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P & M TRANSIT COMPANY, INC., D/B/A JIM WALKER`S YAMAHA, AND YAMAHA MOTOR CORPORATION U.S.A. vs. SUZUKI OF HAMILTON, INC., D/B/A DAYTONA YAMAHA, U.S.A., AND DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES, 88-003519 (1988)

Division of Administrative Hearings, Florida Number: 88-003519 Latest Update: Apr. 06, 1989

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 =================================================================

Florida Laws (2) 120.57, 320.642

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