characteristics that may distinguish the Comm/Terr from the "average" "metro" market in the United States, in the southeastern United States, and in Florida. Moreover, Vista's Approach fails to take into consideration that VWoA has an incomplete national dealership network and is inadequately represented in various markets included in "the U.S. major metros, the Southeast major metros, and the Florida major metros." As a result, Vista's Approach yields a standard that, unlike the Palm Beach Standard, is too conservative to reflect a "reasonably expected" "market share" or "market penetration" for the Comm/Terr. Employing the Palm Beach Standard (as segment adjusted), the "reasonably expected" "market shares" or "market penetrations" in the Comm/Terr and the Coconut Creek PAI for the VW brand for the years 1995, 1996, 1997, and 1998 were as follows: Comm/Terr: 1995- 1.9%, 1996- 3.5%, 1997- 3.5%, and 1998- 6.2%; and Coconut Creek PAI: 1995- 1.8%, 1996- 3.5%, 1997- 3.4%, and 1998- 6.1%. The actual "market shares" or "market penetrations" in the Comm/Terr and the Coconut Creek PAI for the VW brand for these years were as follows: Comm/Terr: 1995- 2.2% (which was more than "reasonably expected"), 1996- 3.8% (which was more than "reasonably expected"), 1997-3.2% (which was less than "reasonably expected"), and 1998- 5.4% (which was less than "reasonably expected," but more than VWoA's "average penetration in the U.S. major metros [4.6%], the Southeast major metros [4.4%], and the Florida major metros [4.4%]"); and Coconut Creek PAI: 1995- 2.0% (which was more than "reasonably expected"), 1996- 3.2% (which was less than "reasonably expected"), 1997- 2.8% (which was less than "reasonably expected"), and 1998- 4.6% (which was less than "reasonably expected," but the same as "the average penetration in the U.S. major market metros" and more than the "average penetration in the . . . Southeast major metros, and the Florida major metros"). Accordingly, for every full year after 1996, VWoA's "market share" or "market penetration" in the Comm/Terr has been less than "reasonably expected," and for every full year after 1995, VWoA's "market share" or "market penetration" in the Coconut Creek PAI has been less than "reasonably expected." Comparing VWoA's actual versus its "reasonably expected" "market share" or "market penetration" in the Comm/Terr and the Coconut Creek PAI reveals the "retail registration effectiveness" of its dealership network in those markets. The "retail registration effectiveness" of VWoA's dealership network in the Comm/Terr in 1995, 1996, 1997, and 1998 was 119%, 108.1%, 93%, and 87.1%, respectively. The "retail registration effectiveness" of VWoA's dealership network in the Coconut Creek PAI during those years was 111.6%, 93.4%, 84%, and 76.3%, respectively. Accordingly, for every full year after 1995, the last year that VWoA was represented by four dealerships in the Comm/Terr, the "retail registration effectiveness" of VWoA's dealership network in the Comm/Terr and the Coconut Creek PAI has declined. During this period of decline in VWoA's "retail registration effectiveness" in the Comm/Terr and the Coconut Creek PAI, demographic factors in these markets, insofar as retail vehicle sales are concerned, have been favorable. In fact, such sales increased in absolute terms in the Comm/Terr in 1996, 1997, and 1998 (from 1,367 in 1995, to 1,715 in 1996, to 2,341 in 1997, to 3,902 in 1998), but not enough in 1997 and 1998 to meet reasonable expectations with respect to "market share" or "market penetration" (which measures a brand's performance relative to other brands). The likely cause of VWoA's recent "retail registration [in]effectiveness" in the Comm/Terr is the absence of an adequate number of VW dealerships located within its boundaries (which negatively impacts consumer convenience). There are 132 franchised dealerships (of all brands) in the Comm/Terr. Only three (or 2.3%) of these dealerships are VW dealerships. (The Comm/Terr has had only three VW dealerships since the closing of Arnie Smith Volkswagen in or about July of 1995.) In contrast, in the Palm Beach PAIs, 4% of the franchised dealerships are VW dealerships It does not appear that the recent "retail registration [in]effectiveness" in the Comm/Terr has been caused by the supply shortages of VW product (that have led to the creation of "waiting lists" for certain types of VW vehicles) inasmuch as there is no indication that such supply shortages existed only in the Comm/Terr and were not present elsewhere (including, most significantly, in the Palm Beach PAIs). Having identified the cause of VWoA's recent "retail registration [in]effectiveness" in the Comm/Terr as an insufficient number of VW dealerships, the solution to this problem is obvious: the addition of at least another VW dealership in the Comm/Terr. The Coconut Creek area cluster (where the Coconut Creek Site is located) is an appropriate location for this additional dealership. Relocating one of the existing VW dealerships in the Comm/Terr to the Coconut Creek area would not solve the "retail registration effectiveness" problem that VWoA is experiencing in the Comm/Terr inasmuch it would still leave VWoA with an inadequate share of the franchised dealerships in the Comm/Terr. The establishment of an additional VW dealership on the Coconut Creek site would benefit not only VWoA (by increasing its VW sales and enabling it to attain greater "market share" or "market penetration" in the Comm/Terr than it would with just three dealerships in the Comm/Terr). Consumers, particularly those in the Coconut Creek PAI (Coconut Creek consumers), would benefit as well. At present, with three VW dealerships in the Comm/Terr (none of which is located in the Coconut Creek area) Coconut Creek consumers, on the average, have to travel a further distance (8.6 miles) to buy new VWs (or to have their VWs serviced or repaired) than they do to purchase (or have serviced or repaired) vehicles of any of the 27 major brands that are represented in the Coconut Creek PAI. To purchase (or have serviced or repaired) vehicles manufactured by VAG's and VWoA's principal import competitors, Honda, Mitsubishi, Toyota, Mazda, and Nissan, these consumers have to travel, on the average, 4.1, 4.4, 4.4, 4.6, and 4.8 miles, respectively. If the Proposed Dealership is established on the Coconut Creek Site, Coconut Creek consumers would, on the average, be 4.6 miles away from a VW dealership. The establishment of the Proposed Dealership would not only reduce the distance Coconut Creek consumers, on the average, have to travel to get to a VW dealership, it would also increase the number of service stalls available in the Coconut Creek PAI to service and repair VW vehicles. These additional service stalls are badly needed. For example, consumers wanting to have their vehicles serviced or repaired at Gunther Volkswagen (which has 17 service stalls, four more than the number of stalls Vista Volkswagen has that are completely devoted to VW service and repair 17/), must wait, on average, a minimum of two weeks from the time they make an appointment before the dealership is able to service or repair their vehicles. If there is not an increase in the number of service stalls in the area, as VW sales rise, Coconut Creek PAI VW owners seeking to have their vehicles serviced will face even greater delays and resulting inconvenience. Consumers would also benefit from the increase in interbrand competition and intrabrand competition (among VW dealerships) that would occur as a result of the establishment of an additional VW dealership on the Coconut Creek Site. 18/ The benefits VWoA and consumers would derive from the establishment of the Proposed Dealership would not come at the expense of the existing VW dealers in the Comm/Terr, if these existing dealerships were to respond competitively to a new intrabrand competitor in the market. It is reasonable to anticipate that these dealerships would respond in such a competitive manner and that, among other things, they would increase their marketing efforts in the Comm/Terr. Such increased marketing efforts, along with the addition of a fourth VW dealership in the Comm/Terr, would produce an increased awareness of the VW brand, which, given the significant untapped potential of the brand in the Comm/Terr, would enable each of the existing dealerships, including Vista Volkswagen, to increase its VW sales. Indeed, even if the positive impact (of an additional VW dealership in the Comm/Terr) on consumer demand for the VW brand were disregarded, the opportunity (in terms of VW sales) presently available in the Comm/Terr (that is, the opportunity that the existing VW dealerships have not taken advantage of and therefore have "lost," hereinafter referred to as "lost opportunity" would be sufficient to support a fourth VW dealership in the Comm/Terr and, at the same time, allow the three existing VW dealerships to increase their VW sales in the Comm/Terr inasmuch as this "lost opportunity" in the Comm/Terr is significantly greater than the number of VW sales that it is reasonable to expect the Proposed Dealership would make to Comm/Terr consumers. Vista has made a significant investment ($3,311,971.00 as of October 1998) to perform its obligations under its dealer agreement with VWoA (with which it is in substantial compliance). The establishment of the Proposed Dealership, however, would not cause Vista to be deprived of a fair return on its investment, nor would it have "a significant and unfair negative financial impact on Vista," as Vista claims in its Proposed Recommended Order. While it is true that the size of Vista Volkswagen's PAI would be reduced by the addition of a VW dealership on the Coconut Creek Site, having a smaller PAI 20/ would not have any adverse impact on Vista's VW business if Vista were to respond in an effective, competitive manner 21/ and aggressively take advantage of the opportunity that would be available in the Comm/Terr as a whole 22/ (which, as noted above, would be sufficient to support four dealerships), with its efforts being focused upon the geographic areas closest to its dealership. There is no reason to believe that Vista would not be able to respond in such a fashion and offset any loss of Coconut Creek consumer business that it might suffer as a result of the establishment of the Proposed Dealership with an increase in business from consumers residing in its newly configured PAI and in other areas outside of the Coconut Creek PAI. There is no evidence that VWoA has unreasonably denied Vista opportunities for growth within the Miami Metro market. The establishment of the Proposed Dealership appears to be warranted and justified based upon present and anticipated economic and marketing conditions in the Comm/Terr.
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 approving the proposal/application of Volkswagen of America, Inc., to establish an additional dealership in the Coconut Creek area of Broward County. DONE AND ENTERED this 17th day of December, 1999, in Tallahassee, Leon County, Florida. STUART M. LERNER 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 17th day of December, 1999.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by June C. McKinney, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s letter of withdrawal of protest of the establishment of AutoNation Dodge of Pembroke Pines, Inc., 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. Accordingly, it is hereby ORDERED and ADJUDGED that Respondent, AutoNation Dodge of Pembroke Pines, Inc. be granted a license for the sale and service of Jeepr passenger cars and light trucks manufactured by Chrysler (JEEP) 13601 Pines Boulevard, Pembroke Pines (Broward County), Filed January 27, 2012 3:47 PM Division of Administrative Hearings Florida 33027 upon compliance with all applicable requirements of section 320.27, Florida Statutes, and all applicable Department rules. DONE AND ORDERED this A‘! day of January, 2012, in Tallahassee, Leon County, Florida. skill, Assistant Deputy Director 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 | __ day of January, 2012. Nalini Vinayak, Dealer Ycense Administrator 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. MDM/jde Copies furnished: Thomas H. Yardley, Esquire Law Office of Thomas H. Yardley 1970 Michigan Avenue, Building D Cocoa, Florida 32922 Phil Langley Chrysler Motors, LLC 10300 Boggy Creek Road Orlando, Florida 32824 R. Craig Spickard, Esquire Kurkin Forehand Brandes, LLP 800 North Calhoun Street, Suite 1B Tallahassee, Florida 32303 Dean Bunch, Esquire Nelson, Mullins, Riley and Scarborough LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 June C. McKinney 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 MASSEY-YARDLEY CHRYSLER PLYMOUTH, INC., Petitioner, vs. Case No. 11-6492 CHRYSLER GROUP CARCO, LLC, AND AUTONATION DODGE OF PEMBROKE PINES, INC., Respondents.
The Issue The issues in this case are whether Petitioner has standing to protest the establishment of an additional motorcycle dealership; and, if so, whether Petitioner is adequately representing this line of motorcycles in the relevant territory or community pursuant to section 320.642, Florida Statutes (2018).1/
Findings Of Fact Tropical Scooters is located at 11594 Seminole Boulevard, Largo, Florida 33778. It has been in the business of selling scooters and other motorized vehicles for ten years. Michele Stanley is the owner and manager of Tropical Scooters and she has knowledge regarding its purchasing and franchise agreements, inventory, and sales figures. Although no franchise agreement was offered into evidence, Ms. Stanley testified Petitioner has an agreement with a distributor, Pacific Rim International, d/b/a Ice Bear ATV (Ice Bear), to sell YNGF motorcycles. Ice Bear has been supplying Petitioner with YNGF motorcycles for approximately two and a half years. Tropical Scooters has had a good relationship with this distributor and has encountered no problems selling the YNGF line. In the last 18 months, Tropical Scooters has sold 137 YNGF units and currently has 23 units at its showroom. Ms. Stanley discovered that Respondents had applied with the Department to establish a YNGF motorcycle dealership at 9145 66th Street North, Pinellas Park, Florida 33782, from the February 22, 2018, notice published by the Department in the Florida Administrative Register.2/ Subsequently, Tropical Scooters filed a timely complaint with the Department challenging Respondents’ application. Ms. Stanley was familiar with the proposed location of the new dealership and stated that it was four miles “as the crow flies” from the Tropical Scooters showroom. Tropical Scooters is an existing dealership that sells YNGF motorcycles and is within 12.5 of the location proposed by Powersports and Motrac for the new dealership. Therefore, Tropical Scooters has standing to bring this challenge pursuant to section 320.642(3). There was no evidence that Tropical Scooters’ representation of the YGNF line of motorcycles was inadequate in its community or territory as described in section 320.642(2)(b).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department denying the new dealership application of Respondents for the sale and service of Sanmen County Youngfu Machine Co., Ltd., vehicles at 9145 66th Street North, Pinellas Park, Pinellas County, Florida. DONE AND ENTERED this 27th day of July, 2018, in Tallahassee, Leon County, Florida. S HETAL DESAI 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 27th day of July, 2018.
Findings Of Fact In November 1986, Sport Products received approval of its application with American Honda to establish a Honda motorcycle, all terrain vehicle (ATV), and motor scooter dealership in Fort Lauderdale, Florida. By application dated December 2, 1986, Sport Products applied to the Department for a motor vehicle dealer license to establish its dealership at 1030 West Sunrise Boulevard, Fort Lauderdale, Florida. The application of Sport Products was protested by Stanmar and Honda West, existing dealers in Broward County. Stanmar's dealership is located near the intersection of Copans and Powerline Roads, Pompano Beach, Florida. As sited, Stanmar is located approximately 9.5 miles due north of the proposed dealership. Honda West's dealership is located at the intersection of University Drive and Stirling Road, Davie, Florida. As sited, Honda West is located a straightline distance of approximately 9 miles southwest, but a substantially greater distance over any available route of travel, from the proposed dealership. 1/ Replacement Dealer Or New Dealer Point? The proposed site for the Sport Product dealership, 1030 West Sunrise Boulevard, Fort Lauderdale, Florida, is the same location previously occupied by another Honda dealer, Satnam Enterprises, Inc. (Satnam). Satnam conducted business at that location from 1979 until late December 1985, when it ceased doing business. Satnam's dealership agreements with American Honda were terminated on January 22, 1986. Upon termination of Satnam's dealership, American Honda immediately began its search for a replacement dealer in Fort Lauderdale. Typically, it takes from six months to one year to advertise open dealership points, evaluate applications, and select a replacement dealer. In this case, the replacement dealer, Sport Products, was located and approved within one year. If licensed, Sport Products would resurrect the third Honda motorcycle, all terrain vehicle (ATV) and motor scooter dealership in Broward County since the demise of Satnam. The issue of American Honda's right to establish a third Honda dealership in Broward County was previously addressed in the matter of Satnam Enterprises, Inc., d/b/a Honda of Fort Lauderdale, et al. v. S.G. Silverman, et al., DOAH Case No. 85- 0836. In that case, Satnam and Honda West protested Stan Silverman's (Stanmar's) proposal to establish a third dealership in Broward County at the intersection of Copans and Powerline Roads, Pompano Beach, Florida. The case proceeded to hearing on September 11 and 12, 1985, and the hearing officer entered his recommended order on November 13, 1985. The Department's final order, which adopted the recommended order in toto, was entered December 30, 1985, and found that Broward County was the relevant market area, community or territory to be considered and that American Honda was inadequately represented in that area by the two existing dealers. Subsequently, Stanmar received its dealer's license. 2/ As appears more fully from the findings of fact which address the adequacy of the existing two dealers representation of Honda in Broward County, infra, there have been no changes in circumstance that would warrant a departure from the final order rendered in Satnam Enterprises, Inc., d/b/a Honda of Fort Lauderdale, et al. v. S.G. Silverman, et al., supra. The need for three dealership points having been established in that case, it is concluded that the subject application is for a replacement dealership and not a new dealership point. Adequacy Of Existing Dealer Representation Broward County is the relevant market area, community or territory under consideration in this case. The proof establishes that American Honda is not being adequately represented in Broward County. This is evidenced by the following: As of November 1986, R.L. Polk & Co. reported that Honda's market share in the entire State of Florida was 51.06 percent, while Honda's market share in Broward County was 26.65 percent. Simply stated, this means that whereas throughout the State of Florida 51 of every 100 motorcycles and motorscooters sold was a Honda vehicle, only 27 of every 100 sold in Broward County was a Honda vehicle. 3/ By comparison, at the time of Case No. 85-0836, supra, which concluded that a third dealership in Broward County was needed, Honda's market share for Broward County was 48.07 percent, whereas its state- wide share was 55.73 percent. The R.L. Polk Reports demonstrate that Honda's market share in Broward County has been steadily erroding over the past five years. Currently, there are 52 Honda dealerships in the State of Florida. Since the population for the entire state was estimated in 1986 to be 11,668,638 people, there is currently one Honda dealer for every 224,397 people in the State of Florida. There are now only two Honda dealers in Broward County, which had an estimated population in 1986 of 1,203,210 people. This equates to a dealership per population ration of one dealership for every 603,605 people. With the re-establishment of the third dealership in Broward County, that ratio would be reduced to one dealership for every 401.070 people in Broward County, whereas the state ratio, calculated with the additional dealership, would then be one dealership for every 220,163 people. Clearly, the dealership per population ratio in Broward County far exceeds the state-wide ratio, and would continue to greatly exceed the state- wide ratio even if Sport Products is licensed. Since 1982, there have been an increasing number of Broward County residents who have gone outside Broward County to purchase their Honda vehicles. In contrast, a significantly lesser number of customers from outside Broward County have traveled into Broward County to purchase their vehicles. In 1984, one Honda vehicle was sold in the State of Florida for every 367 people within the state. In Broward County for 1984, that figure was one vehicle for every 503 people. In 1985, whereas one Honda vehicle was sold throughout the state for every 402 people, that figure in Broward County was one Honda vehicle for every 702 people. In 1986, whereas one Honda vehicle was sold throughout the state for every 516 people, that figure in Broward County had plummeted to one Honda vehicle sold for every 1,133 people. If the ratio of sales to population in Broward County had been the same as the state-wide ratio in 1986, 2,332 American Honda units would have been sold. In fact, the two existing Broward County dealers sold 638 units, while non-Broward County dealers sold 424 units to Broward County residents. Consequently, there was an estimated unmet sales potential of 1,270 units for 1986. Even if sales by Stanmar for 1986 are doubled (in essence, providing Stanmar with 14 months of sales to account for the fact that it started in business in June 1986), the unmet sales potential in Broward County still exceeds 1,000 units, which is more than sufficient to support the proposed dealership and still leave substantial room for sales increases by the two existing dealers. The foregoing sales projection figures are based upon emperical data showing the sales per population of Broward County residents, and is therefore intrinsically credible. Further, such projections have been validated. Hence, the evidence establishes not only the reasonableness of the projections calculated by Honda's expert, Dr. Ford, but also the inadequacy of current representation. The evidence establishing inadequacy of representation was particularly acute with respect to American Honda's motor scooter product line. Whereas in the state and throughout the nation more than 7 out of every 10 motor scooters sold is a Honda vehicle, in Broward County, less than 3 out of every 10 motor scooters sold is a Honda vehicle. This situation is particularly significant in that the motor scooter product line, which was introduced by American Honda in 1983, is very important to American Honda, since it is intended to be marketed to persons outside the traditional motorcycle market. Through such marketing, American Honda should be able to introduce a new segment of the population to its product line, and thereby increase its consumer base. Broward County is a good motor scooter market, as it is blessed with year-round favorable weather, many beach communities, and an emphasis on recreation. In addition, in the Fort Lauderdale area, there are a number of low income households. Low income areas are fertile markets for the motor scooter product line. Notwithstanding these factors favoring the sale of the Honda motor scooter product line, the existing Broward County dealers are either unwilling or unable to adequately represent that product line in this community, particularly in the Fort Lauderdale area. For example, neither of the protesting dealers participated significantly in a recent promotion conducted by American Honda with respect to the lower priced model motor scooter, notwithstanding the fact that a representative from American Honda visited both dealers to explain the program and its benefits, and to recommend that the dealers participate. It appears that Honda West considers itself too far removed from what it considers the primary market for the motor scooter, and Stanmar considers itself unable to compete with the local Yamaha motor scooter dealer. Further, the evidence established that the motor scooter purchaser is more likely to be a localized shopper, such that the physical separation of the two protesting dealers from the greater Fort Lauderdale area is a significant factor contributing to the inability of those dealers adequately to represent American Honda's motor scooter product line. Failure of a dealer to adequately represent a particular product line is tantamount to inadequate representation of the manufacturer or distributor. The population in Broward County has shown tremendous growth, as has Florida, and is projected to continue that growth through at least the year 2020. Significantly, the east central sector of Broward County, in which the proposed dealership would be established, is the most densely populated sector of Broward County, and is likewise projected to increase its population through the year 2020. Substantial growth is also projected for the southwest and southeast sectors, in which Honda West's dealership is located, and in the northwest and northeast sectors, in which Stanmar's dealership is located. Accordingly, it is anticipated that there will be an increasing need for the third Broward County dealership in the future. Broward County is an economically viable market, ranking second among all counties in such things as total and per capita Effective Buying Income, Buying Power Index, and total per capita Retail Sales. Additionally, Broward County has shown substantial growth in these figures through 1986. These are the economic indices typically used to gauge the vitality of a market. The protesting dealers did not dispute the deficient market share for Honda products in Broward County, but attempted to rationalize the disparity by citing to a number of factors. One such factor was certain adverse publicity associated with the previous Fort Lauderdale Honda dealership. Such evidence was, however, unpersuasive. First, protestants offered no proof that a nexus existed between the previous dealer's reputation and the inadequate market share. Second, the proof established that the previous dealer was a Honda- Yamaha-Suzuki dealer and, consequently, any adverse impact would have afflicted those product lines also. Other factors cited by the protesting dealers in an attempt to explain or rationalize Honda's poor market penetration in Broward County included the timing of product releases by the manufacturer, pricing policies, the quantity and models available for dealers to sell, insurance rates, the lack of off-road riding areas, and safety concerns regarding the 3-wheeled ATVs. Such factors are, however, unpersuasive in explaining Honda's lack of penetration into the Broward County market. To the extent such factors existed, they would have affected either all brand vehicles equally, or at least all Honda dealers equally if the factor was peculiar to a specific Honda product. Other evidence presented by the protesting dealers, such as Mr. Silverman's contention that an American Honda representative told him that the Fort Lauderdale dealership would not be replaced, is not only inherently improbable, but was rebutted by credible proof. That proof established that American Honda consistently advised Mr. Silverman that the Fort Lauderdale dealership would be re-established, and that Mr. Silverman's only concern was that it not be located any closer to his dealership than previously sited. Finally, protestants suggest that Honda's poor performance in the Broward market in 1986 can be explained by the fact that following Satnam's closure in December 1985, there was only one Honda dealer, Honda West, for Broward County until Stanmar opened in June 1986. While such dealer turnover and lack of representation could have affected Honda's performance in 1986, it does nothing to explain Honda's consistently poor market penetration in the preceding years. Consequently, protestants' assertion does not detract from the conclusion that American Honda is not adequately represented in Broward County, and more particularly in Fort Lauderdale. "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. All terrain vehicle sales are not reflected in R.L. Polk data for the State of Florida since they are not used on the roads and highways and therefore are not registered in the state. "Sales penetration" measures actual unit sales compared with total sales potential using manufacturer warranty data, whether or not the vehicle is registered.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Highway Safety and Motor Vehicles process Sport Products' application for a motor vehicle dealer license, and that the protests of Stanmar, Inc. and International Cycle, Inc. be dismissed. DONE AND ORDERED this 17th day of April, 1987, in Tallahassee, Florida. WILLIAM J. KENDRICK 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 17th day of April, 1987.
The Issue Whether Gorilla Motor Works, LLC (Gorilla) should be permitted over Petitioner's protest to establish an additional dealership for the sale of motorcycles manufactured by Taizhou Zhongneng Motorcycle Co. Ltd. (ZHNG) at 188 North Federal Highway, Deerfield Beach, Florida 33441 (the proposed location).
Findings Of Fact Petitioner is an existing franchised dealer of ZHNG Motorcycles. Petitioner's dealership is located at 550 North Flagler Avenue, Pompano Beach, Florida. Petitioner's dealership is approximately 7.2 miles from the proposed location. Respondents offered no evidence that Petitioner has failed to adequately represent ZHNG.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Department of Highway Safety and Motor Vehicles enter a Final Order denying the request to establish a new ZHNG dealership at the proposed location. DONE AND ENTERED this 7th day of December, 2011, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 7th day of December, 2011.
