The Issue Whether the application of Fountain Motors, Inc. (Fountain) for a new motor vehicle dealer license should be granted on the ground that the existing Oldsmobile dealers in the Orlando area are not providing adequate representation.
Findings Of Fact THE MARKET AREA: The relevant market area for purposes of section 320.642 is the Orlando multiple dealer area (MDA). 1/ The Orlando MDA consists of Orange County, Seminole County and the communities of Osteen and DeBary in Volusia County. This area is presently being served by Landmark and Willett Oldsmobile. The Orlando MDA has been subdivided by GM into three market areas known as Areas of Geographic Sales and Service Advantage (AGSSA). 2/ AGSSA 1 includes the extreme southern end of Seminole County and that portion of Orange County generally north of Colonial Drive. It defines the area that, in theory, would be served primarily by Landmark. AGSSA 2 is north of AGSSA 1 and generally surrounds the Sanford area. It defines Willett's area of primary responsibility. AGSSA 3 is the area of Orange County generally south of Colonial Drive and defines the area that would be Fountain's area of primary responsibility. THE DEALERS: LANDMARK OLDSMOBILE John Kitzmiller, the dealer/operator of Landmark Oldsmobile, worked with GM, Pontiac Division, for 24 years and eight months. He held a variety of responsible positions with the Pontiac Division including Zone Manager for the Oklahoma City Zone and Zone Manager for the Los Angeles Zone. Mr. Kitzmiller received high performance ratings throughout the time he was with GM. He left GM on July 6, 1983, to become vice-president and general manager of an import distributorship. In February 1984, Mr. Kitzmiller, in conjunction with Mr. Fred Schneider, executed a buy/sell agreement with Scott Smith Oldsmobile in Orlando, Florida, and the application and documentation to finalize the transaction was presented to the Oldsmobile Zone Office in Jacksonville on February 28, 1984. On March 2, 1984, Mr. Kitzmiller and Mr. Schneider met with Mr. Martabano, the Zone Manager for the Jacksonville Zone, to discuss the application. Mr. Martabano stated that he felt that that both Mr. Kitzmiller and Mr. Schneider were qualified applicants and that he saw no problem with the application being processed. However, Mr. Martabano advised Mr. Kitzmiller and Mr. Schneider that Scott Smith did not have a good performance record either in sales or customer relations. He stated that additional cars would have to be sold to get average national market penetration, and he indicated that he would provide additional car allocations above what Scott Smith had earned, to help Landmark achieve sufficient market penetration. Mr. Martabano also informed Mr. Kitzmiller and Mr. Schneider that a market survey had been started in October of 1983 to determine whether a new dealer point should be added in the Orlando metropolitan area, that all indications were that a new dealer point would be added, and that Orlando would probably become a three-dealer metro area. Because there are numerous factors which affect the time within which a new dealership can be established, Mr. Martabano did not venture an opinion as to the time that it would take to establish the new dealership should the survey indicate the need for one. Although not initially approved, Landmark ultimately entered into a dealer agreement with GM and began operation on July 16, 1984, as an Oldsmobile dealer in Orlando, Florida, at the location formerly occupied by Scott Smith Oldsmobile. Landmark is located just north of the border between Orange and Seminole Counties. 3/ Approximately three weeks after Landmark started operating, Mr. Martabano visited Landmark and informed Mr. Kitzmiller that the survey had been completed and indicated the need for an additional dealer in the Orlando market. Mr. Kitzmiller was asked not to protest the addition of a new dealer point. FOUNTAIN: On September 19, 1984, Fountain filed an application with the Division seeking the issuance of a license to operate a new Oldsmobile dealership in Orange County, at 1406 Sand Lake Road. The application was subsequently amended to state that the Sand Lake Road location had been approved by Oldsmobile on a temporary basis only and that Fountain had secured property at 8621 Orange Blossom Trail for the later construction of the permanent dealership facility. The Orange Blossom Trail location is three-tenths of a mile west on Sand Lake Road and seven-tenths of a mile south on Orange Blossom Trail from the Sand Lake Road location. A letter of protest to the application was filed by Landmark on October 8, 1984. WILLETT: Willett purchased the Joe Creamons Oldsmobile dealership and began operations in March 1985, at the location formerly occupied by Joe Creamons Oldsmobile in Seminole County. Creamons had been dualed with Chevrolet and Cadillac, but Willett was no longer dualed with Chevrolet at the time of the hearing. Willett is not a party in this proceeding. AREA POPULATION AND ECONOMIC GROWTH: While the number of Oldsmobile dealers in the area designated the Orlando MDA has remained at two since 1940, the population of the area as a whole has increased more than seven fold, from slightly under 100,000 in 1940 to over 750,000 in 1984. Orange County's 1985 population is estimated to be 523,300, an 11.1 percent increase over the 1980 population of 471,016. In that portion of Orange County designated AGSSA 3, the population increased from 188,200 in 1980 to an estimated 1985 population of 215,154, an increase of 14.3 percent. The remaining area of Orange County, located within AGSSA 1, experienced an estimated increase in population between 1980 and 1985 of approximately 9 percent. The number of households in Orange and Seminole Counties has substantially increased over the past fifteen years. Between 1970 and 1980 the number of households in Orange County increased from 108,645 to 170,754, a 57.2 percent increase. During the same period the number of households in Seminole County increased from 25,757 to 63,247, an increase of 68.7 percent. Between 1980 and 1984, Orange County added another 26,062 households and Seminole County added 14,708. Of the East Central Florida Regional Planning Council's planning areas which roughly correspond to AGSSA 3 (ECFRPC Planning Areas 7, 9, 14, 15, 16 and 17) planning area 17, located generally to the west of the proposed add point experienced the greatest percentage increase in the number of households, going from 2,559 households in 1970 to 11,122 households in 1984, an increase of almost 335 percent. However, the greatest number of households are located to the north and northeast of the proposed dealer location, the area of AGSSA 3 located closest to Landmark. Of five new schools scheduled to be built in Orange County, four will be located in the AGSSA 3 area. Between 1980 and 1985, both Orange County and AGSSA 3 showed increases in the number of dwelling units, in residential employment (persons living within the area that are employed), and in attendant employment (number of persons whose work place is located in the area regardless of where the person lives). However, the AGSSA 3 area experienced greater growth than the county as a whole. In 1980, AGSSA 3 had 39.3 percent of the total county's residential employment and 36.5 of the attendant employment. AGSSA 3 is estimated to have 40.9 percent of the residential employment and 41.2 percent of the attendant employment in 1985. As can be seen from the Commercial Land Use Inventory map (GM Ex. 2), the AGSSA 3 area south and west of the proposed dealer location is an area of heavy development, containing several developments of regional impact and numerous planned developments and subdivisions. This area of heavy development is generally within ECFRPC planning area 17, the area which also experienced a tremendous gain in the number of households. Another area of heavy development is located to the east and northeast of Orlando, just southeast of Landmark. Although there is some development in the northwest and the southwest areas of the county, it appears that the pattern of growth is to the east and northeast of Orlando and to the southwest. Landmark is located in a good position to capitalize on the growth to the northeast, and Fountain would be in a good location to take advantage of the growth in the southwest. As measured by the Business Barometer of Central Florida's composite index of economic activity, the Orlando area experienced healthy economic growth in every year from 1977 to the present, except 1981 when the growth rate was - 1.8 percent. The two peak years were 1978, with a 14.9 percent growth rate, and 1983, with an 11.3 percent growth rate. The growth rate projected for 1985 is 3.1 percent. In 1982, the per capita income in Orange County was $11,641, as compared to $10,907 for Florida and $11,100 for the United States. The 1982 per capita income in Seminole County was $9,122. The 1985 per capita income for Seminole County is $11,081 and is $14,140 for Orange County. In 1979, the median family income for Orange County was $17,705, and based on inflation, projected at $20,553 in 1984. Of the 171 traffic zones 4/ in AGSSA 3, 90 or 52.6 percent had a median family income higher than the county's average median income. In most of the census tracts comprising the Orlando MDA, the average household income is between $15,000 and $40,000. However, the AGSSA 3 area contains 6 census tracts where the average household income is over $40,000 and it contains no census tracts where the average household income is below $15,000. MARKET PENETRATION: General Motors conducts periodic market penetration analyses of AGSSAs by compiling the registration data provided by R. L. Polk Company at a census tract level. The registration data provided by Polk to GM includes every vehicle registered within a particular census tract regardless of the identity or location of the dealer which sold the vehicle. The R. L. Polk Company is the authoritative source of registration data used for marketing penetration analysis in the automotive industry. This registration data is made up of components including fleet and retail. The most current AGSSA level registration data available is year end 1984 data. Both parties have utilized retail registrations to analyze market penetration. Market penetration for a manufacturer is a relative concept which compares the registrations of one make of vehicle against the total industry registrations in a particular geographic area. For example, in 1984, 10.04 percent of all vehicles registered in the United States were Oldsmobiles; therefore, the market penetration nationally was 10.04 percent. Registration efficiency is the relationship of the marketing area's penetration percentage to the zone or national penetration percentage. Of the six MDAs in Florida, the Orlando MDA ranked 5th in registration efficiency. The Orlando MDA penetration has been consistently below zone and national penetration, and of the three AGSSAs in the MDA, AGSSA 3 has the lowest penetration. For the years 1982, 1983, and 1984, Oldsmobile's retail market penetration nationally, by zone, by MDA, and by AGSSA were as follows: 1982 1983 1984 National 9.59 10.51 10.04 Zone 8.49 8.77 8.25 Orlando Multiple Dealer 6.67 6.99 6.71 Area (MDA) AGSSA 1 6.66 6.9 6.7 AGSSA 2 9.53 9.7 8.7 AGSSA 3 5.2 5.8 5.5 22. In 1984, the Orlando MDA rated 137th in retail penetration percentage of the 159 largest United States markets for Oldsmobile. Only one MDA in the Jacksonville Oldsmobile zone had a worse retail penetration percentage during 1984. Lost opportunity is the difference between actual Oldsmobile retail registrations in an area and the number of registrations which would have occurred if national average penetration or zone average penetration had been achieved. The number of lost opportunities represents the potential number of registrations available to the Oldsmobile dealers if national or zone average penetration were attained. The following chart reflects lost opportunities in the Orlando MDA for 1982, 1983, and 1984: 1982 ZONE NATIONAL 1983 ZONE NATIONAL 1984 ZONE NATIONAL Orlando MDA (438) (702) (522) (1032) (481) (1038) AGSSA 1 (263) (420) (325) (630) (278) (608) AGSSA 2 0 0 0 (33) 0 (66) AGSSA 3 (212) (282) (234) (369) (221) (366) The Orlando MDA and AGSSAs had fewer lost opportunities when compared zone rather than national penetration because in 1982, 1983, and 1984, the Jacksonville zone penetration was below national market penetration. The extremely low retail market penetration rate in the Orlando MDA, particularly the area designated AGSSA 3, is a legitimate cause for concern. However, identifying a problem is less difficult than identifying the reason or reasons for the problem. GM contends that the low market penetration indicates inadequate representation in the Orlando MDA, specifically the lack of an Oldsmobile dealer in the southern part of the MDA, the AGSSA 3 area. Landmark points to other factors which might influence low retail penetration, including large fleet registrations, insufficient car allocations, and area demographics. FLEET REGISTRATIONS: Fleet automobiles are automobiles that are sold to large fleet customers such as rental car companies. Fleet registrations are not counted when determining retail market penetration statistics. The Orlando market has an extremely high number of fleet registrations. In 1984, fleet registrations accounted for almost 62 percent of all Oldsmobile registrations in the Orlando area. 5/ The percentage of fleet registrations nationally, in 1984, was 17.27 percent. Fleet cars are sold by rental car companies both at wholesale and retail after they have been in rental service for a period of time. During 1984 and the first four months of 1985, Budget Rent-a-Car sold 1,364 cars from their rental car sales lot in Orlando, of which 281 were Oldsmobiles. During the same period of time Avis sold 82 Oldsmobiles at retail and 132 Oldsmobiles at wholesale and National Rent-a-Car sold 1 Oldsmobile at retail and 584 at wholesale. The 82 Avis cars and the one car sold by National at retail had limited warranties. At the Orlando Auto Auction held in May 1985, approximately 4,000 fleet cars were sold at wholesale, of which approximately 70 percent stayed in Florida. The average age 6/ of an Avis car sold at retail was 11 months, at wholesale 15 months. The minimum age of an Avis retail car was 6 months; the maximum was 22 months. At wholesale, the minimum age was 6 months; the maximum was 30 months, which could be a 4-year old car. The average age of a Budget Rent-a-Car was about 6 1/2 months, with the minimal amount of time in rental service being 2 months. National keeps a car in rental service from 4 to 20 months, with an average of 11 months. There was insufficient evidence to support a finding that the high fleet penetration of Oldsmobile in the Orlando area had an effect on retail penetration in the area. There was no evidence presented to show that the purchasers of the fleet cars, either the direct retail customers or the ultimate purchasers of the cars sold at wholesale, resided within the Orlando area. Indeed, the only evidence concerning the destination of the wholesaled cars indicates that the great majority of wholesaled cars did not remain in the Orlando area for resell. There was no evidence that a greater percentage of fleet cars were available to the retail purchaser in the Orlando market than in other market areas. Finally, there was not sufficient evidence presented to support a finding that the purchase of a rental car at retail takes a new car purchaser out of the market. Therefore, it cannot be concluded that the high fleet registrations substantially affect the Oldsmobile dealers' opportunities for new car sales within the Orlando market. CAR ALLOCATIONS: The Oldsmobile allocation system is divided into two basic phases called controlled distribution and earned distribution, also known as "earn and turn," travel rate distribution, or computerized phase. The "built-out" phase is part of the earned distribution phase which occurs at the conclusion of the year's model run, when the last of the cars for the current model year are being produced and the plants are being retooled to build the new models. The controlled distribution phase for the upcoming model year begins approximately in July of each year, following build-out. During this period, when the first new models are being produced and accordingly there is a limited number of cars available for distribution, a dealer gets a fixed percentage of the zone's cars based on the percentage of his sale of vehicles within the zone from January 1 through June of that year. 7/ For example, if a dealer sold five percent of the zone's sales of a particular model from January through June, then the number of cars received by that dealer during controlled distribution would be five percent of that model's initial production received by the zone. After a sufficient number of new model cars have been manufactured, the system for arriving at the number of cars distributed to the dealer is converted to the earned distribution formula, this conversion taking place in October or November of each year. Prior to 1984, the earned system compared the new model year sales and availability of each dealer during the preceding approximately 60 days to the sales of each other dealer in the Jacksonville zone. Beginning in November 1984, Oldsmobile began computerized distribution, the earn-and-turn system for all dealers. The system provides a guide to the zone manager on a weekly basis for the allocation of cars to all dealers within the zone. Under the system, all dealers within the zone are competing on a national system with all the other Oldsmobile dealers throughout the United States. The guide uses a 60-day sales rate, comparing the dealer's sales by model within the 60- day period to the inventory of the model for the dealership. An earned rate is then computed for that week with each dealer earning a proportionate share of the national production of that particular model. A factor built into the computerized system is the "protected" car. A protected car is not counted in the dealer's inventory and therefore gives him a better sales rate under the formula. In other words, the dealer will earn more vehicles than he would have had the car been counted as part of his inventory. A car remains protected for approximately six or seven weeks and then it is included in the dealer's inventory if not sold. A dealer may receive protected cars if he is having a special campaign. The zone manager also receives 125 to 130 protected cars every seven weeks that are distributed at his discretion. Cars for a new Oldsmobile dealership, that is, one which has not previously existed, are taken out of the national pool of available production capacity prior to the allocations being made to each dealer. Thus, the establishment of a new dealership impacts each existing dealership in the United States equally. When a dealership is sold by an existing dealer to a replacement dealer, the replacement dealer assumes the previous dealer's sales record. It has been the policy of Mr. Martabano, the Jacksonville zone manager, to allocate additional vehicles beyond the suggested guide figures to the replacement dealer, for the period immediately after the sale. The zone manager has the authority to allocate these additional vehicles to replacement dealers. The zone manager also may allocate to dealers who are opening new facilities and having special sales promotions, because the allocation numbers established through the controlled system and the earned rate system are guides, subject to the discretion of the zone manager to make the final allocation to each dealer. However, every additional vehicle allocated to any dealer within the zone by the zone manager in excess of that dealer's guide figure results in another dealer in the zone getting one less vehicle than his earned number. During the first meeting between Martabano and the prospective purchasers of the Landmark dealership, Mr. Kitzmiller and Mr. Schneider, Mr. Martabano indicated that he would allocate to Landmark cars in addition to guide numbers that had been established by the sales of Scott Smith. However, during the period immediately after Landmark became a dealer, on July 16, 1984, Martabano's ability to allocate additional vehicles to Landmark was limited. During the initial phase of 1985 model year production, product was scare for all dealers. This situation was compounded by a national strike against General Motors in September and, at the conclusion of the strike, production problems on the Cutlass Ciera. However, during the controlled distribution period between July 25 and November 7, 1984, Landmark received fifty- five 1985 model cars in addition to what they would have received using the controlled distribution guide numbers. This was the largest additional number of cars allocated to any dealer in the zone during controlled distribution. 8/ The breakdown on the units earned and received during the controlled distribution system is as follows: Earned percentage of Zone Thru No Units No Units 10/31 Earned Received Difference Firenza 5.65 24 14 -10 Calais 3.25 30 35 + 5 Ciera 2.57 21 38 +17 Supreme 3.42 91 98 + 7 88 2.90 69 90 +21 98 2.20 26 41 +15 Toronado 4.29 14 14 0 TOTAL 3.18 275 330 +55 However, Landmark did not receive any protected cars during that period. During the earned distribution period, between November 14, 1984, and May 1, 1985, Landmark was allocated 553 vehicles in addition to those suggested by the guide number. This was the largest additional number of cars allocated to any dealer during earned rate distribution. 9/ The breakdown on the units earned and received during the computerized period is as follows: #Units Earned #Units Received Firenza 20* 29 Calais 16 93 Ciera 93 205 Supreme 77 213 88 5 147 98 40 100 Toronado 5 22 TOTAL 256 809 *Firenza under controlled distribution until January 10, 1985. INVENTORY AND MODEL MIX: To achieve a sales objective of 125-150 cars per month, a dealer should have a grounded inventory of 300-350 cars per month. The general measure to be applied is that grounded inventory should be between two and three times the proposed sales volume. Moreover, by industry standards a dealership needs a 60-day grounded inventory to achieve a given sales ratio. Although Landmark repeatedly requested extra cars and although Landmark received more cars than they would have received following the guidelines, Landmark's grounded inventory from July through December of 1984 was too low to support the sales objectives projected by Landmark and Oldsmobile. When Landmark took over the Scott Smith dealership there were 79 automobiles in inventory. At the end of July 1984, Landmark had 81 cars in inventory. At the end of August, Landmark had 119 cars in inventory. At the end of September, Landmark had 72 cars in inventory. At the end of October, Landmark had on ground inventory of only 34 cars, at the end of November, Landmark had 106 cars in inventory, and at the end of December, Landmark had 167 cars in inventory. Further, during most of this period of time, the model mix of Landmark's on ground inventory was imbalanced when compared to the zone average. For example at the end of July, Landmark had 23.46 percent of its inventory in Toronadoes, as opposed to the zone average of 7.14 percent, and 20.99 percent of its inventory in the "hot cars," 10/ Ciera and Supreme, as compared to the zone average of 32.09 percent. At the end of October, 76.57 percent of Landmark's inventory were 98s and Toronadoes, compared to the zone average of 34.55 percent, and 8.82 percent of the inventory in "hot cars," compared to the zone average of 14.10 percent. However, by the end of December, Landmark's model mix was quite similar to the zone's average model mix. Landmark had 34.14 percent of its inventory in "hot cars," as compared to the zone average of 34.24 percent, and 4.79 percent of Landmark's inventory were Toronadoes, as compared to the zone average of 4.90 percent. Thus, until the end of 1984, Landmark tended to have higher percentages of slow moving models and lower percentages of fast moving models in its inventory. 11/ Although inventory is a factor in sales, it is not the sole factor. From November 1984, to April 1985, Landmark's rank in sales was lower than its rank in inventory among dealers in the zone at month end in every month except April. The following compares rank in inventory to rank in sales for that period: Nov. Dec. Jan. Feb. Mar. Apr. Sales 7 8 7 8 8 3 Inventory 3 2 4 3 2 4 Mr. Smith, the Director of Sales Analysis and Distribution for Oldsmobile, named several factors which a Zone Manager should take into account when utilizing his discretion in the allocation of cars, both during earn and turn distribution and during controlled distribution. Among these considerations are: a dealer's financial problems if based on his product mix and availability of automobiles, expenditures of dealers for new facilities or additions or improvements to existing facilities, a change in ownership of a dealership, and the sales pattern of the dealer within the 60-day period used to establish the number of cars earned. Most of these factors were present in Landmark's situation. Landmark lost money during each month from July through December of 1984, Landmark had problems with inventory and model mix, and Landmark had expanded and improved its facilities. When presented with a scenario applicable to the Landmark situation, in which a dealer takes over a metropolitan dealership that is poorly run, and in which the new dealer believes that he can sell more cars than would be allocated under the strict terms of the earn and turn allocation system, Mr. Smith stated that, under the system that existed prior to November 1984, the problem should be solved by the Zone Manager, who should "approach the Regional Manager or the Assistant General Sales Manager and plead his case and ask for an allocation of reserve cars to prime the pump and that should get the dealer up and running at whatever rate they want to get into". 12/ Smith further testified that under this illustration, getting this dealer enough cars to establish his own sales rate would be a number one priority, and that in this situation the Regional Manager and Assistant General Sales Manager would always come up with some cars. However, when given the same scenario as above, with the added information that the new car dealer takes over the existing dealership in the middle of the summer, and asked how the problem would be solved, Mr. Smith replied, "I don't know how you would solve that problem." The reason being that the Regional Manager and the Assistant General Sales Manager do not have a reserve available during the period from July until the earn and turn distribution begins, which generally is in October, but in 1984 began in November. Landmark contends that it should have gotten special treatment from the zone manager in terms of additional cars during its start up period, and it did get special treatment. Not only did it get the 55 additional 1985 models previously mentioned, it also received 44 additional 1984 cars out of the 188 available in the last 1984 model year preference, which was the highest allocation of extra 1984 models to any dealer in the Jacksonville zone for that final preference. Also, in late 1984, the leadership of the "super group," an advertising group consisting of all the dealers in the Jacksonville zone, appealed to Oldsmobile management in Lansing for an additional allocation of protected cars and were allocated 600 cars which were divided among all 92 dealers in the zone. The refusal to allow Landmark to keep all 40 of the Citrus Bowl "Brass Hat" cars in its inventory and the failure to approve 150 additional cars for a promotional planned by Landmark were not arbitrary decisions designed to prevent Landmark from getting cars. In both situations, there were sound reasons for the decisions. 13/ Landmark has not been discriminated against by GM in the allocation of cars when compared with other dealers in the zone or with King Oldsmobile, the largest dealer in the zone. DEALER PROXIMITY AND DEMOGRAPHICS: The number of locations of dealerships for various line makes, including Oldsmobile, provide a basis for comparing the relative levels of customer convenience for buyers in a particular AGSSA. Oldsmobile has the worst level of customer convenience in AGSSA 3 of any of the major manufacturers located in the Orlando area. Potential buyers in AGSSA 1 and 2 enjoy far greater convenience to the nearest Oldsmobile dealer than a buyer living in AGSSA 3, and Oldsmobile retail registration penetration is worse in AGSSA 3 than either AGSSA 1 or AGSSA 2. The average consumer must travel farther from a residence in AGSSA 3 to reach an Oldsmobile dealer than to reach a Honda, Ford, Chrysler-Plymouth, Datsun, Pontiac, Chevrolet, Toyota or Buick dealer. The addition of an Oldsmobile dealer in AGSSA 3 would provide Oldsmobile customers convenience commensurate with convenience offered by competitive lines. The customer convenience offered by Oldsmobile in AGSSA 3 would be slightly better than the convenience now offered to consumers in AGSSA 1 and slightly less than the convenience currently offered to consumers in AGSSA 2. The driving time, taking the shortest route in non-rush hour traffic, from the proposed Fountain location to the Landmark location in AGSSA 1 is extreme when compared to the convenience levels offered by other manufacturers. The most direct drive time between the two locations ranged between 35:30 minutes and 29:40 minutes. The shortest measured driving distance was 16.7 miles. A consumer living in an average residential area in AGSSA 3 would travel less than half the distance to get to the proposed location than he presently must travel to get to Landmark. Within two miles of the Landmark location, Oldsmobile achieved national average penetration in the retail market during 1984. Generally, Oldsmobile penetration decreased farther away from the Landmark location until the 12-14 mile distance, which is the approximate location of the dealership in AGSSA 2 to the north. The relation of Oldsmobile retail market penetration to the distance from Landmark is shown below: OLDSMOBILE RETAIL PENETRATION IN 2-MILE RINGS SURROUNDING LANDMARK OLDSMOBILE 2 - 4 miles 7.37 percent 4 - 6 miles 6.26 percent 6 - 8 miles 6.92 percent 8 - 10 miles 6.67 percent 10 - 12 miles 6.19 percent 12 - 14 miles 7.80 percent Distance Ring Oldsmobile Retail Penetration Less than 2 miles 10.00 percent Greater than 14 miles 7.63 percent Proximity affects market penetration, but there are obviously other factors which influence consumer choice in interbrand competition, the foremost of which is the product itself. Product preference can be associated with such characteristics as age and income. Therefore, an analysis of market penetration in a specified area must take into account the demographic characteristics of the people in that area. Therefore, penetration is not solely a function of proximity of a certain line make, but may also reflect the preference of the people contained in a given geographic area. Put simply, consumers' characteristics may give rise to pockets of high penetration and pockets of low penetration by line make and by model. The Continuous Automotive Market Information Program ("CAMIP") report offered into evidence by Landmark shows that Oldsmobile has retail customers in every income group, particularly income groups where the household income exceeds $15,000. The demographics for the entire Orlando MDA, and AGSSA 3 in particular, show heavy concentrations of household income between $15,000 and $40,000 and at levels above $40,000. As of 1984, there were no census tracts in AGSSA 3 where the average household income was less than $15,000. Landmark's evidence regarding age and income demographics only considered 42 percent of the total Oldsmobile buyers from a household income standpoint, and did not consider the majority of known Oldsmobile buyers. Further, and perhaps as a result, in several census tracts where there were purportedly a lack of high propensity Oldsmobile buyers, Oldsmobile penetration was high. Additionally, although age and income demographics for Buick buyers were essentially the same as for Oldsmobile buyers, Buick performed better than Oldsmobile in market penetration. In sum, the age, income, and housing demographics presented do not explain the poor retail penetration for Oldsmobile in the Orlando MDA, and more specifically do not explain why there is lower market penetration in AGSSA 3 than in the rest of the MDA. REPRESENTATION OF LANDMARK Scott Smith Oldsmobile, Landmark's predecessor, had been performing below average in sales and registration effectiveness for several years. 14/ Scott Smith was so deficient in sales and service performance that it had been on the Oldsmobile Action Program for approximately 8 years, which was longer than any other dealer in the zone had ever been on the program. The Action Program is a program for dealerships with deficiencies so serious that they may result in termination of the dealership. John Kitzmiller made every effort to correct these problems from the inception of Landmark Oldsmobile. Immediately upon opening the Landmark dealership Mr. Kitzmiller hired a replacement service manager. This service manager quit within two weeks after discovering the magnitude of the problems with the service department inherited from Scott Smith. A month or so thereafter, Mr. Kitzmiller was able to hire Mr. Bob Dorton from Houston, Texas, to be service manager from Landmark. Mr. Dorton, who had won 9 times Pontiac Motor Division's award for five star service excellence, joined Landmark on November 1. At the time of the hearing, Landmark's Service Department had improved to the point that the Jacksonville Zone Office had, on at least two occasions, requested that Landmark assist it by repairing Oldsmobiles which other Oldsmobile dealerships have been unable to repair. Landmark has complied with the Zone's requests and resolved the problems. Robert L. Woodfork, Zone Development Manager and former District Sales Manager for the district encompassing Orlando, testified that Scott Smith was deficient in sales due to inadequate sales force, poor advertising, and lack of consistency in reporting sales and that a dealership with poor sales performance can remedy that situation by increasing the sales force, increasing advertising, and increasing levels of inventory through prompt reporting. Based upon his knowledge of the total sales opportunity in the Orlando market, Mr. Woodfork concluded that the Scott Smith dealership, now Landmark, should have a sales objective of 125 to 150 retail sales per month. Based upon this sales objective, Scott Smith's sales force of five or ten salesmen was inadequate. In Mr. Woodfork's opinion, 15 salesmen were needed to reach this objective. Due to the limited amount of cars available in the Fall of 1984, Landmark was unable to stabilize its sales force until February 1985, but by April Landmark had 17 salesmen. Landmark also had established sales incentive and bonus programs for salesmen. Landmark spent in excess of $45,000 a month in advertising since it began business which is more than adequate by Mr. Woodfork's standard and perhaps excessive considering the limited availability of cars to Landmark during the Fall of 1984. Additionally, Landmark hired a professional advertising agency to develop an advertising program with the theme "We Care." Landmark also had various promotionals for retail sales. In addition to increasing the sales force and advertising, Landmark immediately hired an experienced Oldsmobile sales manager who came highly recommended by Oldsmobile. Landmark expanded and improved the existing sales and service facilities and established a regular training program for salesmen. Landmark instituted a new method of handling calls from prospective buyers and a system in which each customer who comes on the lot is called and encouraged to come back in. Also, Landmark instituted a system of calling purchasers within a week of purchasing the car and again in 5 months to make sure they are satisfied with the car and service they received. In April 1985, Landmark's total sales were third in the zone and reached or exceeded the sales objectives set for the dealership. From April 1st to and including May 1st Landmark sold 165 cars. 15/ The results of Landmark's comprehensive programs to improve sales, service, and customer relations are further evidenced by Oldsmobile Par Excellence Report for April 1985, in which Landmark was given a 95 percent overall sales rating by its customers. This was higher than both zone (92 percent) and national (91 percent) averages. The travel rates for both Landmark and Willett increased steadily during the first four months of 1985, culminating in the month of April, in which Landmark increased its travel rate 36.4 percent over the previous month, and Willett increased its travel rate 41.4 percent over the previous month. While the travel rate for the zone decreased from May 3, 1984, to May 1, 1985, Landmark's travel rate increased 2.4 percent (from 4.520 to 4.627) over Scott Smith's May 3rd travel rate, and Willett's travel rate increased 38.6 percent (from 1.260 to 1.746) over Creamon's travel rate. The existing Landmark and Willett facilities exceed the quantity of facilities which GM determined were needed to serve the Orlando MDA. TRADE AREAS Trade areas are a commonly used method of identifying dealer sales areas of influence within the automobile industry. A 67 percent trade area is that geographic area within which 67 percent of the cars sold by a particular dealer are registered. In 1984, two-thirds of all cars sold by Landmark were registered within an eight mile radius of Landmark. The 67 percent trade area circle for Scott Smith from 1982-1984 was approximately the same. The geographical distribution of Landmark's sales between January and April 1985, also reflect a similar pattern. The size of the trade area surrounding the AGSSA 1 dealer has remained constant regardless of the dealer, the time period covered, or the source of the data used. The size of the trade area circle does not necessarily increase with increased sales. Indeed, Landmark's 67 percent trade area was slightly smaller during its best sales month, April 1985, than it was during 1984. Landmark's trade area circle extends approximately eight miles from its dealership location or about halfway between Landmark's location and Fountain's proposed location; it is close to the dividing line between AGSSA 1 and AGSSA 3. Although the trade area circle may tend to reflect the distance a purchaser is willing to travel to purchase a particular car, 16/ the size of the trade area circle is related to the dealer's location vis-a- vis the location of areas of high market potential density. In other words, a dealer located in the middle of an area densely populated with potential buyers should have a smaller trade area circle than a dealer located in a sparsely populated rural area. EFFECT OF SALE OF EXISTING DEALERSHIPS At the time of the hearing in this cause, both of the two existing dealerships had been in operation for less than a year under their current ownership. 17/ Scott Smith Oldsmobile was sold to Landmark effective July 1984, and Joe Creamons was sold to Willett Oldsmobile effective March 1985. Replacement dealers are evaluated for sales and service performance after a full calendar year to measure compliance with the dealers' contractual obligation to GM. It is the practice of GM not to consider an additional dealership in an area within one year of the opening of a new dealership or dealer point within that area. However, there is no GM policy providing that the addition of a dealership within an area will be delayed or affected by the sale of an existing dealer in the area. GM does not control the timing of the sale of an existing dealership. ADEQUACY OF REPRESENTATION Oldsmobile has sustained the burden of proof placed upon it by Section 320.642. It has demonstrated that the dealers existing in the Orlando MDA have not provided adequate representation in terms of retail market penetration in the territory as a whole or within the area designated AGSSA 3. The evidence presented shows that retail penetration in the area is and has been below both average zone and average national retail registration rates. The evidence does not support a finding that lower than average penetration is an inherent characteristic of the Orlando market due to high fleet penetration or demographics. Further, the disparity in market penetration between AGSSA 3 and the rest of the Orlando MDA clearly indicates that Oldsmobile is being inadequately represented in the AGSSA 3 area. The only plausible reason for the extremely low market penetration in the AGSSA 3 area is the lack of an Oldsmobile dealer conveniently located to serve that market. The addition of another Oldsmobile dealer at the proposed location will not result in more dealers than the area can support.
Recommendation Based on the foregoing findings of fact and conclusions of law it is RECOMMENDED that Royal Oldsmobile be substituted for Landmark Oldsmobile as a party respondent and that the application of Fountain Motors, Inc. for a motor vehicle dealer's license be granted. DONE and ENTERED this 29th day of October, 1985, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of October, 1985.
The Issue Whether Petitioners are entitled to establish a new motor vehicle dealership that is proposed to be located in Lake Mary, Florida, for the sale of motorcycles manufactured by Zongshen Industrial Group (ZONG).
Findings Of Fact Respondent is an existing franchised dealer of motorcycles manufactured by Zongshen Industrial Group (ZONG). Petitioners have proposed the establishment of a new dealership to sell the same line and make of motorcycles as those sold by Respondent. Respondent's dealership is located at 306 West Main Street, Apopka, Florida 32712. Petitioners' proposed dealership would be located at 3311 West Lake Mary Boulevard, Lake Mary, Florida 32746. The proposed dealership is within a 12.5-mile radius of Respondent's dealership. Respondent has standing to protest the establishment of the proposed dealership. No evidence was presented that there is inadequate representation of such line-make motor vehicles in such community.
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 denying the establishment of Petitioners' proposed dealership. DONE AND ENTERED this 7th day of April, 2009, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE 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 April, 2009. COPIES FURNISHED: Electra Theodorides-Bustle, Executive Director Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Michael James Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32344 Jason Rupp Wild Hogs Scooters & Motorsports, LLC 3311 West Lake Mary Boulevard Lake Mary, Florida 32746 Mathu Solo LS Motorsports, LLC 10215 South Sam Houston Parkway West, Suite 100 Houston, Texas 77071 James Sursely Action Orlando Motorsports 306 West Main Street Apopka, Florida 32712
The Issue Whether the application to relocate the Honda dealership owned by Bengal Motor Company, Ltd., d/b/a Miami Honda should be granted.
Findings Of Fact Bengal Motor Company, Ltd., d/b/a Miami Honda (Miami Honda) submitted its application to relocate its Honda dealership pursuant to Section 320.642, Florida Statutes. The requested relocation is from 3100 Northwest 36th Avenue, Miami, Florida, to a location that is 1350 feet west of the corner of Northwest 57th Avenue and Northwest 167th Street, Miami Lakes, Florida. The existing location is in the vicinity of the Miami International Airport. The proposed location is on the Palmetto Expressway. Miami Honda purchased the real estate for the proposed location without assistance from American Honda and has entered into an agreement with American Honda to relocate to that location if its relocation application is granted. Hollywood Imports, Ltd., Inc., d/b/a Hollywood Honda (Hollywood Honda) timely protested the relocation with the Department of Highway Safety and Motor Vehicles pursuant to the provisions of Section 320.642, Florida Statutes. The parties agree that the relocation is subject to protest and that Hollywood Honda has standing to bring this protest as it is within 12.5 straight line miles of the proposed location. See, Section 320.642(3)(b)1., Florida Statutes. American Honda has decided to relocate Miami Honda to the Miami Lakes area instead of adding a new dealer in Miami Lakes. Section 320.642, Florida Statutes, sets forth the criteria for relocation if a protest is filed. Section 320.642(2)(a), Florida Statutes, provides as follows: (2)(a) An application for a motor vehicle dealer license in any community or territory shall be denied when: A timely protest is filed by a presently franchised motor vehicle dealer with standing to protest as defined by subsection (3); and The licensee fails to show that the existing franchised dealer or dealers who reg- ister new motor vehicle retail sales or retail leases of the same line-make in the community or territory of the proposed dealership are not providing adequate representation of such line-make motor vehicles in such community or territory. The burden of proof in establish- ing inadequate representation shall be on the licensee. Section 320.642(2)(b), Florida Statutes, sets forth factors 1/ which may be considered in determining the adequate representation issue, as follows: (2)(b) In determining whether the existing franchised motor vehicle dealer or dealers are providing adequate representation in the comm- unity or territory for the line-make, the de- partment may consider evidence which may in- clude, but is not limited to: The impact of the establishment of the proposed or relocated dealer on the consumers, public interest, existing dealers, and the licensee; provided, however, that financial impact may only be considered with respect to the protesting dealer or dealers. The size and permanency of investment reasonably made and reasonable obligations incurred by the existing dealer or dealers to perform their obligations under the dealer agreement. The reasonably expected market penetra- tion of the line-make motor vehicle for the community or territory involved, after con- sideration of all factors which may affect said penetration, including, but not limited to, demographic factors such as age, income, education, size class preference, product popularity, retail lease transactions, or other factors affecting sales to consumers of the community or territory. Any actions of the licensee in denying its existing dealer or dealers of the same line-make the opportunity for reasonable growth, market expansion, or relocation, in- cluding the availability of line-make vehicles in keeping with the reasonable expectations of the licensee in providing an adequate number of dealers in the community or territory. Any attempts by the licensee to coerce the existing dealer or dealers into consenting to additional or relocated franchises of the same line-make in the community or territory. Distance, travel time, traffic patterns, and accessibility between the existing dealer or dealers of the same line-make and the loca- tion of the proposed additional or relocated dealer. Whether benefits to consumers will likely occur from the establishment or relo- cation of the dealership which the protesting dealer or dealers prove cannot be obtained by other geographic or demographic changes or expected changes in the community or territory. Whether the protesting dealer or dealers are in substantial compliance with their dealer agreement. Whether there is adequate interbrand and intrabrand competition with respect to said line-make in the community or territory and adequately convenient consumer care for the motor vehicles of the line-make including the adequacy of sales and service facilities. Whether the establishment or relocation of the proposed dealership appears to be warr- anted and justified based on economic and mark- eting conditions pertinent to dealers compet- ing in the community or territory, including anticipated future changes. The volume of registrations and service business transacted by the existing dealer or dealers of the same line-make in the relevant community or territory of the proposed dealership. THE COMMUNITY OR TERRITORY The area that constitutes the "community or territory" (community/territory) as that term is used in Section 320.642, Florida Statutes, is all of Dade and Broward Counties. This area is somewhat unique from a marketing standpoint because it is restricted on the West by the Everglades and on the East by the Atlantic Ocean. These geographic barriers create a concentration of population in a North/South corridor. This area will be referred to as the "Miami Metro", the term used by American Honda. There are presently nine Honda dealers in the Miami Metro. There are five Honda dealers in Dade County and four Honda dealers in Broward County. In comparison, there are five Toyota dealers in Dade County and five Toyota dealers in Broward County. An additional "open point", where a Honda dealer will be added at some undetermined time, has been identified for Plantation, Florida, which is in Broward County. This area has a significant amount of shortfall of Honda sales (compared to sales in other areas of the market area) that indicates that a new dealership would be justified. The relocation to Miami Lakes is not designed to recapture the lost opportunity that presently exists in Broward County. That lost opportunity is a separate problem. Honda considers Toyota and Nissan to be its primary competitors. Honda attempts to have a Honda dealer facing each Toyota dealer. Toyota outsells Honda at a greater percentage in Broward County than it does in Dade County. This discrepancy can be explained, in part, by the fact that Broward County is the home of Southeast Toyota, which is the distributor of Toyotas in the Southeastern United States, and by the fact that until the open point that American Honda has identified for Plantation is filled, Honda has one less dealer in Broward than does Toyota. Although American Honda has identified an open point in Plantation, Florida, and has included that open point in its marketing planning the additional dealership for Plantation is not being pursued by American Honda at this time. It is likely that the addition of a dealership would be subject to protest by existing dealers. It is not likely that a new dealership will exist in Plantation in the next five years. Expert witnesses for both Miami Honda and Hollywood Honda agree that Largo Honda, located in Key Largo, Monroe County, Florida, should be excluded from the Miami Metro. 2/ Data collected from new car registrations 3/ includes the name of the dealer selling the new vehicle and the street address of the purchaser. Retail registration data is analyzed to provide information as to each dealer's market area. The information produced by this analysis, referred to as cross- sale data, is used to determine whether the Miami Metro is one homogeneous, interconnected market or whether it consists of separate identifiable markets. In performing this analysis, each of the existing eight dealers and the proposed location is assigned a primary marketing area, referred to as a PMA. A PMA consists of census tracts 4/ within the Miami Metro and represents the geographical area in which an existing dealer or a proposed dealer would reasonably be expected to have a competitive advantage over competing same-line (Honda) dealers by virtue of its proximity to the customers within the PMA. The PMAs developed by the experts in this proceeding were based upon the exact proposed location of Miami Honda, rather than the existing location or any other hypothetical location. This methodology was reasonable and appropriate. The cross-sale data reflecting shopping patterns of Honda buyers in the Miami Metro demonstrates that customers residing in Dade County primarily purchase from Dade County dealers and that customers residing in Broward County primarily purchase from Broward County dealers. The exception to this is Hollywood Honda, which sells extensively to customers throughout the Miami Metro, including customers in Dade County. REASONABLY EXPECTED MARKET PENETRATION Market penetration is the traditional standard used to measure the performance of a dealer network in a given geographical area, such as a community/territory or a PMA. Market penetration is the percentage of all vehicles registered in a particular area that a particular brand achieves. Market penetration for any area is computed by analyzing all brand-line registrations in the area, without regard to the location of the selling dealer. To determine whether a particular PMA is being adequately represented, it is first necessary to select a standard against which the PMA will be measured. There was a dispute between the expert witnesses in this proceeding as to the appropriate standard against which to measure the PMA for the proposed relocation. The expert for Hollywood Honda used Honda's market penetration for Honda's Southeast Zone, consisting of six states, to determine what should be Honda's reasonably expected market penetration in the Miami Metro. The rationale that supports the use of this standard is not persuasive because of the unique nature of the Miami Metro and because there are many areas in the Southeast Zone within which Honda is not being adequately represented. The use of Dr. Matthews' standard will produce a mediocre target that does not accurately represent Honda's market potential in this unique area. Honda's expert analyzed sales within what he termed the "Balance of Dade" to determine Honda's reasonably expected market penetration in the Miami Metro. The Balance of Dade standard analyzed Honda's market penetration in Dade County with the exception of the PMA identified for the proposed relocation. The PMA for the proposed relocation was excluded from the analysis because it would be inappropriate to compare the area in question to itself. The Broward County portion of the Miami Metro was excluded because it was determined that American Honda is not adequately represented in many areas of Broward County. To develop a reasonable standard, the areas of comparison must be areas in which American Honda is adequately represented by its dealer network. There was extensive testimony by American Honda's expert as to the reasons this standard was used. Mr. Anderson, American Honda's expert, opined that the Balance of Dade standard produced a reasonable and appropriate standard by which to measure Honda's reasonable expected market penetration in this local market area. There was also extensive testimony by Hollywood Honda's expert as to why this standard should not be used. Dr. Matthews, Hollywood Honda's expert, believed that the use of the Balance of Dade standard produced an inappropriately high expectation of what should be Honda's reasonably expected market penetration. Dr. Matthews viewed sales in Dade County to be unreasonably high because of the sales into the market areas by Largo Honda and because of the number of new Honda vehicles sold into Dade County by Honda dealers in Broward County. This conflicting testimony is resolved by finding that the standard selected by American Honda's expert for determining reasonably expected marketing penetration, the so-called Balance of Dade standard, is a reasonable and appropriate standard to determine Honda's reasonably expected market penetration in this local market. By measuring and analyzing each car segment in which American Honda competes in the Balance of Dade, American Honda's expert determined that with a dealer operating at the site of the proposed relocation, its reasonably expected market penetration for the Miami Lakes PMA would be 20 percent of the retail segments in which Honda competes. 5/ ACTUAL PERFORMANCE COMPARED WITH EXPECTED PERFORMANCE Honda market penetration in the Miami Lakes PMA has consistently been below expected levels in 1992, 1993, 1994, and the first half of 1995. Comparing actual penetration with the reasonably expected penetration of 20 percent demonstrates that Honda market penetration in the Miami Lakes PMA has been between 87.2 percent and 90.1 percent effective. The additional new car sales that would have been required to bring the Miami PMA up to its reasonably expected market penetration level were 263 units in 1993, 149 in 1994, and 168 for the first half of 1995. American Honda established that it is not receiving adequate representation in the Miami Lakes PMA. ECONOMIC AND MARKETING CONDITIONS Since 1980, there has been a significant decline in the number of households in the area of Dade County near the airport where Miami Honda is presently located, and a significant increase in the number of households in the Miami Lakes area. Miami Lakes represents a densely populated area which presently has no Honda dealer to serve it. All other densely populated areas of the Miami Metro, with the exception of the Plantation area, have an existing Honda dealer. Demographic factors, such as household income, reflect that the Miami Lakes area is much more affluent than the area surrounding the present Miami Honda location. Current and projected demographic data indicate that Honda's inadequate representation in the Miami Lakes PMA is the result of substantial and continuing growth. The growth pattern in the Miami Lakes area is also typical of the growth pattern for the Hollywood Honda PMA. These growth patterns are expected to continue through the year 2000 so that the opportunities for car sales for Hollywood Honda as well as a dealer in Miami Lakes would be expected to increase as this growth continues. Miami Honda's current facility is located in an industrial area that is blocked on the west from further development by the airport. In the vicinity, there are trailer parks and other low income housing, a cemetery, and a truck depot. Also in the area is a highly industrialized area of the Miami River, where cargo vessels are anchored, and the former headquarters of Eastern Airlines and Pan American Airlines, both of which are empty or partially empty. The present location is not as well suited as the Miami Lakes area for the sale of new automobiles. There are Nissan, Mitsubishi, and Hyundai dealerships in the area where Miami Honda is currently located. These lines are also represented in the Miami Lakes area. Miami Honda is one of the top Honda dealers in the Miami Metro and usually one of the top twenty dealers in the United States. Miami Honda is profitable at its current location, having made a profit of $2.9 million in 1994. The existing sales and service facilities of Miami Honda meet Honda's established guide for minimum facilities requirements. However, these existing facilities are outdated and inefficient. These facilities need to be replaced for Miami Honda to remain competitive. The existing location does not justify the construction of a new facility. It takes approximately 28 minutes to drive from the current Miami Honda location to the Hollywood Honda location. It takes approximately 22 minutes to drive from the proposed Miami Honda location to the Hollywood Honda location. Miami Honda's proposed location is part of an auto row, with the other lines being Toyota, Lincoln/Mercury, Ford, Nissan, Pontiac, GMC, Mitsubishi, Chevrolet, Chrysler Plymouth, Jeep Eagle, and Hyundai. This auto row did not exist ten years ago. Hollywood Honda is located on a similar auto row, with virtually the same lines being represented. Without a representative on the Miami Lakes auto row, American Honda is at a competitive disadvantage in the Miami Lakes area to those competing lines with dealers on the Miami Lakes auto row. The present location of Miami Honda is too close to that of Brickell Honda. The population and household trends of the PMA occupied by Brickell Honda and the PMA presently occupied by Miami Honda shows declining sales opportunity for the two dealers and suggests the need for a relocation of one of the two dealers. Honda has established that it is currently under-represented in the Miami Lakes PMA and that the likely cause of the current under-representation is the absence of a Honda dealer in this PMA. Relocating the Miami Honda dealership to Miami Lakes would strengthen the Brickell Honda dealership and the Miami Honda dealership. The relocation would also be in the best interests of the consuming public because it would bring a Honda dealer into the Miami Lakes area. Honda's chances of achieving a reasonable, adequate level of representations are dependent on how well its dealer network keeps pace with expanding sales opportunities. The proposed relocation would maximize customer convenience in the Miami Metro because the distance the purchasers of new cars would have to drive to reach the nearest Honda dealership would be minimized. It is reasonable to expect that Hollywood Honda would lose sales in the Miami Lakes PMA if the relocation is approved because approximately 34 percent of the sales in the Miami Lakes PMA are presently made by Hollywood Honda. It is also reasonable to expect that these lost sales can be offset by Hollywood Honda concentrating on its marketing opportunities closer to its location. The expected marketing penetration in the market within two miles of the Hollywood Honda dealership is 19.3 percent while the actual penetration is 8.6 percent. While Hollywood Honda is one of American Honda's top dealerships, it is missing opportunity for sales in its immediate marketing area. It is reasonable to expect that the proposed relocation will provoke a competitive response by Hollywood Honda that would positively impact Hollywood Honda's sales. Without a competitive response by Hollywood Honda, it is likely that the relocation of Miami Honda would result in the loss of approximately 250 sales a year for Hollywood Honda, for an approximate monetary loss of $500,000. The decision of American Honda to relocate Miami Honda instead of adding a dealer in Miami Lakes provides the existing dealers, including Hollywood Honda, with the opportunity to take advantage of the growing market within the Miami Metro and the lost opportunity for sales that exist, especially in Broward County. Even when the impacts of the proposed relocation would have on Hollywood Honda are considered, it is concluded that approving the proposed relocation of Miami Honda would strengthen the American Honda dealer network in the Miami Metro and would serve the interests of the consuming public.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order that adopts the findings of fact and conclusions of law contained herein. It is further recommended that the final order approve Miami Honda's proposed relocation. DONE AND ENTERED this 6th day of June, 1996, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of June, 1996.
The Issue The issue is whether Petitioners are entitled to motor vehicle dealerships that are proposed to be located in Orange County, Florida.
Findings Of Fact Based on the Notices of Publication, Respondent's protest letters which were forwarded to DOAH, and the testimony presented at the final hearing, the following Findings of Fact are made: Respondent is an existing franchised dealer for motorcycles manufactured by Benzhou Vehicle Industry Group Company, Ltd. Petitioners have proposed the establishment of new dealerships to sell the same line-make of motorcycles as those sold by Respondent. Respondent's dealership is located at 3838 John Young Parkway, Orlando, Orange County, Florida. Petitioners' dealerships are proposed to be located in Orange County, Florida, at: 4535 34th Street, Orlando, Florida (Case No. 09-3489); and 2650 West Fairbanks Avenue, Winter Park, Florida (Case Nos. 09-3499 and 09-4750). The proposed dealerships are within a 12.5-mile radius of Respondent's dealership. Respondent has standing to protest the establishment of the proposed dealerships. No evidence was presented showing that Respondent was "not providing adequate representation" of the same line-make vehicles in the community or territory.
Recommendation Based upon 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 denying the establishment of Petitioners' proposed franchise dealerships for Case Nos. 09-3489, 09-3499, and 09-4750. DONE AND ENTERED this 12th day of November, 2009, in Tallahassee, Leon County, Florida. S JEFF B. CLARK 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 12th day of November, 2009. COPIES FURNISHED: Electra Theodorides-Bustle, Executive Director Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Jennifer Clark Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-308 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Jude A. Mitchell Jude's Cycle Service Post Office Box 585574 Orlando, Florida 32858 Beverly Fox Red Streak Scooters, LLC 427 Doughty Boulevard Inwood, New York 11096 Randy Lazarus Scooter City USA, LLC 4535 34th Street Orlando, Florida 32811 Bobbette Lynott Classic Motorcycles and Sidecars, Inc. Post Office Box 969 Preston, Washington 98050 Lou Ronka Scooter City USA, LLC 2650 West Fairbanks Avenue Winter Park, Florida 32789
The Issue Whether existing Mazda dealers are providing adequate representation of the Mazda line-make in the community or territory in which Mazda Motor of America, Inc., proposes to add a dealer.1/
Findings Of Fact The Parties MMA is a “licensee” as defined by section 320.60(8), Florida Statutes. SMM is a “motor vehicle dealer” as defined by section 320.60(11). Notice and Standing On August 9, 2013, notice was published in the Florida Administrative Register announcing MMA’s intent to establish Brickell Mazda as a dealer for the sale of Mazda vehicles at 618 Southwest Eighth Street, Miami, and for the service of Mazda vehicles at 665 Southwest Eighth Street, Miami (jointly referred to as the Proposed Point). These two parcels of real property are situated 71 feet apart and directly across from each other on opposite sides of Southwest Eighth Street, a three-lane one-way street that is not a limited access highway. The proposed additional dealer would be located in Miami-Dade County, Florida, which has a population of more than three million persons. SMM is an existing franchised Mazda dealer operating from a facility located at 18010 South Dixie Highway, Miami, Florida. SMM timely protested the proposed additional dealer. During several 12-month periods within the 36 months preceding publication of notice of the proposed additional dealer, SMM made more than 25% of its retail sales of new Mazda vehicles to persons who registered those vehicles within a radius of 12 and one-half miles of the proposed location of the proposed additional dealer. If Brickell Mazda is permitted to open at the Proposed Point, its Mazda sales operations and its Mazda service and parts operations will open on the same day, and it will operate its Mazda sales and service operations at the Proposed Point until completion of construction of a new Mazda sales and service facility to be located within two miles of the Proposed Point. Community or Territory The first issue to be addressed in this protest is the identification of an appropriate “community or territory” (Comm/Terr), which is the relevant geography within which to judge the performance of the Mazda brand. Section 320.642, Florida Statutes, does not provide any specific criteria for geographically defining the Comm/Terr. In determining the geographic boundaries of the Comm/Terr, consideration is given to the areas assigned to Mazda dealers by MMA. MMA assigns to each of its dealers a geographic area known as a Statistical Observation Area (SOA), which is comprised of United States (U.S.) Census Bureau census tracts close to each dealer. A dealer’s SOA is the area in which a dealer has a geographic advantage with respect to consumers, who generally will shop for a new vehicle at the closest dealer, unless they are dissatisfied with that dealer for some reason. In determining the geographic boundaries of the Comm/Terr, consideration is also given to the buyer behavior of new Mazda consumers--what is the geographic area where consumers in that area buy the majority of their new vehicles from dealers in that area, and where the dealers in that area sell the majority of their new vehicles to consumers in that area. The Comm/Terr should also have “connectivity” meaning that the areas within the Comm/Terr are reasonably connected from a buyer behavior point of view. MMA defines the Miami Metro market as an area encompassing all of Miami-Dade County, all of Broward County, a portion of northern Monroe County (consisting of the upper Keys), and a portion of southern Palm Beach County. MMA employs the 2010 version of U.S. Census Bureau census tracts to define the Miami Metro market. Sharif Farhat, MMA’s expert witness, testified that the proper Comm/Terr in this case is the geographic area within the four Miami-Dade SOAs–-Ocean Mazda (Ocean), Mazda of North Miami (North Miami), SMM, and the open point (formerly Potamkin Mazda’s SOA), which shall be referred to hereinafter as the “Miami Comm/Terr.” Joseph Roesner, SMM’s expert witness, agreed that the Miami Comm/Terr is the proper Comm/Terr. Based on a consideration of all relevant evidence, the proper Comm/Terr in this case is the Miami Comm/Terr. Within the Miami Comm/Terr, Mazda’s competitors are represented in the areas near SMM, Ocean, and North Miami, and also in the open point SOA where Brickell Mazda is proposed, but where there is no current Mazda dealer. Historical Network Changes, Existing Dealer Network For over 16 years, from April 1992 until Potamkin Mazda (Potamkin) closed in March 2009, there were four Mazda dealerships operating in Miami-Dade County–-Ocean Mazda, North Miami/Marlin Mazda, SMM/Kendall Mazda and its predecessors, and Potamkin. If the operations of Williamson Mazda and Spitzer Mazda in Homestead are considered, there were five Mazda dealerships operating in Miami-Dade County for some of those years. It has only been since March 2009, or a little over five years, that there have been only three Mazda dealerships operating in Miami-Dade County. The current Mazda dealers in Miami-Dade County are Ocean (9.3 miles from the Proposed Point), North Miami (13.8 miles from the Proposed Point), and SMM (14.6 miles from the Proposed Point). In 2012, within the SOA of the Proposed Point, North Miami registered the most new Mazda vehicles (204) and SMM registered the least (73), whether measured by number of units or percentage of registrations in the SOA. Brickell Mazda will be the first Mazda dealer added since the 2008/2009 downturn in the automotive industry, and the fourth Mazda dealer in the Miami Comm/Terr, with no plans by MMA to add a fifth dealer. Prior to SMM opening in October 2007, Kendall Mazda (Kendall) operated at 18010 South Dixie Highway, Miami. Kendall lost its floor plan (the bank credit line used to purchase new vehicles from MMA), and it sought bankruptcy court protection. On March 19, 2007, SMM’s parent company, South Motors Company of Dade County, purchased the Kendall dealership property from the trustee for the Kendall bankruptcy. When South Motors Company of Dade County purchased the property, SMM did not yet have a Mazda dealership agreement. Prior to its closing, Kendall received negative local publicity, caused in part by that dealership not paying off loans on customers’ trade-in vehicles. Kendall’s actions could have damaged Mazda in the market place. Before being awarded a Mazda franchise by Mazda and opening the Mazda dealership, SMM knew of the problems caused by the prior dealer, and expected that SMM would struggle to be profitable because of issues with Kendall. SMM even considered not opening the dealership. However, SMM expected that, in time, it could overcome these issues and decided to open the dealership. SMM was awarded its Mazda franchise by Mazda and did not have to purchase the franchise rights from another Mazda dealer. Not only did SMM not pay any money for acquiring the franchise, but MMA provided $200,000.00 in monetary assistance to SMM specifically to assist in establishing itself in the market. Kendall’s actions no longer impair SMM’s performance as a Mazda dealer. Potamkin was previously located in the open point SOA where the Proposed Point is located. Potamkin’s location was 9.3 miles from Kendall, which is where SMM is located today. The Proposed Point is 14.6 miles from SMM and will provide better spacing between Mazda dealers. Potamkin’s dealership facility was located on four different properties, the leases for which were expiring in February 2009. Potamkin told MMA that it wanted to either close or sell the dealership. The proposed buyer was a prior Mazda dealer, but MMA did not consider him to be a successful dealer and was not interested in him as a buyer for the Potamkin point. Potamkin closed in March 2009, the same year that General Motors and Chrysler filed for bankruptcy and many dealers, not just Mazda dealers, were struggling financially on the heels of the financial crisis and the bottoming out of the automobile market the year before. MMA made the decision to negotiate a voluntary termination of Potamkin and temporarily close the point, in order to provide Ocean and SMM two years to absorb the sales and fixed operations business of Potamkin. In making this decision, MMA conducted a risk/benefit analysis. One potential benefit was that Ocean and SMM might be able to increase sales and profitability. Other benefits were that MMA could “control the point and plan for the future” and “attract a top tier dealer candidate.” The risk was that Ocean and SMM would not be able to “absorb sales and fixed operations business.” MMA believed closing Potamkin would also help the “crowded” Miami dealer representation, caused by Ocean’s relocation to within four miles of Potamkin. MMA approved Ocean’s relocation because Ocean’s dealership facility was in the direct flight path of jets landing at Miami International Airport, and the noise disrupted sales and service operations. There is no evidence that Potamkin voluntarily terminated because there were four Mazda dealers in Miami-Dade County. MMA kept the SOA formerly assigned to Potamkin as an open point and did not assign any of Potamkin’s market area to Ocean or SMM. The Proposed Point is further away from both Ocean and SMM than was the prior Potamkin location. After Potamkin closed in 2009, Ocean and SMM were not able to increase their sales to “absorb” Potamkin’s sales business or achieve an acceptable level of sales in the market area previously served by Potamkin. Furthermore, SMM was not able to increase its profitability, and it continued to operate at a loss, which has been the case since the dealership opened in 2007. SMM’s losses decreased in 2010, but then increased in 2011 and 2012. Mario Murgado is an experienced and successful new car dealer who expressed interest to MMA in becoming a Mazda dealer. Mr. Murgado was born in Havana, Cuba, is fluent in Spanish and English, and is experienced in marketing and selling new motor vehicles to Hispanic and non-Hispanic customers in the Miami market. Mr. Murgado owns several successful automobile dealerships on Southwest Eighth Street in Miami, which is within the open point SOA formerly assigned to Potamkin, including Honda, Buick, GMC, and Pontiac. This area is within “Little Havana,” one of the most densely Hispanic populated areas in Miami. Mr. Murgado also owns and operates Audi and Infinity dealerships in Stuart, Florida. Mr. Murgado entered into a Letter of Intent with MMA in which he agreed that “the Permanent Dealership Site shall meet Mazda’s design and image standards” and which contains specified minimum square footage requirements at the proposed Brickell location. On August 9, 2013, MMA gave notice of its intent to allow the establishment of Brickell Mazda at the Proposed Point.2/ Adequacy of Representation in the Community or Territory-– Statutory Criteria After establishing the proper Comm/Terr, section 320.642(2)(b) outlines 11 factors to be balanced when determining whether or not current representation in the Comm/Terr is adequate. Impact of the Proposed Additional Dealer on Consumers, Public Interest, Existing Dealers, and MMA Impact on Consumers and Public Interest The Miami Comm/Terr is currently served by three Mazda dealers located in the northern (North Miami), western middle (Ocean), and southern (SMM) portions of the market. The proposed Brickell Mazda location would service the eastern middle portion of the Miami Comm/Terr. Each of the three existing dealers is located in a large cluster of other dealers that offer competing line-make vehicles. These locations provide consumers with convenient access to cross shopping opportunities. The proposed additional dealer would also be located next to a Honda, Buick, and GMC dealership. The travel distance from the proposed location to SMM is 15.4 miles. From the proposed location to Ocean is 10.5 miles. From the proposed location to most of North Miami, the travel distance is 14.5 miles. The proposed location is approximately 2.4 miles east of the former Potamkin, which would place it further away from its nearest competing Mazda dealership, Ocean. The existing road network provides consumers access to one or more Mazda dealers via major arterial roadways: North Miami is accessed from Interstate 95 or the Florida Turnpike, major north/south arteries; Ocean is accessed from the Dolphin Expressway, a major east/west artery, the Palmetto Expressway, a major north/south artery, or the Florida Turnpike; and SMM is located on U.S. 1, a major north/south artery, and is also accessible from the Florida Turnpike. Drive times between the existing Mazda dealerships vary dramatically based upon traffic congestion, which can be notoriously heavy. Consumers would have convenient access to the proposed Brickell Mazda location from U.S. 1, the Dolphin Expressway, and Interstate 95. The Proposed Point is on Southwest Eighth Street (Tamiami Trail/U.S. 41), which is an east-west three-lane main artery leading into downtown Miami. Brickell Mazda will provide a shuttle service for Mazda customers who work in downtown Miami. Downtown Miami workers and residents would have the greatest enhanced accessibility to Mazda sales and service due to the close proximity of the proposed location to downtown. On average, Mazda consumers in the Miami Comm/Terr have to travel 10.2 miles to a Mazda dealer, which is the highest distance of all brands in the Miami Comm/Terr, placing the Mazda brand at a significant disadvantage to other competitors offering more convenience in terms of travel distance. The establishment of Brickell Mazda would reduce the average distance to the nearest Mazda dealer in the Miami Comm/Terr from 10.2 miles to five miles, which would place Mazda in the middle of its competitors in terms of customer convenience based on travel distance. The proposed additional dealer will benefit consumers by providing an additional choice for Mazda sales and service at a new facility owned and operated by an experienced and successful automobile dealer and shortening the travel distance for some consumers in the Comm/Terr. More specifically, the addition of a new Mazda dealer at the proposed Brickell location will make sales and service of Mazdas significantly more accessible to the growing residential population of downtown Miami. Impact On Existing Dealers The analysis of the potential impact on existing dealers begins with an assessment of the opportunity for Mazda sales in the Miami Comm/Terr in addition to the sales occurring historically. These are additional sales available to existing dealers who compete aggressively that will offset any potential impact resulting from Brickell Mazda’s establishment. These additional sales come from two sources–-sales by competitors (conquest sales) and Mazda sales by Mazda dealers outside the Miami Comm/Terr into the Miami Comm/Terr (in-sell). Based on 2012 registration data, there were 1,729 additional conquest sales available if the Miami Comm/Terr achieves the Broward average.3/ A significant number of these conquest sales are located in and around the central part of the Miami Comm/Terr where Brickell Mazda is proposed. Based on 2012 registration data, there are 775 additional in-sell registrations available to Mazda dealers in the Miami Comm/Terr. The total of these conquest sales and in-sell sales is 2,504 units, which is a significant missed opportunity. Brickell Mazda’s potential sales of 647 within 20 miles, and 56 beyond 20 miles, total 703 units, leaving an additional 1,801 units available to the existing dealers. Another way to measure impact is to examine the change in the existing dealers’ expected sales based on the changes to their SOAs that would occur if Brickell Mazda is established. The changes in the SOAs reflect changes in each dealer’s geographic advantage. All of the existing dealers have significant sales opportunities within their assigned SOAs, and should suffer no negative impact after Brickell Mazda opens. SMM had the opportunity to capture 84 additional sales just as a result of in-sells made by North Miami alone in 2012, which are more sales than SMM made into the open point SOA the same year. SMM argues that the addition of another Mazda dealer in the Comm/Terr will necessarily result in each of the existing dealers receiving a lesser share of total sales. However, this argumemt was not supported by credible testimony. To the contrary, a review of the data regarding the addition of a new Mazda dealership in other markets demonstrates that there is a likely benefit to existing dealers. For example, after the addition of a Mazda dealer in Wesley Chapel (Tampa area), registration effectiveness increased 65.5%, indicating that the result was an effective, aggressively-competing dealer network. The sales performance of the existing dealers also improved, indicating no negative impact on sales relative to their historical sales. After the addition of a Mazda dealer in Jacksonville, Mazda’s market share increased 29% because of conquest sales, and in-sell sales decreased. After the addition of a Mazda dealer in Royal Palm Beach, following the closing of two Mazda dealers, and at a very difficult time for the automotive industry in 2008 and 2009, Mazda’s market penetration was better than in the state of Florida as a whole, and the SOA with a Mazda dealer had improved sales performance. These case studies indicate that the addition of a Mazda dealer, where there is inadequate performance, results in increased Mazda market penetration due to increased customer satisfaction, and that existing dealers are not negatively impacted because of the new dealer. Financial Impact on South Motors4/ SMM is wholly owned by South Motors Company of Dade County, which also owns and operates several other automobile dealerships in South Florida. Since commencing operations in 2007, SMM has continually operated at a loss, averaging approximately $750,000 in losses each year since 2008.5/ SMM executives have made no decision and have not even discussed whether to close the dealership if losses continue. Ricardo Lujan, Vice President of Finance for South Motors Company of Dade County, testified that SMM can “continue to increase our revenues and get to profitability,” but he will recommend that SMM close if Brickell Mazda is established because new vehicle sales will be split among four dealers instead of three. This erroneously assumes that the number of new vehicle sales is a “fixed pie,” which ignores conquest sales and in-sell sales available in the Miami Comm/Terr to dealers willing to compete for automotive sales and service, as well as future growth in the market. Mr. Roesner acknowledged that a new Mazda dealer in a market can generate new excitement in the Mazda brand and cause people who would not otherwise do so to buy new Mazda vehicles, resulting in increased conquest sales. The mere existence of Brickell Mazda with new Mazda signage may cause people to take note of the brand. The increase in sales has the potential to lead to increased service business for existing Mazda dealers. Mr. Roesner estimates that based on 2012 sales volume, SMM would lose between 67 and 135 new Mazda sales if Brickell Mazda is established. This calculation ignores the fact that SMM failed to capture 233 units sold to customers in SMM’s SOA by other Mazda dealers. In short, Mr. Roesner’s financial analysis merely states that SMM will lose more business with the addition of Brickell Mazda without considering the opportunity that currently exists for SMM and all Mazda dealers in the Miami Comm/Terr. Further, if SMM operates according to Mr. Roesner’s financial analysis, SMM will never be profitable--even if Brickell Mazda is never established. Mr. Roesner’s financial analysis fails to include any calculation of the new car sales volume necessary for SMM to break even. Using Mr. Roesner’s calculations and assumptions, Mr. Farhat analyzed SMM’s break-even point and determined SMM would have to more than double its annual sales in its new car department, and also double its volume in every other department to break-even, regardless of whether Brickell Mazda is established. In short, if Mr. Roesner’s financial/sales analysis is to be believed, SMM will not be able to grow sales and will never be profitable even if Brickell Mazda does not open. SMM’s financial problems and inability to make a profit result from poor dealership operations, not the opening of Brickell Mazda, and only SMM can address and rectify its own operational issues. There is no competent, substantial evidence in the record that Brickell Mazda’s opening will cause SMM to go out of business. Impact on MMA With the addition of Brickell Mazda, MMA will have greater market penetration (as discussed in greater detail below) and a more competitive dealer network in the Miami Comm/Terr, resulting in increased sales of MMA vehicles, and more satisfied Mazda customers, which will enhance the Mazda reputation to the benefit of MMA and its dealers. Investment of Existing Dealers SMM has invested $6.6 million in its dealership operations, and its parent company, South Motor Company of Dade County, has invested $6.8 million in the facilities from which SMM operates. The undisputed testimony establishes that the other existing Mazda dealers in the Comm/Terr have made similar facility investments. SMM’s investment does not include the dealership property, which is owned by SMM’s parent company, South Motors Company of Dade County. SMM’s investment in its Mazda dealership is substantially less than what it would be in the ordinary course of business, because it does not own the dealership property and has entered into an interest-only, below-market-rate lease with South Motors Company of Dade County. SMM’s investment is also less because many of its ordinary business expenses are paid by South Motors Company of Dade County. Reasonably Expected Market Penetration Market penetration, or registration performance, is a measure of the share of the retail automobile market which a line-make achieves during a defined period of time in a particular geographic area. In the automobile industry, market penetration is calculated by dividing the number of new vehicles of a line-make that are registered by the number of all new vehicles of competing line-makes that are registered. Thus, for instance, the calculation of the 2013 Mazda market penetration in the Comm/Terr would be: Total Number of New Mazda Registrations in the Comm/Terr during 2013 divided by the Total Number of New Competitive Line-Make Registrations in the Comm/Terr during 2013. Appropriate Benchmark Identifying an Appropriate Comparison Area In determining whether Mazda is currently achieving a reasonably expected level of market penetration in the Comm/Terr, a standard or benchmark for market penetration must first be established against which Mazda’s performance is compared. That benchmark must be reasonable, and should be neither too high nor too low. In determining a standard to measure performance in the Miami Comm/Terr, market penetration in another geographic area (“comparison area”) is assessed in order to arrive at a level or standard of performance that can reasonably be achieved in the Miami Comm/Terr. The comparison area must be independent of the Miami Comm/Terr, so that the Miami Comm/Terr is not being measured against itself. A smaller comparison area close to the Miami Comm/Terr is superior to a larger comparison area that is farther away because the larger area will include dealers in diverse areas whose performance could be affected by market occurrences such as buy-sells, relocations, and facility changes, and because the larger area will include areas that have no Mazda dealer. For a larger comparison area, such as the U.S. or Florida, it is appropriate to consider only the areas that have a Mazda dealer, known as U.S. Represented SOAs or Florida Represented SOAs. The combined SOAs of the three Mazda dealers in Broward County, Florida--Gunther and the two Lou Bachrodt dealerships–- comprise a smaller comparison area adjacent to the Miami Comm/Terr in the same state and climate. The larger comparison areas suggested by SMM, of U.S. Represented and Florida Represented, are not appropriate benchmarks to determine adequate representation in the Miami Comm/Terr because over the period of 2010 through July 2013, the Broward SOAs consistently achieve higher market penetrations and demonstrate what an adequately represented market can achieve. MMA’s use of regional averages or other comparison areas in standardized reports to dealers is not a reason to use Region as the comparison area in this case. Instead, a more thorough analysis of the South Florida market is appropriate in determining adequacy of performance, as required under section 320.642. Using the Broward SOAs as the comparison area (Broward average) results in the dealers in the Miami Comm/Terr being compared to dealers in Broward County, and not to dealers in distant and diverse parts of the U.S. or Florida. The dealers in the Broward SOAs are in the same advertising market as the dealers in the Miami Comm/Terr; were in the same dealer advertising group with the Miami Comm/Terr dealers until March 2012; and, like the Miami Comm/Terr dealers, had no dealer advertising association after March 2012. Another key factor weighing in favor of using the Broward SOAs as the comparison area is the similar Hispanic population to the Miami Comm/Terr. While not as high as the Miami Comm/Terr, the Broward SOAs have high percentages of Hispanic population compared to most other SOAs in Florida. Segmentation Analysis The second step in determining the benchmark is segmentation analysis, the process by which any differences in product popularity caused by consumer purchase preferences between the Miami Comm/Terr and the benchmark area are addressed. This analysis accounts for any differences between the Miami Comm/Terr and the Broward SOAs for consumers purchasing certain types of vehicles, such as trucks or SUVs, and not others. MMA’s product lines are broken down into various segments, such as subcompact, mid-size, and SUV, and then Mazda registrations in those segments are compared to industry registrations in those same segments. By dividing the number of Mazda registrations in each segment by the number of industry registrations in each segment, the actual penetration rate in each segment in the Miami Comm/Terr is obtained. The overall actual Mazda penetration rate in 2012 in the Miami Comm/Terr for all segments was 3.43%. This is computed by dividing the total actual Mazda registrations within the Mazda Comm/Terr by the actual industry registrations. These same computations using the actual Mazda and industry registrations in the Broward SOAs yield the actual penetration rate in each segment for 2012 in the Broward SOAs. The number of expected registrations in 2012 in the Miami Comm/Terr in each segment is computed by multiplying each segment’s actual penetration rate in the Broward SOAs by the number of industry registrations in that same segment in the Miami Comm/Terr. The overall expected Mazda penetration rate in 2012 for all segments in the Miami Comm/Terr is 5.29%, computed by dividing the number of expected registrations of 4,320 (Mazda registrations in Miami Comm/Terr if Mazda captured what the Broward SOAs dealers captured) by 81,721 (total competitive registrations in the Comm/Terr). Mazda’s expected registrations, or market penetration, for other years can be computed by multiplying the expected penetration rate for that time period by the number of actual industry registrations in the Miami Comm/Terr for that time period. For example, applying the 2012 Broward average expected penetration rate of 5.29%, Mazda’s expected registrations in the Miami Comm/Terr were 4,320 registrations, while its actual registrations were only 2,800. Confirmation of the Benchmark as Reasonable The third step in determining the benchmark is to test the reasonableness of the benchmark by determining if it has been achieved. There are many areas in Southeast Florida, including areas in Miami-Dade, Broward, and Palm Beach counties, that achieve or exceed the Broward average of 5.29%. The Broward average of 5.29% has also been consistently achieved or exceeded in various markets in Florida over a period of time from 2010 to July 2013. Although the Broward average includes Gunther, one of MMA’s highest selling dealers, this is not a valid reason to reject it as the benchmark because the Broward average of 5.29% is achieved in numerous areas in Southeast Florida, and over time in various other markets in Florida. Mr. Roesner proposed alternative benchmarks of U.S., comprised of the entire U.S.; the Region, comprised of several states in addition to Florida; and the entire state of Florida. Mr. Roesner’s Florida benchmark includes many areas with no Mazda dealer representation. Mr. Roesner’s U.S., Region, and Florida benchmarks are not appropriate benchmarks because those areas are too diverse or different from the Miami Comm/Terr to permit a meaningful comparison. Based on a consideration of all relevant evidence, the appropriate comparison area is the Broward SOAs, and the segment- adjusted Broward average of 5.29% is a reasonably expected market penetration level for adequate representation in the Miami Comm/Terr. Performance of Dealer Network in Miami Comm/Terr Compared to Reasonably Expected Market Penetration Mazda’s performance in the Miami Comm/Terr (actual market penetration) is measured relative to the segment-adjusted Broward average (expected market penetration) to determine if the dealer network in the Miami Comm/Terr is providing adequate representation. For the years 2010 through July 2013, the Miami Comm/Terr performed well below the reasonably expected Broward average performance. Specifically, in 2010, the Miami Comm/Terr performed at 68.7% of the reasonably expected Broward average, with a loss of 1,604 new vehicle registrations; in 2011, at 67.4% of reasonably expected Broward average and 1,535 lost registrations; in 2012, at 64.8% of reasonably expected Broward average and 1,520 lost registrations; and calendar year to date (CYTD) July 2013, at 65.8% of reasonably expected Broward average and 1,659 lost registrations (on an annualized basis). The Miami Comm/Terr’s performance in the 60th to 70th percentile range is not a low “C” average; rather it is considered very low achievement because the Broward average is considered to be reasonably expected, and not superlative, performance. In another words, 100% is merely average and to be expected. The Miami Comm/Terr is performing well below a reasonable level of performance, and its performance has been consistently below average-–65% of Broward SOAs. Mr. Farhat credibly testified as to the import of this performance-- consumers are saying they’re dissatisfied with the Mazda effort, the Mazda Network. Consumers in Broward County are buying at a certain rate. Consumers in this area [the Miami Comm/Terr] are buying at 50 or 60 percent of that rate. So consumers are telling Mazda they’re not happy. This is not an adequately represented [market]-–there’s not enough competition. There’s not enough convenience. And it’s displayed in ultimately, you know, their purchases. They put their money where their mouth is, and it’s not going to Mazda. The fact that the Miami Comm/Terr’s performance has been consistently below the Broward average indicates inadequate performance by the Mazda dealer network. This below-average performance is evident throughout the Miami Comm/Terr in all four of the SOAs–-Ocean, SMM, North Miami, and the open point. North Miami’s performance (although still below the Broward average) is better than the other SOAs’ performance and indicates that a stronger performing dealer can do better, so that improved performance is available with a stronger dealer effort. The Miami Comm/Terr’s performance is still inadequate when compared to the more conservative benchmark, suggested by SMM, of the Florida Represented average. The Miami Comm/Terr’s performance declined in each year from 2010 through CYTD July 2013 as measured by the Florida Represented average, indicating inadequate performance and consumer dissatisfaction with the level of Mazda dealership competition. Specifically, in 2010, the Miami Comm/Terr performed at 95.2% of Florida Represented average, with a loss of 179 new vehicle registrations; in 2011, at 94.3% of Florida Represented average, with a loss of 191 registrations; in 2012, at 84.3% of Florida Represented average, with a loss of 522 registrations; and CYTD July 2013 (MMA gave notice of establishing Brickell Mazda in August 2013), at 80.8% of Florida Represented average, with a loss of 759 registrations (on an annualized basis). This same below average and declining performance measured against the Florida Represented average is evident in the Ocean, SMM, and open point SOAs. North Miami’s performance is better as measured against the Florida Represented average, which indicates the very conservative nature of the Florida Represented as a benchmark. However, even North Miami’s performance is declining under the Florida Represented average, dropping over 20% from 2010 to CYTD July 2013. As Mr. Farhat testified, under either the Broward or Florida Represented benchmarks, his conclusions are the same-- So the pattern, I think, is similar. The conclusion is, ultimately, relative to the reasonable benchmark, which is the Broward County SOAs, the Miami Comm/Terr, and in particular, areas south of the Lehman [North Miami] SOA are inadequately represented. There is very poor performance. There is significant incremental opportunity. And even to the more conservative Florida benchmark, you have the same conclusion: Areas below or South of Lehman are not adequately represented by the existing Mazda dealer network. Based on a consideration of all relevant evidence, it is determined that there is an inadequate level of representation of Mazda in the Miami Comm/Terr. Consideration of All Factors Which May Affect Market Penetration The “market penetration” factor requires not only a determination of the appropriate comparison and analysis of how the existing dealers are penetrating their market, but requires “consideration of all factors which may affect said penetration, including, but not limited to, demographic factors such as age, income, education, size class preference, product popularity, retail lease transactions, or other factors affecting sales to consumers of the community or territory.” § 320.642(2)(b)3., Fla. Stat. In addition to the segmentation analysis discussed above, which takes into consideration vehicle size and class preference, both MMA and SMM presented extensive evidence regarding the potential effect of the Miami Comm/Terr Hispanic population, and the lack of Spanish-language advertising by MMA and the Miami Comm/Terr Mazda dealer group. SMM argues that there are unique demographic factors in the Comm/Terr which explain why Mazda’s market penetration dropped from 2011 to 2012 and through July 2013. Further, SMM argues that MMA’s failure to conduct advertising in Spanish, in the Miami Comm/Terr, resulted in Mazda’s declining market penetration. These arguments were not supported by credible evidence. Miami-Dade County makes up the vast majority of the Comm/Terr. The population of Miami-Dade County is 67% Hispanic. By contrast, the population of Broward County is just 27% Hispanic. Within Miami-Dade County more than 50% of the Hispanic population is Spanish dominant, meaning that they speak mostly or only Spanish. Spanish dominance is high across Hispanic nationalities and socio-economic levels. A vast majority of the Hispanic population in Miami- Dade County are Latin Americans who immigrated to this Country. The population of Miami-Dade County is such that Spanish speakers immigrating to the county are not required to assimilate by learning English. Even those Spanish speakers who also speak English are able to live their daily lives without communicating in English. A large portion of the Miami-Dade County population consumes Spanish media, in the form of El Nuevo Herald (the Spanish language version of The Miami Herald); the numerous Spanish language radio stations; and the four Spanish broadcast television (TV) stations. Spanish broadcast TV stations are the most popular in Miami-Dade County. The two top-rated six o’clock TV newscasts in Miami-Dade County are on Spanish stations. Among broadcast TV viewers, greater than 50% watch Spanish TV stations between the hours of 6:00 p.m. and 11:00 p.m. Because of the high concentration of Hispanics in Miami-Dade County, along with the high percentage of Hispanics that are Spanish dominant and the popularity of Spanish media, Spanish advertising is very common throughout Miami-Dade County. There are three categories or “tiers” of advertising in the automotive industry–-Tier 1, Tier 2, and Tier 3. Tier 1 advertising is designed to promote the Mazda brand to a national audience; for example, a Mazda automobile advertisement during a sporting event. MMA pays for all Tier 1 advertising. Tier 2 advertising is designed to advertise the Mazda brand in connection with specific offers available to potential customers in a market area, and usually includes some reference to the local dealers. Dealer groups, known as Dealer Marketing Groups (DMGs), purchase Tier 2 advertising with funds derived from two sources: 1) member dealers contribute on a per-car basis for all cars purchased from MMA (currently 1.5% of base MSRP)6/; and 2) MMA contributes an additional amount (currently $.50 for each dollar contributed by dealers). DMGs are formed when dealers in the same media market area, known as a Dominant Market Area (DMA), voluntarily join together to pool their advertising dollars to fund advertising in their DMA. South Motors, Ocean, and North Miami are not part of a DMG. If a dealer is not a member of a DMG, the per-car contribution that would otherwise go to the DMG is kept by the dealer and can be used for advertising. DMGs work with MMA to make advertising buys in the local media. MMA’s advertising agency will propose advertising content and buys, and the DMGs decide how and on what ads to spend their money. Prior to DMGs, Mazda dealers joined Tier 2 marketing groups known as voluntary or “Vol” groups, which were similar to DMGs, and used dealer contributions and matching funds from MMA to engage in Tier 2 advertising. The Vol groups disbanded in 2012 when the DMG program began. Not all Mazda dealers are in DMGs. A single point market (only one Mazda dealer) does not have a DMG because with no pooling of funds, the dealer can make its own decision about advertising content and buys. In multi-point markets (more than one Mazda dealer), if the dealers voluntarily agree to form a DMG, MMA will support them. If dealers in a market decide not to form a DMG, MMA does not attempt to force them. If MMA were to provide funds for Tier 2 advertising in markets where there is no DMG, it would discourage dealers from participating in DMGs and contributing to the cost. MMA has 18 multi-point markets in the Southeast Region, and ten do not have DMGs. The Mazda dealers in Nashville and Winston-Salem formed DMGs and later disbanded them. MMA currently has six multi-point markets in Florida with DMGs and two multi-point markets without DMGs. There are two DMGs in Florida with some, but not all, dealers participating-–West Palm and Orlando. In Palm Beach County, there are two high-volume dealers in the southernmost part of the county who agreed to form a DMG because the dealers to the north do not compete with them. In Orlando, there is one dealer in Ocala who is on the fringe of the DMG and does not strongly compete with the five Orlando dealers in the DMG. MMA prefers not to have DMGs with less than all dealers participating because of the “free rider” problem, where the non-participating dealers may benefit from the advertising paid for by the participating dealers. In both West Palm and Orlando, all of the dealers are aware of and have consented to the formation of the DMGs without the participation of all dealers in these DMAs. Tier 3 advertising is designed to persuade individual local consumers to do business with a particular dealership; for example, advertising of the dealership in local media, the internet, or on billboards. Each individual dealership pays for its Tier 3 advertising. MMA reimburses a portion of each dealership’s Tier 3 advertising costs by crediting the dealer’s account with amounts known as Co-Op funds. In addition to Co-Op funds, if a dealer is not a member of a DMG, the per-car contribution that would have gone to the DMG is returned to the dealer and can be used for additional Tier 3 advertising. In addition to providing funds for the three advertising tiers, MMA periodically has available regional marketing funds used for additional regional advertising or events, or to assist dealers with grassroots events or additional local advertising. MMA ran Tier 1 advertising in English during all times relevant to this proceeding. Tier 1 advertising provides the same coverage in all markets for all dealers. Beginning in 2013, MMA increased its Tier 1 advertising to be “always on” for all dealers 52 weeks a year. Since October 2010, the majority of Mazda Hispanic advertising has been at the Tier 2 level by the Vol groups or DMGs. MMA’s decision to shift Hispanic advertising to the Tier 2 level is consistent with its overall marketing strategy to put greater emphasis on local versus national media. MMA’s marketing strategy allows DMGs to focus on Hispanic advertising in markets where there is a large population of Spanish-dominant speaking consumers. DMGs vote and determine whether to engage in Hispanic advertising. DMGs in some markets have elected to engage in Hispanic advertising. Currently, DMGs engage in Hispanic advertising in the following markets–-Tampa, Orlando, West Palm, Los Angeles, Sacramento, San Francisco, Houston, Dallas, and the lower Rio Grande Valley. In 2013, MMA investigated the feasibility of a Tier 1 national Hispanic advertising effort, but concluded that Hispanic advertising was best done at the Tier 2 and 3 levels. MMA is not the only manufacturer that does not engage in Hispanic advertising at the Tier 1 level–-Kia and Hyundai do not conduct Tier 1 Hispanic advertising. In addition, at various times from 2010 to 2013, Hyundai, Buick, Mitsubishi, Volvo, GMC, Smart, Subaru, and Mini have not engaged in Tier 1 Hispanic advertising on local Spanish TV stations in the Miami- Dade/Broward market. MMA decided not to do Tier 1 Hispanic advertising because over two-thirds of the national Hispanic audience either speak English fluently or speak both English and Spanish. Miami-Dade and Broward counties comprise one market for advertising purposes (Miami-Dade/Broward Market). MMA’s Tier 1 advertising reaches a national audience (which would include the Miami-Dade/Broward Market) through its national TV, digital, and print categories. Through 2012, MMA engaged in Tier 1 English and Hispanic advertising in the Miami-Dade/Broward market, including Tier 1 Hispanic advertising on local Spanish TV stations. In 2013, MMA continued its Tier 1 English advertising in the Miami-Dade/Broward Market and also conducted a small amount ($5,663.00) of Tier 1 Hispanic advertising on local Spanish TV stations. Garage Team Mazda is MMA’s contracted advertising agency and tracks MMA’s media planning and spending. Garage Team Mazda prepares summaries of MMA spending on Tier 1 and Tier 2 advertising. MMA and Garage Team Mazda compute the actual advertising dollars spent in the Miami-Dade/Broward Market by taking the percentage of U.S. households defined by Nielsen to be in the Miami-Dade/Broward Market (1.4%) and applying that percentage to the total national spending. For the fiscal year ending March 2010, MMA spent $30,407,616.00 on Tier 1 TV advertising, of which 1.4%, or $425,706.00 was spent in the Miami-Dade/Broward market. For the fiscal year ending March 2011, MMA spent $35,715,344.00 on Tier 1 TV advertising, of which 1.4%, or $500,014.00 was spent in the Miami-Dade/Broward Market. For the fiscal year ending March 2012, MMA spent $80,401,232.00 on Tier 1 TV advertising, of which 1.4%, or $1,125,617.00 was spent in the Miami-Dade/Broward Market. For the fiscal year ending March 2013, MMA spent $87,530,735.00 on Tier 1 TV advertising, of which 1.4%, or $1,225,430.00 was spent in the Miami-Dade/Broward Market. For the fiscal year ending March 2014, MMA spent $108,065,318.00 on Tier 1 TV advertising, of which 1.4%, or $1,512,914.00 was spent in the Miami-Dade/Broward Market. These sums represent only Tier 1 advertising on national TV, and do not include other Tier 1 advertising such as national radio, print, spot TV, digital, etc. Tony Garcia, SMM’s advertising expert, testified that MMA’s spending on general and Hispanic advertising in Miami-Dade and Broward counties has been decreasing, and as a result Mazda “gets lost in the shuffle.” However, Mr. Garcia based his conclusions on advertising spending figures that include only a limited number of local TV stations; and, even for those stations, the figures do not include national broadcast advertising. As a result, Mr. Garcia does not know what additional Tier 1 advertising each manufacturer is doing. The Tier 1 spending in Mr. Garcia’s report could reflect as little as 5% or more than 75% of Tier 1 spending in the Miami-Dade/Broward Market; and, thus, Mr. Garcia did not know the true percent of spending for Tier 1 advertising of each brand. With regard to Tier 2 spending, Mr. Garcia did not know whether the data he relied on included all Tier 2 spending by dealer advertising associations or whether the data correctly segregated Tier 1 and Tier 2 spending. Mr. Garcia also testified that MMA’s Mazda advertising is not reaching an important segment of the market, specifically Hispanics. However, Mr. Garcia does not know what portion of the Hispanic population that speaks “mostly Spanish” is not reached by English language advertising. Mr. Garcia also does not know how likely Hispanics are to purchase new motor vehicles, but admits that is something a new car dealer would want to know before spending money on Hispanic advertising. Roughly 12.5% of the Miami-Dade population speak only Spanish. Before the DMG program started in 2012, all Mazda dealers in Miami-Dade and Broward counties belonged to the Vol group and engaged in Tier 2 English and Hispanic advertising. The Miami-Dade/Broward Mazda Vol group did not agree on Hispanic advertising and compromised on spending a very small amount on Hispanic advertising. The Miami-Dade/Broward Mazda Vol group disbanded at the start of the DMG program. Hispanic advertising placed by the Vol group continued to run in the Miami-Dade/Broward Market until February or March 2012. After the Vol group disbanded, the dealers in the Miami-Dade/Broward Market did not agree to form a DMG because some dealers were not interested. Mazda dealers are free to engage in Hispanic advertising at the Tier 3 level and, in fact, can use the funds that would otherwise go to the DMG, along with Co-Op funds which are reimbursed by MMA. MMA cannot force its dealers to join a DMG. Less than all of the dealers can form a DMG, but this was not proposed by SMM, Ocean, or North Miami. Mazda dealers can also request reimbursement for advertising, including Hispanic advertising, from the Region’s yearly marketing funds. In January 2013, SMM requested regional marketing funds to reimburse expenses of a “grass roots event.” The request was not approved due to a lack of funds left in the regional budget for the fiscal year ending March 31, 2013. The open point SOA is 63.79% Hispanic, the second- highest Hispanic density of all the Mazda SOAs in Florida. In 2012, SMM sold 73 new Mazda vehicles to customers in the open point SOA, while North Miami sold 204. The disparity in the ability of these two dealers to penetrate the open point SOA-- under the same conditions of no DMG and no Hispanic Tier 2 advertising--belies the contention that Mazda’s performance in the open point SOA is affected by a lack of Hispanic advertising. If the lack of Tier 1 and/or Tier 2 Spanish language advertising is hampering SMM’s ability to sell to customers in the open point SOA, North Miami would not be able to sell almost three times as many vehicles to customers in the same highly Hispanic SOA. The disparity points to differences in individual dealer operations, not a lack of Hispanic advertising. SMM also contends that the cessation of Tier 2 advertising, in any language, in March 2012 is responsible for Mazda’s declining market penetration in the Miami Comm/Terr. However, as noted above, the performance of all the SOAs in Broward and Dade counties had already peaked in 2010 and had started to decline in 2011. After the Miami-Dade and Broward dealers’ DMG ceased, the per-car contributions by the dealers were returned by Mazda to the dealers, which funds may be spent on advertising or other purposes. Based on a consideration of all relevant evidence, it is determined that the economic and marketing conditions in the Miami Comm/Terr are not likely causes of the inadequate representation and, in fact, support the need for the establishment of Brickell Mazda. Based on a consideration of all relevant evidence, it is determined that the Hispanic population in the Miami Comm/Terr and the end of Tier 2 Hispanic and/or English advertising in 2012 are not likely causes of the inadequate representation. Action by MMA Denying Existing Dealers Opportunity for Reasonable Growth and Market Expansion There is no evidence establishing that MMA has taken any action to deny existing dealers an opportunity for reasonable growth and market expansion. Attempts by MMA to Coerce Existing Dealers to Consent to the Proposed Additional Dealer There is no evidence establishing that MMA attempted to coerce existing dealers to consent to the proposed additional dealer. Distance, Travel Time, Traffic Patterns, and Accessibility Between Existing Dealers and the Location of the Proposed Additional Dealer As discussed in greater detail above, SMM, Ocean, North Miami, and the proposed Brickell Mazda location are all accessible by major north/south and east/west thoroughfares. Travel times between existing dealers and the proposed location will vary significantly depending upon traffic conditions. The drive time between the Proposed Point and SMM is approximately 20 to 25 minutes but will take longer if there is congested traffic. The establishment of Brickell Mazda will reduce the average distance to the nearest Mazda dealer in the Miami Comm/Terr in half and eliminate any significant drive time for those who live and work in the immediate downtown Miami area. Benefits to Consumers Not Likely to be Obtained by Geographic, Demographic, or Other Expected Changes As discussed above, it is likely that consumers will benefit from Brickell Mazda’s opening, through greater convenience in accessing Mazda sales and service, and increased competition among competitive dealerships and Mazda dealers, resulting in lower prices and improved facilities with better customer care and service. Whether the Protesting Dealer is in Compliance with Its Dealer Agreement SMM is in compliance with its Mazda franchise agreement. Adequacy of Interbrand and Intrabrand Competition and Adequacy of Convenient Consumer Care, including Adequacy of Sales and Service Facilities The presence of interbrand competition (Mazda dealers vs. other brand dealers) and intrabrand competition (Mazda dealers vs. other Mazda dealers) in the Miami Comm/Terr is also assessed as a factor influencing consumer behavior. With respect to intrabrand competition, existing dealers strenuously compete for new Mazda vehicle sales and service business throughout the Comm/Terr. Each of the three existing Mazda dealers in the Comm/Terr sells into the SOAs in which the other dealers are located, and into the open point SOA in which the proposed additional dealer would be located. However, Ocean and SMM consistently lagged behind North Miami in terms of market performance. With respect to interbrand competition, every line- make that Mazda competes with is represented by at least one dealer in the Comm/Terr (all line-makes except for Smart have more than one dealer). The evidence is that there is inadequate interbrand competition because consumers are not buying Mazda vehicles at the rate projected by the Broward average benchmark, thus indicating their dissatisfaction with the Mazda dealer network in the Miami Comm/Terr. Whether the Proposed Additional Dealer is Justified Based on Economic and Marketing Conditions The Miami Comm/Terr, which is composed of the four SOAs of North Miami, Ocean, SMM, and the open point, constitutes a big market, by any measure, with a 2012 population of roughly 3,080,000. The four SOAs all have significant concentrations of populations, with the open point SOA having the greatest density of population. Mr. Farhat testified that this indicates a “hole for the Mazda network” where Brickell is proposed, and where there is no current convenient Mazda dealership. The same pattern is true for households in the Miami Comm/Terr, with high household density and past and projected growth both throughout the area and in the open point SOA. A general pattern of population, household, and employment growth, while not a direct predictor of new vehicle sales, does indicate more new vehicle sales over time. Based on the overall population and number of households, the Miami Comm/Terr is a very large, strong, and growing market in terms of new vehicle sales opportunities. Employment in Miami-Dade County has also grown steadily since the bottom of the recent economic recession in 2009, another positive indicator for new vehicle sales. Households with median incomes between $25,000 and $85,000 (potential Mazda purchasers based on buyer reports), are found throughout the Miami Comm/Terr, a further indicator of new Mazda vehicle sales opportunities. Mr. Farhat assessed the number of Mazda dealerships relative to competitor dealerships to calculate Mazda’s “shelf space,” or share of franchise. Mr. Farhat calculated that Mazda’s share of franchises in the Miami Comm/Terr of 3.1% is low compared to 4.9% in the Broward SOAs and 4.7% in the Florida Represented SOAs, which has caused Miami Comm/Terr consumers to buy other brands and not Mazda. Mazda has three dealers in the Miami Comm/Terr. Only four other competitive brands (Fiat, Subaru, Mini, and Smart) have three or fewer dealers. Fourteen other competitive brands have four or more dealers. MMA wants to be located where its competitors have dealers. Using regression analysis, Mr. Farhat testified to the direct correlation between shelf space and higher market share, and concluded that the Miami Comm/Terr needs “4.8 Mazda dealers, or, essentially, more than four, which is five” dealers in order to be able to achieve the Broward average. Using the more conservative Florida Represented standard, Mazda would still need more than four dealers to achieve the same shelf space as its competitors, indicating that the Miami Comm/Terr is too big for just three Mazda dealers. Based on a consideration of all relevant evidence, it is determined that the economic and marketing conditions in the Miami Comm/Terr support the need for the establishment of Brickell Mazda. Volume of Registrations and Service Business Transacted by Existing Dealers As discussed above, the existing dealers are not meeting the Broward average or the Florida Represented benchmark for registrations. Registrations have been declining in the Miami Comm/Terr for the last three years. With only three Mazda dealers, the Miami Comm/Terr currently provides the greatest sales opportunity per dealer among all Florida markets. If Brickell Mazda is added, the Miami Comm/Terr will have four Mazda dealers and will still present substantial opportunities for sales, ranking as the second largest opportunity per dealer just behind Orlando. The same is true with respect to expected service opportunities as measured by units in operation per dealer. With three dealers, the Miami Comm/Terr currently provides the largest service opportunity per dealer among all Florida markets. If Brickell Mazda is added, the Miami Comm/Terr will still be a very large service market, ranking fourth in opportunity per dealer behind Orlando.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: A final order be entered by the Department of Highway Safety and Motor Vehicles granting the application to establish Miami Automotive Retail, Inc., d/b/a Brickell Mazda, as a dealer for the sale and service of Mazda vehicles, with sales to be located at 618 Southwest Eighth Street, Miami, Miami-Dade County, Florida 33130, and service to be located at 665 Southwest Eighth Street, Miami, Miami-Dade County, Florida 33130. DONE AND ENTERED this 1st day of August, 2014, in Tallahassee, Leon County, Florida. S MARY LI CREASY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of August, 2014.
The Issue The issue is whether Petitioners’ application to establish a new dealership for the sale of motorcycles manufactured by Herchee Industrial Co., Ltd. (HERH), at 203 Northeast Avenue, Gainesville, Florida 32609, should be granted.
Findings Of Fact While the dealership agreement between Petitioner Adly Moto (Adly) and Respondent is not in evidence, the weight of the evidence established that Respondent is an existing franchised dealer for Petitioner Adly. According to DHSMV's published notice, Petitioner Adly intended to establish a new motorcycle dealership, Scooter Superstore, at 203 Northeast 39th Avenue, Gainesville, Florida, on or after July 16, 2008. There is no real dispute that this location is only 3 to 4 miles from Respondent's place of business. Therefore, Respondent has standing to protest Petitioner’s application pursuant to Section 320.642(3)(a)2., Florida Statutes (2008). Respondent’s license number is not in evidence. According to DHSMV’s published notice, Adly intended to establish Scooter Superstore as a dealer for the sale of HERH motorcycles. Currently, Respondent sells Adly motorcycles. The only evidence of record that HERH manufactures Adly products is an announcement dated April 2008 which states that “Her Chee Industrial/ADLY Moto LLC (USA) is proudly introducing Hammerhead Off-Road as our scooter distribution partner in the US.” It is therefore presumed that HERH manufactures Adly products. According to the evidence presented, Respondent has sold primarily scooters of 50 cubic centimeters or less. Respondent insists that he has ordered vehicles over 50 cubic centimeters from the distributor, but that the distributor has refused to ship these vehicles to him. There is evidence that at least three such vehicles were ordered by Solano Cycle, Inc., but the evidence is inconclusive as to whether or not these vehicles were to be offered for sale at the Gainesville location which is the subject of this controversy, or at another Solano Cycle location in another city. However, the evidence is insufficient to establish conclusively as to whether or not Adly vehicles larger than 50 cubic centimeters have been sold by Respondent.1 The market in Gainesville, Florida, comprises primarily college students and professors. According to Martin Solano, president of Respondent, the market in Gainesville is primarily scooters of 50 cubic centimeters or less. Other than anecdotal observations, no competent substantial evidence was presented as to the Gainesville market. There is no evidence establishing an objective, reasonable standard against which to compare the actual market penetration achieved by the existing dealer. Respondent moved to a larger location because the earlier location was very small and, therefore, could not hold a lot of stock. There is no evidence as to Respondent’s profits, capitalization, or financial resources to compete with the proposed new dealership. No market penetration data, whether inter-brand or intra-brand, is in evidence. Since an objective reasonable standard was not established, the actual penetration achieved against the expected standard cannot be established.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is ORDERED: That the Department of Highway Safety and Motor Vehicles enter a final order denying Petitioners’ application. DONE AND ENTERED this 20th day of August, 2009, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS 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 20th day of August, 2009.
Findings Of Fact Burruss is a licensed and franchised American Motors dealer. Burruss has been the sole AMC dealer in the Tarpon-West Pasco County area since 1960. Burruss is in compliance with its franchise agreement with American Motors Sales Corporation. Both Burruss and New Port are located on U.S. Highway 19, a distance of six miles from each other. U.S. Highway 19 is the only major north-south thoroughfare in the Tarpon-West Pasco area. Portions of U.S. Highway 19 have been improved in the past years so that much of the highway is six-laned in the Tarpon-West Pasco area; the unimproved portions of the highway are four-laned. The recent improvements to U.S. Highway 19 in the Tarpon-West Pasco area have improved the traffic flow along U.S. Highway 19. (Findings 1 through 6 are contained in the Prehearing Stipulation.) Burruss is located in Tarpon Springs, which is in the northernmost part of Pinellas County. New Port is located in New Port Richey, which is in Pasco County. There is presently no AMC dealer in Pasco County. The closest AMC dealer to the north of Burruss his in Brooksville, some 35 miles to the north. The AMC dealers in the area are in Tampa, some 27 miles south of New Port Richey; in Clearwater, some 25 miles south of New Port Richey; and Burruss in Tarpon Springs, some six miles south of the proposed location. New Port has been a franchised Lincoln Mercury automobile dealer for three and a half years and is fully qualified to operate the proposed franchise. New Port has agreed to build a 1600 square foot showroom, to have mechanics factory-trained, and to spend in excess of $41,000 in advertising the AMC products during its first year of operation. It has also agreed to maintain a 60-day supply of automobiles in stock. Pasco County has been one of the fastest growing Florida counties in the past ten years, with most of this growth in the western part of the county near U.S. 19. In 1970 Pasco County had a population of 76,000, which increased to 193,643 in 1980 (Exhibit NP-1). In 1981 a study was conducted in the Pasco County area to determine if there was an open point in this area. A copy of this report was submitted as Exhibit NP-2. From this study AMC determined that the area previously serviced by Burruss should be divided into two areas with the southern area comprising the areas containing the zip codes of Tarpon Springs, Crystal Beach, Holiday, Ozone, and Palm Harbor. This is designated the new Tarpon Springs area. All of these communities are in Pinellas County except Holiday, which is in Pasco County. The northern area, which comprises west Pasco County and is the area in which it is contended that AMC is inadequately represented, includes the zip codes for New Port Richey, Aripeka, Elfers, Odessa, and Port Richey. After obtaining the results of this study, American Motors Sales Corporation solicited dealers in this area to apply for an AMC franchise. Burruss became an AMC dealer in 1960, a Jeep dealer in 1970, and a Renault dealer in 1979. Burruss also sells Datsun vehicles, the sale of which runs 25 to 30 percent, by number of units, above its sales of the AMC-Jeep- Renault line, despite the fact that a competing Datsun dealer is located in Pasco County approximately three miles north of Burruss on U.S. 19. During the past ten years ten major shopping malls or plazas have been built in the New Port Richey-West Pasco area, the number of banks or savings and loan institutions have grown from ten to more than 65, and six new car dealerships have been established, to bring the total to nine. Burruss' sales of AMC vehicles reached a peak of 200 per year in 1975 and have steadily declined since that time. Cross-sales figures show that from 45 percent to 75 percent of the AMC-Jeep-Renault vehicles sold in the New Port Richey area are sold by dealers other than Burruss. Of the three AMC dealers in Pinellas County, Burruss has consistently sold the fewest vehicles. Since the population has been greater in the service area of the other two AMC dealers in Pinellas County, this lower rate would be expected. However, Burruss sales have not kept pace with the population growth in the New Port Richey-West Pasco area. In 1977 AMC automobiles accounted for 1.8 percent of domestic new car sales in this Central Florida district, 2.6 percent of the sales in the Tarpon Springs area, and 1.7 percent of the sales in the New Port Richey area. In 1982 AMC automobiles accounted for 1.4 percent of the district sales, 1.0 percent of the Tarpon Springs area sales, and 0.9 percent of the New Port Richey area sales. In 1977 Jeep automobiles accounted for 14.1 percent of the four-wheel drive vehicle sales in the Central Florida district, 13.5 percent of the sales in the Tarpon Springs area, and 13.8 percent of the sales in the New Port Richey area. In 1982, Renault vehicles accounted for 1.4 percent of the district sales, 1.0 percent of the Tarpon Springs area sales, and 0.5 percent of the New Port Richey area sales. Thus, while AMC penetration in the Tarpon Springs area is comparable to district penetration (although Tarpon Springs penetration seems to be declining), the penetration in the New Port Richey area is well below the district average. Not only has Burruss spent less on advertising than other dealers, but also it has not maintained a 60-day supply of vehicles based on "planning potential." (A minimum estimated number of sales a dealer should make in a year.) Based on the planning potential for the combined Tarpon Springs and New Port Richey areas, Burruss should stock 14 AMC, 10 Jeep, and 36 Renault vehicles. As of January 31, 1982, Burruss had in stock 8 AMC, 3 Jeep and 17 Renault vehicles. AMC consistently allots Burruss more vehicles than it purchases. AMC has received more complaints directly from customers in the West Pasco service area about the products they purchased, but not necessarily from Burruss, than from other service areas in the same district. This is indicative that insufficient attention is paid to providing warranty services in the area by the franchised dealer. That a separate market area in Pasco County exists and has been recognized by several other automobile manufacturers was admitted by Herman Burruss, the principal stockholder of Burruss Motor Company, who was the chief operations officer for Burruss for some 45 years until approximately five years ago when he turned the job over to his son and retreated into semi retirement.
The Issue The issue is whether Petitioners are entitled to a proposed motor vehicle dealership in Seminole County, Florida.
Findings Of Fact DOAH provided the parties with adequate notice of the final hearing. On December 11, 2008, DOAH mailed a Notice of Hearing to each of the parties, scheduling the final hearing for April 6, 2009. No Notice was returned as undelivered. No party objected to a final hearing on April 6, 2009. On December 11, 2008, DOAH also issued an Order of Pre- hearing Instructions that, in relevant part, required the parties to file a pre-hearing stipulation which was to include a list of witnesses and exhibits to be called and submitted at the final hearing. No party complied with the Order. The documents forwarded to DOAH by the Department support the findings. The Notice of Publication for a New Point Franchise Motor Vehicle Dealer in a County of More than 300,000 Population was published in the Florida Administrative Weekly, Volume 34, Number 43, on October 24, 2008. On behalf of Respondent, Mr. James Sursely timely filed a protest letter dated November 7, 2008, with Ms. Nalini Vinayak, the administrator at the Department responsible for receiving such protests. The remaining facts are undisputed in this proceeding. The proposed new point franchise motor vehicle dealer is for a line-make identified in the record as Chunfeng Holding Group Co. Ltd. (CFHG) motorcycles. The proposed location is in Seminole County, Florida. Seminole County has a population in excess of 300,000. The proposed new point franchise motor vehicle dealer is located at 3311 West Lake Mary Boulevard, Lake Mary, Florida. Respondent owns and operates an existing CFHG dealership that is located at 306 West Main Street, Apopka, Orange, County, Florida, 32712. The proposed dealership is within a 12.5-mile radius of Respondent's dealership. Respondent has standing to protest the establishment of the proposed dealership. The petitioners submitted no evidence that Respondent is "not providing adequate representation" of the same line-make motor vehicles in the community or territory.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order denying the establishment of the proposed franchise dealership. DONE AND ENTERED this 21st day of April, 2009, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of April, 2009.
The Issue The issue is whether Petitioner's applications to establish new dealerships for the sale of motorcycles manufactured by Shanghai Motorcycle Co., Ltd. (JMSTAR), and Shanghai Shenke Motorcycle Co., Ltd. (SHEN), should be granted. PRELIMANARY STATEMENT In the Florida Administrative Weekly, Volume 34, Number 21, May 23, 2008, the Department of Highway Safety and Motor Vehicles (DHSMV) published two Notices of Publication for a New Point Franchise Motor Vehicle Dealer in a County of Less than 300,000 Population. Said notices advised that Petitioner Gator Moto, LLC and Gator Moto, LLC (Petitioner) intended to establish new dealerships for the sale of motorcycles manufactured by Shanghai Motorcycle Co., Ltd. (JMSTAR), and Shanghai Shenke Motorcycle Co., Ltd. (SHEN). On or about June 3, 2008, Respondent Austin Global Enterprises, LLC, d/b/a New Scooters 4 Less (Respondent) filed two complaints with DHSMV about the proposed new motorcycle dealerships. DHSMV referred both complaints to the Division of Administrative Hearings on June 10, 2008. On July 2, 2008, Respondent filed its Compliance with Initial Order. On July 7, 2008, Petitioner filed Petitioner's Compliance with Initial Order Division of Administrative Hearings (DOAH) Case Nos. 08-2735 and 08-2736. This is the only communication that DOAH has received from Petitioner. On July 23, 2008, Administrative Law Judge Barbara J. Staros entered an Order of Consolidation for DOAH Case Nos. 08-2735 and 08-2736. On July 24, 2008, Judge Staros issued a Notice of Hearing, scheduling a final hearing on December 4, 2008. On November 26, 2008, Respondent filed its Compliance with Pre-hearing Instructions. Petitioner did not respond to the Order of Pre-hearing Instructions. On December 1, 2008, Judge Staros issued an Amended Notice of Hearing. The amended notice only changed the commencement time for the hearing. DOAH subsequently transferred these consolidated cases to the undersigned. On the morning of the December 4, 2008, hearing, DHSMV advised the undersigned's office that DHSMV had failed to arrange for the appearance of a court reporter at the hearing. Accordingly, the undersigned issued an Order Granting Continuance and requiring the parties to confer and provide DOAH with mutually-agreeable dates for re-scheduling the hearing. On December 17, 2008, Respondent filed its unilateral Compliance with Order Granting Continuance. Respondent filed this pleading after an unsuccessful attempt to confer with Petitioner. On December 18, 2008, the undersigned issued a Notice of Hearing and Order of Pre-hearing Instruction. The notice scheduled the hearing for February 9, 2008. On February 3, 2007, Respondent filed its unilateral Compliance with Order of Pre-hearing Instructions. Petitioner did not file a response to the Order of Pre-hearing Instructions. When the hearing commenced, Petitioner did not make an appearance. Respondent made an appearance and presented the testimony of Colin Austin, Respondent's Managing Member. Respondent did not offer any exhibits. The hearing transcript was not filed with DOAH. Neither party filed proposed findings of fact and conclusions of law.
Findings Of Fact Respondent has standing to protest Petitioner's applications pursuant to Section 320.642(3)(a)2., Florida Statutes (2008). According to DHSMV's published notice, Petitioner intended to establish two new motorcycle dealerships at 2106 Northwest 67th Place, Suite 15, Gainesville, Florida, on or after May 9, 2008. This location is only 4.5 miles from Respondent's place of business. At some point in time, Petitioner relocated its business to 7065 Northwest 22nd Street, Suite A, Gainesville, Florida. This location is only 5.3 miles from Respondent's place of business. Petitioner's application indicated that Petitioner intended to establish itself as a dealer of SHEN and JMSTAR motorcycles. Currently, Respondent sells those motorcycles under License No. VF/1020597/1. Respondent currently supplies itself with SHEN and JMSTAR products from a United States distributor. Respondent has a good faith belief that Petitioner intends to import the motorcycles and related products directly from the Chinese manufacturers. In that case, Petitioner would be able to sell the products at a lower price than Respondent and thereby deny Respondent the opportunity for reasonable growth. Petitioner did not notify DOAH about a change of address. DOAH's notices and orders directed to Petitioner at its address of record have not been returned. Petitioner has not communicated with DOAH since filing a response to the Initial Order. Petitioner did not make an appearance at the hearing. Apparently, Petitioner has abandoned its applications to establish the new dealerships.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is ORDERED: That the Department of Highway Safety and Motor Vehicles enter a final order denying Petitioner's applications. DONE AND ENTERED this 16th day of February, 2009, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD 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 16th day of February, 2009. COPIES FURNISHED: Michael James Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32344 Collin Austin Austin Global Enterprise, LLC 118 Northwest 14th Avenue, Suite D Gainesville, Florida 32601 Justin Jackrel Gator Moto, LLC 4337 Northwest 35th Terrace Gainesville, Florida 32605 Justin Jackrel Gator Moto, LLC 2106 Northwest 67th Place, Suite 15 Gainesville, Florida 32653 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
The Issue The Petitioner, P & M Transit Company, Inc., d/b/a Jim Walker's Yamaha (hereinafter "Walker") filed an application to relocate its Yamaha dealership. A protest to the application was filed by the Respondent, Suzuki of Hamilton, Inc., d/b/a Daytona Yamaha, U.S.A. (hereinafter "Hamilton"). The basic issue in this case is whether the Walker application should be denied. Underlying issues are (a) whether Section 320.642, Florida Statutes (1987), applies to relocations of existing dealerships and, if so, (b) whether the existing dealers ". . . are providing adequate representation in the community or territory. . . ." (The parties stipulated that there is no issue in this case regarding breach of the dealer agreement by a dealer.) At the hearing, Yamaha Motor Corporation, U.S.A. (hereinafter "Yamaha"), presented the testimony of John Donaldson, an expert in the area of motorcycle dealer network analysis, and offered exhibits 1 through 21, all of which were received into evidence. Hamilton presented the testimony of Alec Mobbs and offered into evidence exhibits A through G. The transcript of the hearing was filed on January 4, 1989, and thereafter Yamaha and Hamilton filed timely proposed recommended orders containing proposed findings of fact and conclusions of law. The parties' proposals have been carefully considered during the formulation of this recommended order. All findings of fact proposed by the parties are specifically addressed in the attached appendix.
Findings Of Fact Based on the evidence received at the hearing, I make the following findings of fact: Petitioner Walker filed an application seeking to relocate its Yamaha motorcycle dealership from 1147 "B" North Dixie Freeway, New Smyrna Beach, Florida 32069, to the location of its Honda-Suzuki Store at 2385 South Ridgewood Avenue, South Daytona, Florida 32019. The new Yamaha location would be approximately nine miles north of the original location and within six miles of Respondent Hamilton's existing dealership. The traffic in the six miles between the proposed new Walker location and the existing Hamilton location is much more dense than the traffic in the nine miles south of the proposed location. The population of Volusia County is separated from the surrounding counties on the north and south, such as to constitute it as a separate community or territory. For purposes of the applicable statutory provisions, the geographic boundaries of the subject "territory or community" are the same as the geographic boundaries of Volusia County. The proposed relocation of Walker is from one point in a territory or community in which he is presently located to another point in that same territory or community. The motorcycle industry is in a decline. Florida currently ranks eighth in the nation in motorcycle sales, which is down from its previous ranking of sixth. Hamilton, the protesting dealer, has owned and operated a successful Yamaha dealership at 324 Eleventh Street, Holly Hill, Florida 32017, since 1983. The dealership is well marked and easily accessible. Although the majority of Hamilton's sales are made to customers who live within five miles of the dealership location, Hamilton considers its market area to be Volusia County. Eleven motorcycle dealerships are currently located in the county. Volusia County's population in 1982-83 was 281,512. In 1987-88 the total was 337,909, for a growth rate of 20 percent. This growth rate is significantly less than Florida as a whole. The typical motorcycle purchaser is aged eighteen to thirty-four. The population of eighteen to thirty-four year olds in Volusia County grew only 16 percent between 1982 and 1988, and, as a percentage of the total population, that age group declined from 25 percent to 24 percent. Hamilton has actively cultivated all of Volusia County as a sales market area since 1983. It spends an average of $17,500 a year advertising on the radio, in newspapers, yellow pages, and participating in various exhibits and mall shows. Hamilton's efforts have been successful. The dealership was a financial disaster when purchased by Hamilton in 1983. But after its first year of operation the dealership showed a profit. The dealership continues to show a profit in the face of a declining industry and a declining market population. Hamilton has over $100,000 invested in his business. Hamilton's store consists of 10,000 square feet in which only Yamaha products are marketed. This is approximately 4,000 square feet larger than the average store. The dealer employs two sales people and three mechanics. Walker has 10,000 square feet for two brands, Honda and Suzuki. If the relocation is permitted, three brands would be housed in the same amount of space Hamilton has for Yamaha alone. Since 1983, Hamilton has probably accounted for the majority of Yamaha sales in Volusia County. In 1983 it sold 163. In 1984 it sold 207. In 1985 it sold 186. In 1986 it sold 139 and in 1987 it sold 122. By the beginning of December 1988, with ten more selling days remaining it had already sold the same as last year's total. Eighty-four percent of all of Hamilton's sales during the last five years were made to customers who lived within a five mile radius of the dealership. In the last two years, 86 percent of total sales were made in the same area. If another dealer were permitted to locate within that radius, the number of sales that Hamilton could reasonably expect to make would probably significantly decrease. Walker's proposed relocation is in the center of the southern half of the majority of Hamilton's sales. Hamilton is an award winning dealer. Yamaha introduced its pacesetter awards program in 1985. There are separate awards for service, parts and accessories, and sales. A dealer receiving all three awards in the same year is named a pacesetter. In 1985, Hamilton won the pacesetter award. In 1986, 1987, and 1988 it won the parts and accessories, and service awards. Hamilton won the service award in spite of intense competition from 20 motorcycle businesses in the Volusia County area. Yamaha has requested Hamilton to perform service warranty work on machines sold by Walker. Hamilton is 17 points above national average in customer service, and at 155 percent of the target sales figures for parts and accessories. Hamilton was chosen by Yamaha as one of only ten dealers in the United States to test market a line of Yamaha clothing. Yamaha attempts to measure the adequacy of sales performance by determining market penetration. Market penetration is determined by adding the total number of motorcycle registrations to the total number of scooter registrations and dividing that total into the total number of Yamaha motorcycle registrations plus the total registrations of Yamaha scooters. All terrain vehicles, ATVs, and motorcross (off road competition dirt) bikes are not included in Yamaha's computation because they are not registered with Florida's Department of Highway Safety and Motor Vehicles. The registration data that Yamaha relies on is compiled by the R.L. Polk Company. Polk purchases the data with which to compile the reports from various state motor vehicle agencies. Polk's reports are based only on vehicle registrations. Therefore the data is not an accurate reflection of sales performance in Florida because ATVs and motorcross bikes are not registered with the State. In addition, registrations reflect only where the motorcycle purchaser lives, not where the unit was purchased. In other words, if a person who lives in Orlando bought a Yamaha in Daytona, that motorcycle registration would show up in a Polk report as an Orlando registration. It is difficult, if not impossible, to accurately evaluate a dealer's sales performance, or representation of its manufacturer, using the Polk data. It is unreasonable to judge Hamilton's representation of Yamaha on a formula based solely on motorcycles and scooters because unregistered vehicles are a large part of Hamilton's sales. Use of registration data also sometimes yields absurd results. For example, Yamaha based their market share of Volusia County for 1985 on 181 vehicles. Hamilton alone sole 186 units that year. Yamaha dealers have had difficulty ordering and maintaining a sufficient supply of machines to sell. Yamaha allocates a certain number of units to each dealer. The allocations are small and made up of mixtures of units that are difficult to sell. On occasion Yamaha has not been able to fill even an allocated order. The manufacturer has also instituted package sales which place small single line dealers such as Hamilton at a distinct disadvantage in the market area. Because of this packaging system, Hamilton was unable to sell any competition machines, a segment of its beach market, in 1988. Overall, there are fewer Yamaha machines available for dealers to buy and retail. The evidence suggests that Florida's "Space Coast" does not purchase motorcycles at a rate commensurate with the rest of the state. In 1985, 1986, and 1987, the only years for which comparable data was introduced, the counties surrounding Volusia (Flagler, Seminole, St. Johns, Orange, Lake, and Putnam) had market percentages below the Florida and national average. Nevertheless, the Florida Yamaha average for 1987 (21.11 percent) was almost achieved in the zip code area in which Hamilton is located. In that area, Yamaha achieved 20.58 percent by registering 14 scooters and motorcycles out of 68 total. Yamaha has never expressed any dissatisfaction with Hamilton's sales performance or representation of the manufacturer. Hamilton was never told to make any changes in its business and never had any indication that it was providing less than adequate sales representation.
Recommendation For all of the foregoing reasons, it is recommended that the Department of Highway Safety and Motor Vehicles enter a final order in this case denying the application of P & M Transit Company, Inc. d/b/a Jim Walker's Yamaha, to relocate its dealership premises. DONE and ENTERED this 6th day of April 1989, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of April 1989. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 88-3519 The following are my specific rulings on all proposed findings of fact submitted by the parties. Findings proposed by Petitioner, Hamilton: Paragraphs 1 through 10: Accepted. Paragraph 11: Accepted in substance. Paragraphs 12 through 16: Accepted. Paragraph 17: Rejected as constituting primarily argument rather than proposed findings of fact. Paragraphs 18 and 19: Rejected as admittedly inaccurate. Paragraph 20: Rejected as constituting inferences which are not warranted by the evidence; there is insufficient evidence in the record upon which to base the proposed opinion. Paragraphs 22 through 24: Accepted. Findings proposed by Respondent, Yamaha: Paragraphs 1 through 4: Accepted. Paragraphs 5 and 6: Rejected as constituting a discussion of statutory interpretation rather than proposed findings of fact. Paragraph 7: Accepted in substance. Paragraph 8: First sentence accepted. The remainder is rejected as subordinate and unnecessary details. Paragraph 9: Rejected as subordinate and unnecessary details. Paragraphs 10 and 11: Rejected in part as subordinate and unnecessary details and in part as constituting inferences not warranted by the evidence. Paragraphs 12 and 13: Rejected as subordinate and unnecessary details. Paragraph 14: Accepted in substance. Paragraphs 15 and 16: Accepted in substance. Paragraph 17 and 18: Rejected as subordinate and unnecessary details. Paragraphs 19 through 23. Rejected as based on inferences not warranted by the evidence; the Polk data standing alone is simply not a persuasive basis upon which to reach conclusions regarding the scope of the area within which the existing dealers enjoy a "geographic advantage." Paragraph 24: First four lines rejected as based on inferences not warranted by the evidence. Last three lines accepted in substance. Paragraphs 25 and 26: Rejected as contrary to the greater weight of the evidence and as not supported by persuasive competent substantial evidence. Paragraph 27: Rejected as constituting a statement of legal principles rather than proposed findings of fact. Paragraph 28: Rejected as constituting inferences not warranted by the evidence and not supported by competent substantial evidence. Paragraph 29: Rejected as subordinate and unnecessary details; also irrelevant. Paragraph 30: Rejected as constituting inferences not warranted by the evidence. Further, the reasonableness of the proposed standard, without more, is questionable in view of the fact that by simple logic half of the dealers nationwide are performing below the national average. Paragraph 31: Accepted in substance. Paragraph 32: First sentence rejected for same reason as rejection of Paragraph 30. Remainder rejected because the Polk data is not a persuasive basis upon which to draw conclusions regarding market penetration. Paragraphs 33 through 38: Rejected because the Polk data is not a persuasive basis upon which to draw conclusions regarding market penetration. Paragraph 39: First sentence is rejected as irrelevant. Last sentence is rejected as constituting an inference not warranted by the evidence and not supported by competent substantial evidence. Paragraph 40: First sentence is rejected as constituting a legal conclusion not warranted by the evidence. Last sentence rejected as redundant. Paragraph 41: Rejected as constituting argument rather than findings of fact. Paragraphs 42 through 48: Rejected as irrelevant. Paragraphs 49 and 50: Rejected as subordinate and unnecessary details. Paragraph 51: Rejected as constituting subordinate, unnecessary, and irrelevant details. Paragraph 52: Rejected as subordinate, unnecessary, and irrelevant details that are closer to argument than to proposed findings of fact. Paragraphs 53 through 56: Rejected as constituting argument about the evidence rather than proposed findings of fact. COPIES FURNISHED: Dean Bunch, Esquire Rumberger, Kirk, Caldwell, Cabaniss, Burke & Wechsler 101 North Monroe Street Suite 900 Tallahassee, Florida 32301 Linda McMullen, Esquire McFarlain, Sternstein, Wiley & Cassedy 600 First Florida Bank Bldg. Tallahassee, Florida 32301 Michael J. Alderman, Esquire Office of General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Bldg. Tallahassee, Florida 32399-0500 Enoch J. Whitney, Esquire General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Bldg. Tallahassee, Florida 32399-0500 Charles J. Brantley, Director Division of Motor Vehicles Room B-439, Neil Kirkman Bldg. Tallahassee, Florida 32399-0500 =================================================================
