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
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by T. Kent Wetherell, II, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s request for withdrawal, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File as its Final Order in this matter. Accordingly, it is hereby ORDERED that this case is CLOSED and no license will be issued to Red Streak Scooters, LLC and Austin Global Enterprises, LLC d/b/a New Scooters 4 Less to sell motorcycles manufactured by Zhejiang Taizhou Wangye Power Co. Ltd. (ZHEJ) at 118 Northwest 14 Avenue, Suite D, Gainesville (Alachua County), Florida 32601. DONE AND ORDERED this Buy of July, 2009, in Tallahassee, Leon County, Florida. LA. FORD, Direct6r Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Filed with the Clerk of the Divisig otor Vehicles this day of July, 2009. NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. CAF/vlg Copies furnished: Collin Austin Austin Global Enterprises, LLC 118 Northwest 14" Avenue, Suite D Gainesville, Florida 32601 Beverly Fox Red Streak Scooters, LLC 427 Doughty Boulevard Inwood, New York 11096 Marc J. Kradolfer RPM Motorcycles, Inc. 518 Southeast 2" Street Gainesville, Florida 32601 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway, Room A432 Tallahassee, Florida 32399 T. Kent Wetherell, IT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator Florida Administrative Law Reports Post Office Box 385 Gainesville, Florida 32602 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS 28 JUN 19 A 10 Sp Witte pe STP uly SAT ye TRATIVE ARINGS RED STREAK SCOOTERS, LLC and AUSTIN GLOBAL ENTERPRISES, LLC, d/b/a NEW SCOOTERS 4 LESS ay Petitioner, : Case Number: 09-2851 RPM MOTORCYCLES, INC. Respondent. SSS Lid Y Di: 5 COMES NOW, Petitioner, Austin Global Enterprises, LLC is stating a notice of voluntary dismissal. Since RPM Motorcycles, Inc. already has the ZHEJ line make established on their license, Austin Global Enterprises, LLC d/b/a New Scooters 4 Less no longer wishes to continue with the hearing and pursue establishing the ZHEJ line make at its location. CERTIFICATE OF SERVICE | HEREBY CERTIFY that a true and correct copy of the foregoing was served by US Mail to T. Kent Wetherell, Il., Administrative Law Judge, Division of Administrative Hearings, The DeSoto Building, 1230 Apalachee Parkway, Tallahassee, FL 32399-3060; Marc J. Kradolfer, as agent for Respondent RPM Motorcycles Inc., 518 Southeast 2” Street, Gainesville, Fl 32601 on June 8, 2009. AUSTIN GLOBAL ENTERPRISES, LLC Collin Austin, Managing Member Representative for Petitioner 118 NW 14” Avenue, Suite D Gainesville, FL 32601 Telephone: 352-336-1271
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File and Relinquishing Jurisdiction by Jessica E. Varn, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s Notice Of Withdrawal of Proposed Dealer Agreement from Consideration by Respondents and Motion to Dismiss as Moot, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File and Relinquishing Jurisdiction as its Final Order in this matter. Accordingly, it is hereby ORDERED that this case is CLOSED. DONE AND ORDERED this AY day of May, 2013, in Tallahassee, Leon County, Florida. Bureau of Issuance Oversight Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A338 Tallahassee, Florida 32399 Filed with the Clerk of the Division of Motorist Services this 4 day of May, 2013. NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. JB/jdc Copies furnished: Dean Bunch, Esquire Nelson, Mullins, Riley and Scarborough, LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 dean.bunch@nelsonmullins.com John W. Forehand, Esquire South Motors Automotive Group 16165 South Dixie Highway Miami, Florida 33157 john.forehand@southmotors.net David Seymour Leibowitz, Esquire Braman Management Association 2060 Biscayne Boulevard, 2"! Floor Miami, Florida 33137 davidl|@bramanmanagement.com Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 rsox@dealerlawyer.com Jessica E. Varn Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS BMW OF NORTH AMERICA, LLC, Petitioner, vs. SOUTH MOTOR COMPANY OF DADE COUNTY, d/b/a SOUTH MOTORS BMW, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. POMPANO IMPORTS, INC., Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. POMPANO IMPORTS, INC., Respondent. a a aU OOOO ee Oe eee Case No. Case No. Case No. 12-3385 12-3386 12-3387 BMW OF NORTH AMERICA, LLC, Petitioner, vs. Case No. 12-3389 SARASOTA AUTOMOTIVE MANAGEMENT, LLC, d/b/a BMW OF SARASOTA BERT SMITH OLDSMOBILE, INC., d/b/a BERT SMITH INTERNATIONAL CAPITAL EUROCARS, INC., d/b/a CAPITAL BMW IMPORT CITY, INC., d/b/a QUALITY BMW REEVES IMPORT MOTORCARS, INC., Respondents. BMW OF NORTH AMERICA, LLC, _ Petitioner, vs. Case No. 12-3390 BRAMAN MOTORS, INC., d/b/a BRAMAN BMW PALM BEACH IMPORTS, INC., d/b/a BRAMAN MOTORCARS, Respondents. ORDER CLOSING FILES AND RELINQUISHING JURISDICTION This case came before the undersigned on the Petitioner's Notice of Withdrawal of Proposed Dealer Agreement from Consideration by Respondents and Motion to Dismiss as Moot, filed January 29, 2013, and the undersigned being fully advised, it is, therefore, ORDERED that: 1. The final hearing scheduled for May 13 through 17, 2013, is canceled. 2. The files of the Division of Administrative Hearings are closed. Jurisdiction is relinquished to the Department of Highway Safety and Motor Vehicles. DONE AND ORDERED this llth day of February, 2013, in Tallahassee, Leon County, Florida. aw JESSICA E. VARN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of February, 2013. COPIES FURNISHED: Jennifer Clark, Agency Clerk Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-430 2900 Apalachee Parkway, Mail Stop 61 Tallahassee, Florida 32399 John W. Forehand, Esquire South Motors Automotive Group 16165 South Dixie Highway Miami, Florida 33157 john. forehand@southmotors.net Dean Bunch, Esquire Nelson, Mullins, Riley, and Scarborough LLP Suite 202 3600 Maclay Boulevard, South Tallahassee, Florida 32312 dean.bunch@nelsonmullins.com David Seymour Leibowitz, Esquire Braman Management Association 2nd Floor 2060 Biscayne Boulevard Miami, Florida 33137 davidl@bramanmanagement.com Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 rsox@dealerlawyer.com STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS BMW OF NORTH AMERICA, LLC, Petitioner, v8. Case No. 12-3385 SOUTH MOTOR COMPANY OF DADE COUNTY, d/b/a SOUTH MOTORS BMW, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. Case No. 12-3386 POMPANO IMPORTS, INC., d/b/a Vista BMW of Pompano Beach, Respondent. BMW OF NORTH AMERICA, LLC, Petitioner, vs. . Case No. 12-3387 POMPANO IMPORTS, INC., d/b/a Vista BMW of Coconut Creek, Respondent. Filed January 29, 2013 8:53 AM Division of Administrative Hearings BMW OF NORTH AMERICA, LLC, Petitioner, vs. SARASOTA AUTOMOTIVE MANAGEMENT, LLC, d/b/a BMW OF SARASOTA; BERT SMITH OLDSMOBILE, INC., d/b/a" BERT SMITH INTERNATIONAL; CAPITAL EUROCARS, INC., d/b/a CAPITAL BMW; IMPORT CITY, INC., d/b/a QUALITY BMW; and REEVES IMPORT MOTORCARS, INC., Respondents. BMW OF NORTH AMERICA, LLC, Petitioner, vs. BRAMAN MOTORS, INC., d/b/a BRAMAN BMV, and PALM BEACH IMPORTS, INC., d/b/a BRAMAN MOTORCARS, Respondents. Case No. 12-3389 Case No. 12-3390 NOTICE OF WITHDRAWAL OF PROPOSED DEALER AGREEMENT FROM CONSIDERATION BY RESPONDENTS AND MOTION TO DISMISS AS MOOT Comes now BMW of North America, LLC ("BMW NA") and notifies the Administrative Law Judge that it has withdrawn its notice to Respondents concerning the proposed dealer agreement which is the subject of this proceeding. withdrawal of notice, BMW NA moves to dismiss this matter as moot. motion, BMW NA states: As a result of this In support of its 1. On July 17, 2012, BMW NA notified Respondents of its intent to offer them the superseding/merged BMW Center Agreement for BMW passenger cars and BMW light trucks ("the Merged Agreement"), which was proposed to supersede, modify and replace the existing BMW Dealer Agreement for BMW passenger cars and the existing BMW SAV Center Agreement for BMW light trucks (collectively "the Existing Agreements"). 2. Respondents filed complaints with the Department of Highway Safety and Motor Vehicles ("DHSMV"), contesting the terms of the proposed Merged Agreement. These complaints were transferred by the DHSMV to the Division of Administrative Hearings. 3. On January 29, 2013, BMW NA, by letters attached hereto as Exhibit A, notified Respondents, as follows: BMW of North America, LLC ("BMW NA") hereby withdraws its notice, transmitted to you on July 17, 2012, with respect to the superseding/merged BMW Center Agreement (‘Agreement’) for BMW passenger cars and BMW light trucks. You and your successors may remain on your current forms of: dealer agreements: the BMW Dealer Agreement for BMW passenger cars (‘Old Agreement’) and the BMW SAV Center Agreement for BMW light trucks (‘SAV Center Agreement') or sign the Agreement which was offered to you, at any time in the future. 4. Inasmuch as BMW NA has withdrawn the July 17, 2012 notice that entitled Respondents to file their protests, and confirmed to Respondents that they and their successors', have the option to remain on the Existing Agreements unless, at any time in the future, they elect to sign the Merged Agreement, Respondents’ protests should now be dismissed as moot. ' Motor vehicle dealerships, and equity interests therein, are transferable to buyers as provided in Section 320.643, Florida Statutes. 3 Respectfully submitted, Lh. bL Dean Bunch dean.bunch@nelsonmullins.com C. Everett Boyd, Jr. everett. boyd@nelsonmullins.com Nelson Mullins Riley & Scarborough LLP 3600 Maclay Blvd., S., Suite 202 Tallahassee, FL 32312 Telephone: (850)907-2505 Attorneys for BMW of North America, LLC CERTIFICATE OF SERVICE I HEREBY CERTIFY that the forgoing was served by electronic transmission, this at day of January, 2013, upon the following: | Jennifer Clerk, Agency Clerk clark. jennifer@hsmv.state.fl.us Dept. of Highway Safety Neil Kirkman Bldg., Room A-430 2900 Apalachee Parkway, Mail Stop 61 Tallahassee, FL 32399 John W. Forehand, Esq. john. forehand@southmotors.net 16165 South Dixie Highway Miami, FL 33157 Richard N. Sox, Esq. rsox@dealerlawyer.com Nicholas A. Bader, Esq. nbader@dealerlawyer.com 2822 Remington Green Circle Tallahassee, FL 32308 David Leibowitz, Esq. davidl@bramanmanagement.com Timothy Grecsek, Esq. timothyg@bramanmanagement.com Braman Management Association 2060 Biscayne Bivd., Second Floor Miami, FL 33137 ~ Attorney
The Issue The issue is whether Petitioners are entitled to a motor vehicle dealership that is proposed to be located in Melbourne, Florida.
Findings Of Fact Respondent is an existing franchised dealer of motorcycles manufactured by ZHNG. 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 234 Highway A1A, Satellite Beach, Florida 32937. Petitioners' proposed dealership would be located at 6370 North Highway US 1, Melbourne Florida 32940. The proposed dealership is within a 12.5-mile radius of Respondent's dealership. Satellite Beach and Melbourne are both in Brevard County. Petitioners admitted that they did not provide the name of Respondent's business to the Department for purposes of notifying the existing dealer of Petitioner's intent to establish a new dealership of the same line-make. For this reason, Respondent never received the standard letter of notice from the Department. Respondent filed its petition as soon as its ownership learned of the proposed new ZHNG dealership. Orestes Nunez, principal owner of House of Scooters, testified that he had no way of knowing the names of every dealer that is selling the ZHNG line-make because the scooters are brought into this country by four different importers and sold under different names. None of the scooters are marketed under the name "ZHNG." Mr. Nunez' proposed dealership would sell the scooters under the name "Italica," whereas other dealers sell the ZHNG scooter under other names. Mr. Nunez testified that he was able to provide the Department the names of other "Italica" dealers, but could not provide the names of every dealer selling ZHNG scooters. Petitioners conceded that they could not establish that Respondent is not providing adequate representation of the ZHNG line-make within the territory at issue. Petitioners' only basis for disputing the protest was that it was not timely filed. Under all the circumstances, it is found that Respondent's protest was timely filed and that Respondent has standing to protest the establishment of the proposed dealership.
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 franchise. DONE AND ENTERED this 8th day of April, 2009, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 8th day of April, 2009. COPIES FURNISHED: Electra Theodorides-Bustle, Executive Director Department of Highway Safety and Motor Vehicles 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Adriana De Lima Italica Motors, Inc. 5001 Southwest 135 Avenue Miramar, Florida 33027 Greg G. Shonk Loon’s Lagoon, LLC 234 Highway A1A Satellite Beach, Florida 32937 Orestes Nunez Orestes Nunez, d/b/a House of Scooters 6370 North Highway US 1 Melbourne, Florida 32940 Michael James Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32344
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File and Relinquishing Jurisdiction by Jessica E. Varn, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s Notice Of Withdrawal of Proposed Dealer Agreement from Consideration by Respondents and Motion to Dismiss as Moot, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File and Relinquishing Jurisdiction as its Final Order in this matter. Accordingly, it is hereby ORDERED that this case is CLOSED. DONE AND ORDERED this AY day of May, 2013, in Tallahassee, Leon County, Florida. Bureau of Issuance Oversight Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A338 Tallahassee, Florida 32399 Filed with the Clerk of the Division of Motorist Services this 4 day of May, 2013. NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. JB/jdc Copies furnished: Dean Bunch, Esquire Nelson, Mullins, Riley and Scarborough, LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 dean.bunch@nelsonmullins.com John W. Forehand, Esquire South Motors Automotive Group 16165 South Dixie Highway Miami, Florida 33157 john.forehand@southmotors.net David Seymour Leibowitz, Esquire Braman Management Association 2060 Biscayne Boulevard, 2"! Floor Miami, Florida 33137 davidl|@bramanmanagement.com Richard N. Sox, Esquire Bass Sox Mercer, P.A. 2822 Remington Green Circle Tallahassee, Florida 32308 rsox@dealerlawyer.com Jessica E. Varn Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator
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 Whether the application of Snyder Computer Systems, Inc., d/b/a Wildfire Motors and PC Scooter and Cycle, L.L.C., to establish an additional franchised dealership for the sale of Zhejiang Summit Huawin Motorcycle Co. Ltd. (POPC) motorcycles to be located at 3401 East Business Highway 98, Panama City, Bay County, Florida 32401, should be granted.
Findings Of Fact Respondent is a licensed motor vehicle dealer in Florida and an existing POPC dealer located at 12202 Hutchison Boulevard, Suite 72, Panama City Beach, Florida 32407. There was no evidence which demonstrated Petitioners’ market share in the motorcycle market. There was no evidence presented analyzing the motorcycle market in the Panama City area. Likewise, there was no evidence presented regarding anticipated growth in the market area. This type of evidence is generally presented by the distributor or manufacturer of the product. As indicated, Petitioners did not appear at the hearing. Given this lack of evidence, the market share for Petitioners’ motorcycles cannot be established. Mr. Wooten, Respondent’s CEO, established that Petitioners’ proposed location is within 25 miles of Respondent’s current location. Respondent has the ability to adequately serve the needs of the population of Bay County, including Panama City and Panama City Beach through its sales and service of the POPC motorcycles. In the current economy, the entry of Petitioners into the POPC marketplace would have a significant negative financial impact on Respondent’s ability to maintain its sales, service, and customer base. Respondent has expended significant sums on advertising, both in print and online, and could not afford to continue to advertise the POPC line if Petitioners’ application were approved. Respondent already works seven days a week to maintain his market share, and would suffer significant financial losses if Petitioners’ application were approved. Respondent provides low prices for the products it sells and would be forced out of business if Petitioners’ application were approved. Petitioners seek to sell the identical motorcycles sold by Respondent, and the Bay County market is not sufficiently large to support a new entrant. If Petitioners’ application is approved, Respondent will be forced to close its business in Panama City Beach. Respondent is in good standing with the distributors of the products it sells. Respondent’s license with the State of Florida is active and in good standing. There are no barriers to access for customers seeking to purchase the products offered by Respondent. Respondent’s location is centrally located for customers in Bay County, including Panama City and Panama City Beach.
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’ dealership at 3401 East Business Highway 98, Panama City, Florida. DONE AND ENTERED this 6th day of July, 2009, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN 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 6th day of July, 2009. COPIES FURNISHED: Jennifer Clark Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-308 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Donald Watts PC Scooter & Cycle, LLC 1903 Brown Avenue Panama City, Florida 32405 Dan Vogel Snyder Computer Systems, Inc., d/b/a Wildfire Motors 11 Technology Way Steubenville, Ohio 43952 Barry Wayne Wooten Moto Import Distributors, LLC 12202 Hutchison Boulevard, Suite 72 Panama City Beach, Florida 32407 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 32399-0635 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
The Issue Whether the proposed relocations of the existing Fort Lauderdale sales and service operations of Petitioner Holman Automotive, Inc. (Holman) for BMW passenger cars, BMW light trucks, and MINI passenger cars, as more particularly described in the notices of intent published by BMW of North America, LLC (BMW NA) in the Florida Administrative Weekly, should be permitted.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement the factual stipulations set forth in the parties' Pre-hearing Stipulation: BMW NA is a Florida-licensed importer and distributor of BMW passenger cars and BMW light trucks (hereinafter referred to collectively as "BMW Vehicles"), as well as MINI passenger cars (MINIs). BMW passenger cars, BMW light trucks, and MINIs constitute three separate line-makes. In 2007, BMW Vehicles competed in the following luxury passenger and light truck segments: entry compact (against Acura, Audi, Saab, and Volvo models); compact wagon (against Audi, Jaguar, Saab, and Volvo models); compact sedan (against Acura, Audi, Infiniti, Jaguar, Lexus, Mercedes, Saab, and Volvo models); compact coupe (against Infiniti and Mercedes models); compact performance (against Audi models); compact convertible (against Audi, Mercedes, Saab, and Volvo models); midsize sedan (against Acura, Audi, Infiniti, Jaguar, Lexus, Mercedes, Saab, and Volvo models); midsize super performance (against Audi, Jaguar, and Mercedes models); midsize performance (against Audi, Infiniti, Jaguar, Lexus, Mercedes, and Volvo models); midsize wagon (against Audi, Mercedes, Saab, and Volvo models); specialty roadster/coupe (against Audi, Mercedes, and Porsche models); prestige sedan (against Audi, Jaguar, Lexus, and Mercedes models); prestige convertible coupe (against Jaguar, Lexus, and Mercedes models); super convertible/coupe (against Audi, Mercedes, and Porsche models); and prestige SUV (against Acura, Cadillac, Infiniti, Land Rover, Lexus, Mercedes, Porsche, Saab, Volkswagen, and Volvo models). In 2007, the MINI Cooper competed against Smart and Volkswagen models; the MINI Cooper S competed against Chevrolet, Honda, Mitsubishi, Scion, Subaru, Volkswagen and Volvo models; the MINI Cooper convertible competed against Chrysler, Pontiac, Saturn, Smart, and Volkswagen models; and the Cooper Convertible S competed against Mazda, Pontiac, Saturn, and Volkswagen models. BMW NA distributes vehicles in the United States and Puerto Rico through a network of franchised dealers. Its dealers not only sell new vehicles, they service them as well. BMW NA's free maintenance program brings customers back to the dealership for service on a regular basis. BMW NA maintains a policy of limiting the supply of vehicles available to its dealers in order to maintain pricing power. Allocation of product to each dealer is based, in part, on the Sales Planning Guide (SPG) BMW NA assigns the dealer. The higher the SPG, the greater the supply of product the dealer will be able to receive. Each dealer is assigned a "Primary Market Area" (PMA) for which it is responsible pursuant to the terms of its franchise agreement with BMW NA. The dealer's PMA is the geographic "area [comprised of aggregated zip codes] designated by BMW NA in which [the] [d]ealer is expected to focus its activities under [its] [d]ealer [a]greement [with BMW NA]. Evaluation of [the] [d]ealer's performance [under its agreement is] primarily based upon [the] [d]ealer's activities in its [PMA]." Another factor, among others, that BMW NA considers in evaluating its dealers is the "feedback from [the] [d]ealers' customers measured by the results of customer satisfaction surveys provided to [the] dealer by BMW NA." From these survey results, a Customer Satisfaction Index (CSI) is constructed in various categories for each dealer. Some dealers have more than one dealership location in the PMA for which they are responsible. These dealers exercise their discretion to determine how the product they receive from BMW NA (for their PMAs) should be divided. In 2007, in the United States and Puerto Rico, there were approximately 340 PMAs represented by BMW Vehicle dealers and 83 PMAs represented by MINI dealers. The BMW Vehicle PMAs, collectively, cover virtually the entire United States and Puerto Rico. Contrastingly, there are significant land areas in the United States and Puerto Rico that are not included in the 83 MINI PMAs. These are referred to as "unrepresented" areas. Florida has 21 BMW Vehicle PMAs (in which there are 26 dealership locations) and 8 MINI PMAs (half of which are in two counties, Broward and Miami-Dade). Holman and Vista are each Florida BMW Vehicle and MINI dealers with operations in Broward County. There are no other BMW Vehicle or MINI dealers located in Broward County. Holman's BMW Vehicle PMA covers the southern portion of Broward County and extends just over the border (to the south) into northeastern Miami-Dade County. Vista's BMW Vehicle PMA covers the northern portion of Broward County and extends just over the border (to the north) into southern Palm Beach County. The two PMAs cover Broward County in its entirety. Holman's MINI PMA covers the southeastern portion of Broward County and extends just over the border into northeastern Miami-Dade County. Vista's MINI PMA covers the northern portion of Broward County and extends just over the border into southern Palm Beach County. The southwestern portion of Broward County is unrepresented by any dealer. There are two BMW Vehicle dealers and two MINI dealers located south of Broward County in Miami-Dade County. Braman Miami operates a BMW Vehicle dealership (Braman Miami BMW) and a MINI dealership (Braman Miami MINI) from a location on Biscayne Boulevard (U.S. Route 1/Federal Highway) in the area of downtown Miami. (At this location, Braman Miami is building a "five- story parking deck with service on two floors," which will "significant[ly] expan[d]" its service capability.) To the south, there is another BMW Vehicle dealership and another MINI dealership, both run by South Motors3 (South Motors BMW and South Motors MINI, respectively). These are the only BMW Vehicle and MINI dealership locations in Miami-Dade County. Braman Miami's BMW Vehicle PMA and its MINI PMA cover most of northern Miami-Dade County. South Motors' BMW Vehicle PMA covers the southern portion of Miami-Dade County and all of Monroe County (which has no BMW Vehicle dealerships). South Motors' MINI PMA covers the remaining represented portions of Miami-Dade County (that is, those represented areas not represented by Holman's MINI PMA or Braman Miami's MINI PMA). (Monroe County has no MINI representation.) In Palm Beach County, immediately to the north of Broward County, there is one BMW Vehicle dealership location and one MINI dealership location. Both dealerships (Braman West Palm Beach BMW and Braman West Palm Beach MINI) are run by the Braman organization. Compared to Miami-Dade County and Palm Beach County, Broward County has two and four times, respectively, as many BMW Vehicle dealership locations. It has the same number of MINI dealership locations as Miami-Dade County and twice as many as Palm Beach County. Holman has two BMW Vehicle dealership locations in Broward County, a "primary" location in the downtown Fort Lauderdale area (Holman BMW Fort Lauderdale) and a "satellite" location in Pembroke Pines (Holman BMW Pembroke Pines). Holman BMW Fort Lauderdale's sales facility is located at 1400 South Federal Highway, 21.5 miles (by air) north of Braman Miami BMW (22.3 miles, if driving). This location puts it on a well traveled north-south pathway to downtown Fort Lauderdale. Holman BMW Fort Lauderdale's sales facility is staffed by 16 new BMW Vehicle sales consultants, the maximum amount the facility can accommodate. Saturdays are particularly busy days at the facility. To decrease the amount of time customers have to wait to be helped, Holman has "ma[d]e it mandatory for every sales consultant to work every Saturday," a move that was not well received by the sales consultants, but one that Holman believed "from a business perspective [it had to make] so that [it] had enough people on hand to handle the volume of customers that were coming through the door." The sales facility's air-conditioned showroom has enough space to display no more than seven BMW Vehicles, less than what is necessary to "have a representative sample of every [vehicle] that [Holman] sell[s]." Customers must go outside and deal with the sometimes uncomfortable south Florida weather to view other display vehicles. Customer parking at the sales facility is limited. Holman BMW Fort Lauderdale's service facility is located at 1812 South Andrews Avenue, several blocks away from its sales facility. Holman BMW Fort Lauderdale has had these separate sales and service locations since the 1980s. Having sales and service facilities at different locations makes it more difficult for the sales staff to take advantage of the marketing opportunities that exist when customers come in to have their vehicles serviced, but this has not prevented Holman BMW Fort Lauderdale from being a successful and profitable dealership. (In 2007, for example, Holman BMW Fort Lauderdale's business operations generated a net profit of $15 million for Holman.) Holman BMW Pembroke Pines' sales and service facilities are located at 14800 Sheridan Street in Pembroke Pines, 18.8 miles (by air) north of Braman Miami BMW (23.5 miles, if driving) and 14 miles (by air) from Holman BMW Fort Lauderdale's sales facility (18.3 miles, if driving). These facilities occupy 11 acres of a 17.5 acre parcel. The remainder of the parcel is occupied by a Lincoln-Mercury dealership owned by Holman. Holman BMW Pembroke Pines' service facility has 45 service stalls. Holman has a single MINI dealership location in Broward County (Holman MINI). Holman MINI's sales facility is located at 1440 South Federal Highway in Fort Lauderdale. It sits on the same 1.5 acre parcel that Holman BMW Fort Lauderdale's sales facility and pre-owned vehicle operation also occupy (Holman Fort Lauderdale Parcel). There is room on the Holman Fort Lauderdale Parcel for 40 new BMW Vehicles and MINIs. Holman BMW Fort Lauderdale and Holman MINI typically have a combined new vehicle inventory of 225 vehicles. Those new vehicles for which there is no room on the Holman Fort Lauderdale Parcel are stored off-site at a location about three miles away, near where Holman operates a Honda dealership. Also located off-site, at 1777 South Andrews Avenue in Fort Lauderdale, is Holman's in-house accounting department. Sales consultants "need[ing] to pull a deal file to get information [about] a previous customer" or needing other documents held by the accounting department are not able to retrieve them as quickly and reliably as they would if the accounting department were housed on-site. The customer parking at Holman MINI's sales facility is even more limited than it is at Holman BMW Fort Lauderdale's sales facility (where most MINI customers wind up having to park). There is room to display no more than three vehicles in Holman MINI's showroom. The display area is located right next to where the sales consultants sit down and talk to customers, resulting in the possibility that conversations concerning personal financial information and other private matters may be overheard by those looking at vehicles in the display area. Holman MINI shares the service facility used by Holman BMW Fort Lauderdale (Holman Fort Lauderdale Service Facility). The Holman Fort Lauderdale Service Facility has a small, four-lane combined service drive for BMW Vehicles and MINIs, which often gets "back[ed] up" in the morning when customers drop off their vehicles, as well as at the end of the day when vehicles are picked up. The facility has 37 service stalls for the BMW Vehicles and MINIs that are brought in to be serviced. In the interest of "[c]ustomer convenience," Holman has given Enterprise Rent-A-Car space in the facility to conduct rental car operations. There is a parts department located at the facility, but the space it occupies is not "big enough to store all the parts" it needs to be fully operational. As a result, parts are also kept in a "remote warehouse" located where the new vehicle inventory is stored (near the Holman Honda dealership), as well as at a body shop that Holman operates in Hollywood, Florida, near the corner of U.S. Route 1/Federal Highway and Sheridan Street. There are a total of 150 spaces available for parking vehicles at or around the Holman Fort Lauderdale Service Facility, 79 of which are across the street from the facility (on the west side of Andrews Avenue) and are used for employee parking and to "stage the [vehicles] waiting to be [serviced]." These 79 spaces are leased on a month-to-month basis. Under the terms of the lease, no overnight parking is allowed, so any vehicles in these spaces must be moved to the service facility before closing time. As a general rule, customers can get same day appointments to have their vehicles serviced at the Holman Fort Lauderdale Service Facility. There are "always . . . enough slots to handle emergencies," but "from time to time," during busy periods, it may take as long as two weeks to get an appointment for a regularly scheduled maintenance visit. Vista, like Holman, has two BMW Vehicle dealership locations in Broward County, a "primary" location in Coconut Creek (Vista BMW Coconut Creek) and a "satellite" location in the downtown Pompano Beach area (Vista BMW Pompano Beach). (Although they each have two BMW Vehicle dealership locations in Broward County, Vista and Holman are assigned only one PMA each.) Vista BMW Coconut Creek's sales and service facilities are located at 4401 Sample Road in Coconut Creek, which is 33 miles (by air) from Braman Miami BMW (34.7 miles, if driving); 12.1 miles (by air) from Holman BMW Fort Lauderdale's sales facility (14.5 miles, if driving); and 19.7 miles (by air) from Holman BMW Pembroke Pines (25.8 miles, if driving). Vista BMW Pompano Beach's sales and services facilities are located at 744 North Federal Highway in Pompano Beach, which is 31 miles (by air) from Braman Miami BMW (32.8 miles, if driving); 9.5 miles (by air) from Holman BMW Fort Lauderdale's sales facility (10.5 miles, if driving); 21 miles (by air) from Holman BMW Pembroke Pines (26.8 miles, if driving); and 5.6 miles (by air) from Vista BMW Coconut Creek (8 miles, if driving). The service facility at this location has 34 service stalls. Vista has a single MINI dealership location in Broward County (Vista MINI). Vista MINI and Holman MINI are currently the two closest MINI dealerships in the State of Florida. Vista MINI's sales and service facilities are located at 4401 Sample Road in Coconut Creek (on the same campus as Vista BMW Coconut Creek). Vista has a total of 51 service stalls on its Coconut Creek campus. Prior to 2002, in Broward County, there were only two BMW Vehicle dealership locations and no MINI dealership locations. The two BMW Vehicle dealership locations were both east of I-95. One was Holman BMW Forth Lauderdale. The other was a Vista dealership operation at 700 North Federal Highway in Pompano Beach. Holman MINI and Vista MINI were opened in March 2002 and October 2003, respectively. Holman's decision to house its MINI operations at its existing BMW Vehicle facility in the downtown Fort Lauderdale area resulted in a reduction in the amount of space it had available there for BMW sales and service operations. BMW NA prefers (but does not require) that its MINI dealerships with sales volumes similar to that of Holman MINI be located in exclusive facilities and not co-located with BMW operations. In October 2003, Vista also moved its BMW Vehicle dealership (which at the time had only one location) from 700 North Federal Highway in Pompano Beach to newly-constructed facilities at 4401 Sample Road in Coconut Creek (the present site of Vista BMW Coconut Creek). Vista spent $21 million to build the Coconut Creek campus that houses its BMW Vehicle and MINI dealerships. In December 2003, a third BMW Vehicle dealership location, Holman BMW Pembroke Pines, was opened in Broward County. In November 2004, the Department entered a Final Order authorizing Vista to establish an additional dealership location at 744 North Federal Highway in Pompano Beach, which was "next door" to, and just north of, the site it had vacated when it had moved its BMW Vehicle dealership to Coconut Creek in October 2003. An "old Daewoo facility" had been located at 744 Federal Highway. Vista purchased and subsequently renovated the site, at a cost of $5.5 million. In April 2006, Vista opened Vista BMW Pompano Beach (the authorized additional dealership location), bringing to four the total number of BMW dealership locations in Broward County, two east of I-95 (Holman BMW Fort Lauderdale and Vista BMW Pompano Beach) housed in smaller, older facilities typical of urban dealerships and two in the faster-growing area west of I-95 (Holman BMW Pembroke Pines and Vista BMW Coconut Creek) housed in large, modern, state-of-the-art facilities. Although it opened the Pompano Beach dealership location, Vista still had "additional plans for expansion and renovation" for which it needed local governmental approval. Vista has only recently obtained this approval, and it has not yet begun this planned expansion and renovation project. Since returning to the Pompano Beach area in April 2006, after a two-and-a-half-year absence, Vista has attempted to build back up its business in that part of the county. These efforts, which are ongoing, have included making substantial expenditures for advertising. In reconfiguring and expanding the BMW Vehicle dealer network in Broward County to make its products and services more conveniently accessible to customers in the area, and in adding MINI representation in the county, BMW NA worked with its existing dealers, Vista and Holman, in an effort to allow them to grow with the market. Calendar year 2007 was the first complete calendar year that Broward County had as many BMW Vehicle dealership locations as it presently has.4 It was also the most recent period for which a full, calendar year's worth of sales data was available at the time of the final hearing. In 2007, there were 3,664 new BMW passenger cars registered in Holman's BMW Vehicle PMA, 2,126 of them sold by Holman, 801 of them sold by Vista, 356 of them sold by Braman Miami, 108 of them sold by South Motors, and 89 of them sold by Braman West Palm Beach. In 2007, there were 3,388 new BMW passenger cars registered in Vista's BMW Vehicle PMA, 2,101 of them sold by Vista, 563 of them sold by Braman West Palm Beach, 402 of them sold by Holman, 61 of them sold by Braman Miami, and 24 of them sold by South Motors. In 2007, there were 4,008 new BMW passenger cars registered in Braman Miami's BMW Vehicle PMA, 1,792 of them sold by Braman Miami BMW, 939 of them sold by South Motors, 595 of them sold by Holman, 382 of them sold by Vista, and 70 of them sold by Braman West Palm Beach. In 2007, there were 2,587 new BMW passenger cars registered in South Motors' BMW Vehicle PMA, 1,548 of them sold by South Motors, 636 of them sold by Braman Miami, 144 of them sold by Holman, 111 of them sold by Vista, and 36 of them sold by Braman West Palm Beach. In 2007, there were 2,048 new BMW passenger cars registered in Braman West Palm Beach's BMW Vehicle PMA, 1,457 of them sold by Braman West Palm Beach, 261 of them sold by Vista, 49 of them sold by Holman, 23 of them sold by Braman Miami, and 13 of them sold by South Motors. In 2007, Holman sold a total of 3,392 new Florida- registered BMW passenger cars. Of this number, 62.68% were registered in its BMW Vehicle PMA; 17.54% were registered in Braman Miami's BMW Vehicle PMA; 11.85% were registered in Vista's BMW Vehicle PMA; 4.25% were registered in South Motors' BMW Vehicle PMA; and 1.44% were registered in Braman West Palm Beach's BMW Vehicle PMA. In 2007, of the consumers in Holman's BMW Vehicle PMA purchasing new BMW passenger cars, 58.02% did so from Holman; 21.86% did so from Vista; 9.80% did so from Braman Miami; 2.95% did so from South Motors; and 2.43% did so from Braman West Palm Beach. In 2007, Vista sold a total of 3,726 new Florida- registered BMW passenger cars.5 Of this number, 56.39% were registered in its BMW Vehicle PMA; 21.50% were registered in Holman's BMW Vehicle PMA; 10.25% were registered in Braman Miami's BMW Vehicle PMA; 7% were registered in Braman West Palm Beach's BMW Vehicle PMA; and 2.98% were registered in South Motors' BMW Vehicle PMA. In 2007, of the consumers in Vista's BMW Vehicle PMA purchasing new BMW passenger cars, 62.01% did so from Vista; 16.62% did so from Braman West Palm Beach; 11.87% did so from Holman; 1.80% did so from Braman Miami; and 0.71% did so from South Motors. In 2007, Braman Miami sold a total of 2,917 new Florida-registered BMW passenger cars. Of this number, 61.43% were registered in its BMW Vehicle PMA; 21.80% were registered in South Motors' BMW Vehicle PMA; 12.31% were registered in Holman's BMW Vehicle PMA; 2.09% were registered in Vista's BMW Vehicle PMA; and 0.79% were registered in Braman West Palm Beach's BMW Vehicle PMA. In 2007, of the consumers in Braman Miami's BMW Vehicle PMA purchasing new BMW passenger cars, 44.71% did so from Braman Miami; 23.43% did so from South Motors; 14.85% did so from Holman; 9.53% did so from Vista; and 1.75% did so from Braman West Palm Beach. In 2007, South Motors sold a total of 2,681 new Florida-registered BMW passenger cars. Of this number, 57.74% were registered in its BMW Vehicle PMA; 35.02% were registered in Braman Miami's BMW Vehicle PMA; 4.03% were registered in Holman's BMW Vehicle PMA; 0.90% were registered in Vista's BMW Vehicle PMA; and 0.48% were registered in Braman West Palm Beach's BMW Vehicle PMA. In 2007, of the consumers in South Motors' BMW Vehicle PMA purchasing new BMW passenger cars, 59.84% did so from South Motors; 24.58% did so from Braman Miami; 5.57% did so from Holman; 4.29% did so from Vista; and 1.39% did so from Braman West Palm Beach. In 2007, Braman West Palm Beach sold a total of 2,389 new Florida-registered BMW passenger cars. Of this number, 60.99% were registered in its BMW Vehicle PMA; 23.57% were registered in Vista's BMW Vehicle PMA; 3.73% were registered in Holman's BMW Vehicle PMA; 2.93% were registered in Braman Miami's BMW Vehicle PMA; and 1.51% were registered in South Motors' BMW Vehicle PMA. In 2007, of the consumers in Braman West Palm Beach's BMW Vehicle PMA purchasing new BMW passenger cars, 71.14% did so from Braman West Palm Beach; 12.74% did so from Vista; 2.39% did so from Holman; 1.12% did so from Braman Miami; and 0.63% did so from South Motors. In 2007, in terms of total sales of new BMW passenger cars, Vista, Holman, Braman Miami, South Motors, and Braman West Palm Beach were the number one, two, three, six, and eight dealers, respectively, in the United States. (In 2006, Vista was number one, Holman was number two, Braman West Palm Beach was number four, Braman Miami was number five, and South Motors was number seven. In 2008, as of October 9, 2008, Vista was number one, Holman was number two, Braman Miami was number three, South Motors was number six, and Braman West Palm Beach was number nine.) In 2007, there were 848 new BMW light trucks registered in Holman's BMW Vehicle PMA, 494 of them sold by Holman, 202 of them sold by Vista, 70 of them sold by Braman Miami, 21 of them sold by South Motors, and 20 of them sold by Braman West Palm Beach. In 2007, there were 672 new BMW light trucks registered in Vista's BMW Vehicle PMA, 430 of them sold by Vista, 95 of them sold by Braman West Palm Beach, 78 of them sold by Holman, 17 of them sold by Braman Miami, and 4 of them sold by South Motors. In 2007, there were 1,103 new BMW light trucks registered in Braman Miami's BMW Vehicle PMA, 510 of them sold by Braman Miami, 256 of them sold by South Motors, 147 of them sold by Holman, 86 of them sold by Vista, and 18 of them sold by Braman West Palm Beach. In 2007, there were 567 new BMW light trucks registered in South Motors' BMW Vehicle PMA, 363 of them sold by South Motors, 96 of them sold by Braman Miami, 37 of them sold by Vista, 34 of them sold by Holman, and 10 of them sold by Braman West Palm Beach. In 2007, there were 445 new BMW light trucks registered in Braman West Palm Beach's BMW Vehicle PMA, 342 of them sold by Braman West Palm Beach, 50 of them sold by Vista, 6 of them sold by Holman, 4 of them sold by Braman Miami, and 1 of them sold by South Motors. In 2007, Holman sold a total of 772 new Florida- registered BMW light trucks. Of this number, 63.99% were registered in its BMW Vehicle PMA; 19.04% were registered in Braman Miami's BMW Vehicle PMA; 10.10% were registered in Vista's BMW Vehicle PMA; 4.40% were registered in South Motors' BMW Vehicle PMA; and 0.78% were registered in Braman West Palm Beach's BMW Vehicle PMA. In 2007, of the consumers in Holman's BMW Vehicle PMA purchasing new BMW light trucks, 58.25% did so from Holman; 23.82% did so from Vista; 8.25% did so from Braman Miami; 2.48% did so from South Motors; and 2.36% did so from Braman West Palm Beach. In 2007, Vista sold a total of 824 new Florida- registered BMW light trucks. Of this number, 52.18% were registered in its BMW Vehicle PMA; 24.51% were registered in Holman's BMW Vehicle PMA; 10.44% were registered in Braman Miami's BMW Vehicle PMA; 6.07% were registered in Braman West Palm Beach's BMW Vehicle PMA; and 4.49% were registered in South Motors' BMW Vehicle PMA. In 2007, of the consumers in Vista's BMW Vehicle PMA purchasing new BMW light trucks, 63.99% did so from Vista; 14.14% did so from Braman West Palm Beach; 11.61% did so from Holman; 2.53% did so from Braman Miami; and 0.60% did so from South Motors. In 2007, Braman Miami sold a total of 706 new Florida- registered BMW light trucks. Of this number, 72.24% were registered in its BMW Vehicle PMA; 13.60% were registered in South Motors' BMW Vehicle PMA; 9.92% were registered in Holman's BMW Vehicle PMA; 2.41% were registered in Vista's BMW Vehicle PMA; and 0.57% were registered in Braman West Palm Beach's BMW Vehicle PMA. In 2007, of the consumers in Braman Miami's BMW Vehicle PMA purchasing new BMW light trucks, 46.24% did so from Braman Miami; 23.21% did so from South Motors; 13.33% did so from Holman; 7.80% did so from Vista; and 1.63% did so from Braman West Palm Beach. In 2007, South Motors sold a total of 648 new Florida- registered BMW light trucks. Of this number, 56.02% were registered in its BMW Vehicle PMA; 39.51% were registered in Braman Miami's BMW Vehicle PMA; 3.24% were registered in Holman's BMW Vehicle PMA; 0.62% were registered in Vista's BMW Vehicle PMA; and 0.15% were registered in Braman West Palm Beach's BMW Vehicle PMA. In 2007, of the consumers in South Motors' BMW Vehicle PMA purchasing new BMW light trucks, 64.02% did so from South Motors; 16.93% did so from Braman Miami; 6.53% did so from Vista; 6.00% did so from Holman; and 1.76% did so from Braman West Palm Beach. In 2007, Braman West Palm Beach sold a total of 516 new Florida-registered BMW light trucks. Of this number, 66.28% were registered in its BMW Vehicle PMA; 18.41% were registered in Vista's BMW Vehicle PMA; 3.86% were registered in Holman's BMW Vehicle PMA; 3.49% were registered in Braman Miami's BMW Vehicle PMA; and 1.94% were registered in South Motors' BMW Vehicle PMA. In 2007, of the consumers in Braman West Palm Beach's BMW Vehicle PMA purchasing new BMW light trucks, 76.85% did so from Braman West Palm Beach; 11.24% did so from Vista; 1.35% did so from Holman; 0.90% did so from Braman Miami; and 0.22% did so from South Motors. In 2007, in terms of total sales of new BMW light trucks, Vista, Braman Miami, Holman, and South Motors, were the number one, three, four, and five dealers, respectively, in the United States, with Braman West Palm Beach not making the top ten. (In 2006, Holman was number one, Vista was number two, South Motors was number three, and Braman Miami was number four, with Braman West Palm Beach again not making the top ten. In 2008, as of October 9, 2008, Vista was number one, Holman was number two, Braman Miami was number three, South Motors was number six, and Braman West Palm Beach was number nine.) Broward County is also home to the number one (in total sales volume) Lexus, Infiniti, Porsche, and Volkswagen dealership locations in the United States. In 2007, there were 346 new MINIs registered in Holman's MINI PMA, 182 of them sold by Holman, 67 of them sold by Braman Miami, 66 of them sold by Vista, 11 of them sold by South Motors, and 8 of them sold by Braman West Palm Beach. In 2007, there were 309 new MINIs registered in Vista's MINI PMA, 197 of them sold by Vista, 45 of them sold by Holman, 43 of them sold by Braman West Palm Beach, 10 of them sold by Braman Miami, and 3 of them sold by South Motors. In 2007, there were 804 new MINIs registered in Braman Miami's MINI PMA, 523 of them sold by Braman Miami, 180 of them sold by South Motors, 55 of them sold by Holman, 27 of them sold by Vista, and 6 of them sold by Braman West Palm Beach. In 2007, there were 370 new MINIs registered in South Motors' MINI PMA, 231 of them sold by South Motors, 99 of them sold by Braman Miami, 19 of them sold by Holman, 16 of them sold by Vista, and 3 of them sold by Braman West Palm Beach. In 2007, there were 247 new MINIs registered in Braman West Palm Beach's MINI PMA, 179 of them sold by Braman West Palm Beach, 40 of them sold by Vista, 11 of them sold by Holman, and 7 of them sold by Braman Miami. South Motors sold none of these new MINIs. In 2007, Holman sold a total of 457 new Florida- registered MINIs.6 Of this number, 39.82% were registered in its MINI PMA; 12.04% were registered in Braman Miami's MINI PMA; 9.85% were registered in Vista's MINI PMA; 4.16% were registered in South Motors' MINI PMA; and 2.41% were registered in Braman West Palm Beach's MINI PMA. In 2007, of the consumers in Holman's MINI PMA purchasing new MINIs, 52.60% did so from Holman; 19.36% did so from Braman Miami; 19.08% did so from Vista; 3.18% did so from South Motors; and 2.31% did so from Braman West Palm Beach. In 2007, Vista sold a total of 419 new Florida- registered MINIs. Of this number, 47.02% were registered in its MINI PMA; 15.75% were registered in Holman's MINI PMA; 9.55% were registered in Braman West Palm Beach's MINI PMA; 6.44% were registered in Braman Miami's MINI PMA; and 3.82% were registered in South Motors' MINI PMA.. In 2007, of the consumers in Vista's MINI PMA purchasing new MINIs, 63.75% did so from Vista; 14.56% did so from Holman; 13.92% did so from Braman West Palm Beach; 3.24% did so from Braman Miami; and 0.97% did so from South Motors. In 2007, Braman Miami sold a total of 789 new Florida-registered MINIs. Of this number, 66.29% were registered in its MINI PMA; 12.55% were registered in South Motors' MINI PMA; 8.49% were registered in Holman's MINI PMA; 1.27% were registered in Vista's MINI PMA; and 0.89% were registered in Braman West Palm Beach's MINI PMA. In 2007, of the consumers in Braman Miami's MINI PMA purchasing new MINIs, 65.05% did so from Braman Miami; 22.39% did so from South Motors; 6.84% did so from Holman; 3.36% did so from Vista; and 0.75% did so from Braman West Palm Beach. In 2007, South Motors sold a total of 467 new Florida-registered MINIs. Of this number, 49.46% were registered in its MINI PMA; 38.54% were registered in Braman Miami's MINI PMA; 2.36% were registered in Holman's MINI PMA; and 0.64% were registered in Vista's MINI PMA. There were no registrations in Braman West Palm Beach's MINI PMA. In 2007, of the consumers in South Motors' MINI PMA purchasing new MINIs, 62.43% did so from South Motors; 26.76% did so from Braman Miami; 5.14% did so from Holman; 4.32% did so from Vista; and 0.81% did so from Braman West Palm Beach. In 2007, Braman West Palm Beach sold a total of 357 new Florida-registered MINIs. Of this number, 50.14% were registered in its MINI PMA; 12.04% were registered in Vista's MINI PMA; 2.24% were registered in Holman's MINI PMA; 1.68% were registered in Braman Miami's MINI PMA; and 0.84% were registered in South Motors' MINI PMA.. In 2007, of the consumers in Braman West Palm Beach's MINI PMA purchasing new MINIs, 72.47% did so from Braman West Palm Beach; 16.19% did so from Vista; 4.45% did so from Holman; and 2.83% did so from Braman Miami. No purchases were made from South Motors. For purposes of the instant consolidated cases, and solely for the purposes of these cases, BMW NA, through its expert witness, James Anderson, created, as alternatives to the PMAs that BMW NA is contractually obligated to use in its dealings with its dealers, what Mr. Anderson termed, "Areas of Geographic Advantage" (AGAs). An AGA, as described by Mr. Anderson, is a geographic area in which each dealer or dealership location (in those PMAs having more than one dealership location) has a competitive advantage over other dealers or locations of the same line-make due solely to its geographic proximity to customers. Mr. Anderson created AGAs for Holman BMW Fort Lauderdale, Holman BMW Pembroke Pines, Vista BMW Coconut Creek, Vista BMW Pompano Beach, Braman Miami BMW, South Motors BMW, Holman MINI, Vista MINI, Braman Miami MINI, and South Motors MINI. The Holman BMW Fort Lauderdale AGA consists of southeastern Broward County. The Holman BMW Pembroke Pines AGA consists of southwestern Broward County and extends just over the border into northwestern Miami-Dade County. The Vista BMW Coconut Creek AGA consists of northwestern Broward County and extends just over the border into southwestern Palm Beach County. The Vista BMW Pompano Beach AGA consists of northeastern Broward County and extends just over the border into southeastern Palm Beach County. The Vista MINI AGA is very similar to its PMA. The Holman MINI AGA is larger than its PMA, covering almost all of southern Broward County. In 2007, there were 1,326 new BMW passenger cars registered in Holman BMW Fort Lauderdale's AGA, 507 of them sold at Holman BMW Fort Lauderdale, 255 of them sold at Vista BMW Coconut Creek, 181 of them sold at Holman BMW Pembroke Pines, and 141 of them sold at Vista BMW Pompano Beach. In 2007, there were 2,335 new BMW passenger cars registered in Holman BMW Pembroke Pines' AGA, 1,203 of them sold at Holman BMW Pembroke Pines, 312 of them sold at Vista BMW Coconut Creek, 219 of them sold at Holman BMW Fort Lauderdale, and 60 of them sold at Vista BMW Pompano Beach. In 2007, there were 2,297 new BMW passenger cars registered in Vista BMW Coconut Creek's AGA, 1,266 of them sold at Vista BMW Coconut Creek, 174 of them sold at Vista BMW Pompano Beach, 146 of them sold at Holman BMW Fort Lauderdale, and 122 of them sold at Holman BMW Pembroke Pines. In 2007, there were 996 new BMW new passenger cars registered in Vista BMW Pompano Beach's AGA, 399 of them sold at Vista BMW Coconut Creek, 222 of them sold at Vista BMW Pompano Beach, 101 of them sold at Holman BMW Fort Lauderdale, and 22 of them sold at Holman BMW Pembroke Pines. In 2007, there were a total of 1,431 new BMW passenger cars sold at Holman BMW Fort Lauderdale. Of this number, 35.43% were registered in its AGA; 15.30% were registered in Holman BMW Pembroke Pines' AGA; 10.20% were registered in Vista BMW Coconut Creek's AGA; and 7.06% were registered in Vista BMW Pompano Beach's AGA. In 2007, of the consumers in Holman BMW Fort Lauderdale's AGA purchasing new BMW passenger cars, 38.24% did so from Holman BMW Fort Lauderdale; 19.23% did so from Vista BMW Coconut Creek; 13.65% did so from Holman BMW Pembroke Pines; and 10.63% did so from Vista BMW Pompano Beach. In 2007, there were a total of 1,961 new BMW passenger cars sold at Holman BMW Pembroke Pines. Of this number, 61.35% were registered in its AGA; 9.23% were registered in Holman BMW Fort Lauderdale's AGA; 6.22% were registered in Vista BMW Coconut Creek's AGA; and 1.12% were registered in Vista BMW Pompano Beach's AGA. In 2007, of the consumers in Holman BMW Pembroke Pines' AGA purchasing new BMW passenger cars, 51.52% did so from Holman BMW Pembroke Pines; 13.36% did so from Vista BMW Coconut Creek; 9.38% did so from Holman BMW Fort Lauderdale; and 2.57% did so from Vista BMW Pompano Beach. In 2007, there were a total of 2,865 new BMW passenger cars sold at Vista BMW Coconut Creek. Of this number, 44.19% were registered in its AGA; 13.93% were registered in Vista BMW Pompano Beach's AGA; 10.89% were registered in Holman BMW Pembroke Pines' AGA; and 8.90% were registered in Holman BMW Fort Lauderdale's AGA. In 2007, of the consumers in Vista BMW Coconut Creek's AGA purchasing new BMW passenger cars, 55.12% did so from Vista BMW Coconut Creek; 7.58% did so from Vista BMW Pompano Beach; 6.36% did so from Holman BMW Fort Lauderdale; and 5.31% did so from Holman BMW Pembroke Pines. In 2007, there were a total of 861 new BMW passenger cars sold at Vista BMW Pompano Beach. Of this number, 25.78% were registered in its AGA; 20.21% were registered in Vista BMW Coconut Creek's AGA; 16.38% were registered in Holman BMW Fort Lauderdale's AGA; and 6.97% were registered in Holman BMW Pembroke Pines' AGA. In 2007, of the consumers in Vista BMW Pompano Beach's AGA purchasing new BMW passenger cars, 40.06% did so from Vista BMW Coconut Creek; 22.29% did so from Vista BMW Pompano Beach; 10.14% did so from Holman BMW Fort Lauderdale; and 2.21% did so from Holman BMW Pembroke Pines. In 2007, there were 291 new BMW light trucks registered in Holman BMW Fort Lauderdale's AGA, 106 of them sold at Holman BMW Fort Lauderdale, 62 of them sold at Vista BMW Coconut Creek, 42 of them sold at Holman BMW Pembroke Pines, and 25 of them sold at Vista BMW Pompano Beach. In 2007, there were 540 new BMW light trucks registered in Holman BMW Pembroke Pines' AGA, 288 of them sold at Holman BMW Pembroke Pines, 77 of them sold at Vista BMW Coconut Creek, 50 of them sold at Holman BMW Fort Lauderdale, and 15 of them sold at Vista BMW Pompano Beach. In 2007, there were 470 new BMW light trucks registered in Vista BMW Coconut Creek's AGA, 291 of them sold at Vista BMW Coconut Creek, 31 of them sold at Holman BMW Fort Lauderdale, 27 of them sold at Vista BMW Pompano Beach, and 19 of them sold at Holman BMW Pembroke Pines. In 2007, there were 185 new BMW light trucks registered in Vista BMW Pompano Beach's AGA, 80 of them sold at Vista BMW Coconut Creek, 29 of them sold at Vista BMW Pompano Beach, 26 of them sold at Holman BMW Fort Lauderdale, and 4 of them sold at Holman BMW Pembroke Pines. In 2007, there were a total of 317 new BMW light trucks sold at Holman BMW Fort Lauderdale. Of this number, 33.44% were registered in its AGA; 15.77% were registered in Holman BMW Pembroke Pines' AGA; 9.78% were registered in Vista BMW Coconut Creek's AGA; and 8.20% were registered in Vista BMW Pompano Beach's AGA. In 2007, of the consumers in Holman BMW Fort Lauderdale's AGA purchasing new BMW light trucks, 36.43% did so from Holman BMW Fort Lauderdale; 21.31% did so from Vista BMW Coconut Creek; 14.43% did so from Holman BMW Pembroke Pines; and 8.59% did so from Vista BMW Pompano Beach. In 2007, there were a total of 455 new BMW light trucks sold at Holman BMW Pembroke Pines. Of this number, 63.30% were registered in its AGA; 9.23% were registered in Holman BMW Fort Lauderdale's AGA; 4.18% were registered in Vista BMW Coconut Creek's AGA; and 0.88% were registered in Vista BMW Pompano Beach's AGA. In 2007, of the consumers in Holman BMW Pembroke Pines' AGA purchasing new BMW light trucks, 53.33% did so from Holman BMW Pembroke Pines; 14.26% did so from Vista BMW Coconut Creek; 9.26% did so from Holman BMW Fort Lauderdale; and 2.78% did so from Vista BMW Pompano Beach. In 2007, there were a total of 678 new BMW light trucks sold at Vista BMW Coconut Creek. Of this number, 42.92% were registered in its AGA; 11.80% were registered in Vista BMW Pompano Beach's AGA; 11.36% were registered in Holman BMW Pembroke Pines' AGA; and 9.14% were registered in Holman BMW Fort Lauderdale's AGA. In 2007, of the consumers in Vista BMW Coconut Creek's AGA purchasing new BMW light trucks, 61.91% did so from Vista BMW Coconut Creek; 6.60% did so from Holman BMW Fort Lauderdale; 5.74% did so from Vista BMW Pompano Beach; and 4.04% did so from Holman BMW Pembroke Pines. In 2007, there were a total of 146 new BMW light trucks sold at Vista BMW Pompano Beach. Of this number, 19.86% were registered in its AGA; 18.49% were registered in Vista BMW Coconut Creek's AGA; 17.12% were registered in Holman BMW Fort Lauderdale's AGA; and 10.27% were registered in Holman BMW Pembroke Pines' AGA. In 2007, of the consumers in Vista BMW Pompano Beach's AGA purchasing new BMW light trucks, 43.24% did so from Vista BMW Coconut Creek; 15.68% did so from Vista BMW Pompano Beach; 14.05% did so from Holman BMW Fort Lauderdale; and 2.16% did so from Holman BMW Pembroke Pines. Holman's and Vista's inability to obtain vehicles hampered their sales performances in 2007 (as well as in 2005 and 2006). They both could have sold more BMW Vehicles and MINIs during this period had BMW NA supplied them with more product. Subsequent to 2007, with deteriorating macro-economic conditions and slackening nationwide demand, supply constraints affecting Holman and Vista have dissipated, at least with respect to BMW Vehicles. The United States economy has "officially" been in recession since February 2008. There has been a "substantial contraction of economic activity since then," with the rate accelerating following the Lehman Brothers bankruptcy on September 15, 2008, which resulted in "great distress [to] the financial markets" and the "worst financial panic this country has seen since the Great Depression." Statewide, there has been the "sharpest fall in housing starts in our state's history," a record number of foreclosures, and "a very strong deceleration in population growth." Broward County has not been spared from the economic slowdown, as reflected by the fact that it has lost population and the growth in the number of those employed in the county has almost come to a halt after 16 years of impressive growth. These less than favorable market conditions resulted in fewer BMW Vehicles being sold in the United States (and by Holman and Vista) the first nine months of 2008 compared to the same period in 2007.7 In fact, in 2008, Holman even "gave cars back to BMW [NA]." Responding to these conditions, BMW NA, in or around August 2008, announced production cuts of BMW Vehicles for the United States market of approximately 12%. Production volume for 2009 is anticipated to be about the same as it was for 2008. There no doubt will be an economic recovery, but there is insufficient record evidence upon which to base a finding as to when this recovery will occur, how strong it will be, and whether it will result in the market demand for BMW Vehicles returning to pre-2008 levels. Nationally, MINI sales have bucked the industry trend and increased over the first nine months of 2008, compared to the same period the previous year, with "[v]irtually all dealers asking for more MINIs" and the "factory . . . operating very close to capacity" to keep up with demand in the United States. BMW NA is working with its existing MINI dealers in the United States to enable them "to continue to grow," and it is also "selectively adding new dealers in white [unrepresented] spots around the country where the drive to a MINI dealer would be far too far for someone to consider." Market penetration is a measure of the sales performance of a line-make in a particular geographic area relative to that of competing line-makes. To determine whether a line-make's market penetration in an area has met reasonable expectations, it is necessary to select a reasonable market penetration standard (adjusted using segmentation analysis) against which that performance can be gauged. Comparing the number of actual registrations in the area to the number of expected registrations based on the selected standard yields a registration effectiveness rating (RER), expressed as a percentage. An RER of 100% or above signifies that reasonable expectations in terms of market penetration have been met or exceeded. An RER of less than 100% means that market penetration has been below reasonable expectations. The parties differ as to the market penetration standards that should be used in the instant consolidated cases. With respect BMW passenger cars and light trucks, BMW NA and Holman advocate application of a standard consisting of the average market penetration (as adjusted) of these line-makes in the Braman Miami BMW and South Motors BMW AGAs combined (Miami BMW Standard), while Vista contends that the average market penetration (as adjusted) achieved in Florida as a whole (Florida BMW Standard) should be used. In 2007, only two of the BMW Vehicle PMAs in Florida (those of Sandy Sansing BMW in Pensacola8 and Braman Miami BMW), and less than ten percent of the BMW Vehicle PMAs in the United States, had an RER of 100% or above applying the Miami BMW Standard. The Florida BMW Standard is a lower standard than the Miami BMW Standard; however, the average market penetration of BMW Vehicles has historically been higher in Florida than it has been regionally or nationally. Applying the Florida BMW Standard, in 2005, 2006, and 2007, in the area covering Holman's BMW Vehicle PMA, Vista's BMW Vehicle PMA, and Braman Miami's BMW Vehicle PMA combined, the RERs for new BMW passenger cars were 108.73%, 106.44%, and 110.64%, respectively, and the RERs for new BMW light trucks were 120.55%, 120.08%, and 120.80%, respectively. Applying the Florida BMW Standard, in 2005, 2006, and 2007, in the area covering Holman's BMW Vehicle PMA and Vista's BMW Vehicle PMA combined, the RERs for new BMW passenger cars were 104.16%, 103.73%, and 105.58%, respectively, and the RERs for new BMW light trucks were 106.97%, 111.01%, and 111.61%, respectively. Applying the Miami BMW Standard, in 2005, 2006, 2007, and 2008 (through June), in the area covering Holman's BMW Vehicle PMA and Vista's BMW Vehicle PMA combined, the RERs for new BMW passenger cars were 88.9%, 93.9%, 90.4%, and 96.7%, respectively, and the RERs for new BMW light trucks were 77%, 89.5%, 90.4%, and 93.7%, respectively. Applying the Florida BMW Standard, in 2005, 2006, and 2007, in Holman's BMW Vehicle PMA, the RERs for new BMW passenger cars were 113.15%, 110.20%, and 111.26%, respectively, and the RERs for new BMW light trucks were 111.59%, 114.85%, and 117.15%, respectively. Applying the Miami BMW Standard, in 2005, 2006, 2007, and 2008 (through June), in Holman's BMW Vehicle PMA, the RERs for new BMW passenger cars were 96.7%, 99.7%, 95.3%, and 101.1%, respectively, and the RERs for new BMW light trucks were 80.4%, 92.6%, 95%, and 99.4%, respectively. Applying the Florida BMW Standard, in 2005, 2006, and 2007, in Vista's BMW Vehicle PMA, the RERs for new BMW passenger cars were 95.59%, 97.41%, and 100%, respectively, and the RERs for new BMW light trucks were 101.87%, 106.74%, and 105.33%, respectively. Applying the Miami BMW Standard, in 2005, 2006, 2007, and 2008 (through June), in Vista's BMW Vehicle PMA, the RERs for new BMW passenger cars were 81.5%, 88.3%, 85.5%, and 92.2%, respectively, and the RERs for new BMW light trucks were 73.4%, 86%, 85.3%, and 87%, respectively. Applying the Florida BMW Standard, in 2005, 2006, and 2007, in the Holman BMW Fort Lauderdale AGA, the RERs for new BMW passenger cars were 110.26%, 110.61%, and 112.65%, respectively, and the RERs for new BMW light trucks were 109.43%, 119.44%, and 115.08%, respectively. Applying the Miami BMW Standard, in 2005, 2006, 2007, and 2008 (through June), in the Holman BMW Fort Lauderdale AGA, the RERs for new BMW passenger cars were 94.7%, 74%, 96.7%, and 103.5%, respectively, and the RERs for new BMW light trucks were 78.8%, 96.2%, 93.2%, and 113.2%, respectively. Applying the Florida BMW Standard, in 2005, 2006, and 2007, in the Holman BMW Pembroke Pines AGA, the RERs for new BMW passenger cars were 118.19%, 112.48%, and 112.15%, respectively, and the RERs for new BMW light trucks were 112.67%, 115.26%, and 116.41%, respectively. Applying the Miami BMW Standard, in 2005, 2006, 2007, and 2008 (through June), in the Holman BMW Pembroke Pines AGA, the RERs for new BMW passenger cars were 100.8%, 101.7%, 95.9%, and 101.1%, respectively, and the RERs for new BMW light trucks were 81.1%, 93%, 94.4%, and 90.3%, respectively. Applying the Florida BMW Standard, in 2005, 2006, and 2007, in the Vista BMW Coconut Creek AGA, the RERs for new BMW passenger cars were 92.66%, 94.39%, and 95.95%, respectively, and the RERs for new BMW light trucks were 102.04%, 104.21%, and 105.62%, respectively. Applying the Miami BMW Standard, in 2005, 2006, 2007, and 2008 (through June), in the Vista BMW Coconut Creek AGA, the RERs for new BMW passenger cars were 79%, 85.4%, 81.9%, and 86.1%, respectively, and the RERs for new BMW light trucks were 73.5%, 84.2%, 85.6%, and 86.9%, respectively. Applying the Florida BMW Standard, in 2005, 2006, and 2007, in the Vista BMW Pompano Beach AGA, the RERs for new BMW passenger cars were 97.48%, 104.28%, and 107.56%, respectively, and the RERs for new BMW light trucks were 100%, 114.88%, and 105.11%, respectively. Applying the Miami BMW Standard, in 2005, 2006, 2007, and 2008 (through June), in the Vista BMW Pompano Beach AGA, the RERs for new BMW passenger cars were 83.2%, 94.6%, 92.3%, and 102.7%, respectively, and the RERs for new BMW light trucks were 72.1%, 92.8%, 85.3%, and 88%, respectively. The Florida BMW Standard is a reasonable market penetration standard, in contrast to the unreasonably high Miami BMW Standard; and therefore it, not the Miami BMW Standard, should be used to determine the pertinent "reasonably expected market penetration." With respect MINI, BMW NA and Holman urge use of a market penetration standard reflecting MINI's average market penetration (as adjusted) in the Braman Miami MINI and South Motors MINI AGAs combined (Miami MINI Standard). Vista, on the other hand, asserts that the average market penetration attained by MINI in those portions of Florida where there is MINI representation (as adjusted) should be the benchmark (Florida Represented MINI Standard). In 2007, only one MINI PMA in Florida (Braman Miami's MINI PMA) and 16 of the 83 MINI PMAs in the United States had an RER of 100% or above applying the Miami MINI Standard. The Florida Represented MINI Standard is a lower standard than the Miami BMW Standard; however, the average market penetration of MINI has historically been higher in represented areas of Florida than it has been regionally or nationally. Applying the Florida Represented MINI Standard, in 2005, 2006, and 2007, in the area covering Holman's MINI PMA, Vista's MINI PMA, Braman Miami's MINI PMA, and the unrepresented portion of southwestern Broward County combined, the RERs for new MINIs were 111.83%, 111.76%, and 107.22%, respectively. Applying the Florida Represented MINI Standard, in 2005, 2006, and 2007, in the area covering Holman's MINI PMA and Vista's MINI PMA combined, the RERs for new MINIs were 97.12%, 91.67%, and 85.96%, respectively. Applying the Miami MINI Standard, in 2005, 2006, 2007, and 2008 (through June), in the area covering Holman's MINI PMA and Vista's MINI PMA combined, the RERs for new MINIs were 76.8%, 68.1%, 65.4%, and 71.2%, respectively. Applying the Florida Represented MINI Standard, in 2005, 2006, and 2007, in the area covering the Holman MINI AGA and Vista MINI AGA combined, the RERs for new MINIs were 96.01%, 88.79%, and 82.34%, respectively. Applying the Miami MINI Standard, in 2005, 2006, 2007, and 2008 (through June), in the area covering the Holman MINI AGA and Vista MINI AGA combined, the RERs for new MINIs were 75.9%, 66.1%, 62.9%, and 70.9%, respectively. Applying the Florida Represented MINI Standard, in 2005, 2006, and 2007, in the Holman MINI PMA, the RERs for new MINIs were 104.89%, 97.69%, and 100.87%, respectively. Applying the Miami MINI Standard, in 2005, 2006, 2007, and 2008 (through June), in the Holman MINI PMA, the RERs for new MINIs were 83.9%, 73%, 77.4%, and 79.9%, respectively. Applying the Florida Represented MINI Standard, in 2005, 2006, and 2007, in the Holman MINI AGA, the RERs for new MINIs were 102.19%, 93.50%, and 92.21%, respectively. Applying the Miami MINI Standard, in 2005, 2006, 2007, and 2008 (through June), in the Holman MINI AGA, the RERs for new MINIs were 81%, 69.9%, 71%, and 77.8%, respectively. Applying the Florida Represented MINI Standard, in 2005, 2006, and 2007, in the Vista MINI PMA, the RERs for new MINIs were 91.47%, 87.36%, and 73.40%, respectively. Applying the Miami MINI Standard, in 2005, 2006, 2007, and 2008 (through June), in the Vista MINI PMA, the RERs for new MINIs were 71.7%, 64.6%, 55.9%, and 63.9%, respectively. Applying the Florida Represented MINI Standard, in 2005, 2006, and 2007, in the Vista MINI AGA, the RERs for new MINIs were 90.39%, 84.78%, and 72.24%, respectively. Applying the Miami MINI Standard, in 2005, 2006, 2007, and 2008 (through June), in the Vista MINI AGA, the RERs for new MINIs were 70.9%, 62.7%, 55%, and 63.6%, respectively. The Florida Represented MINI Standard is a reasonable market penetration standard, in contrast to the unreasonably high Miami MINI Standard; and therefore it, not the Miami MINI Standard, should be used to determine pertinent "reasonably expected market penetration." BMW NA believes that the market penetration of new BMW Vehicles and new MINIs in the areas that it has identified as the relevant "communit[ies] or territor[ies]" in these cases can be improved if Holman BMW Fort Lauderdale and Holman MINI are relocated to the Proposed Location. Vista (whose Vista BMW Coconut Creek, Vista BMW Pompano Beach, and Vista MINI dealership locations are within a 12.5 mile radius of the Proposed Location) has protested these proposed relocations, and these protests are the subject of the instant cases. BMW NA and Holman are dissatisfied with the sales and service facilities at Holman BMW Fort Lauderdale's and Holman MINI's present locations. For each of these dealerships, they would like to have facilities that are larger, and sales and service operations that are adjacent to, not distant from, each other. They also want to avoid having to make MINI customers (who often stay at the dealership and watch their vehicles being serviced) share service facilities (as they do now) with BMW Vehicle customers (with whom they generally do not share similar interests). BMW NA has established minimum standards that the facilities of its BMW Vehicle and MINI dealers must meet. These standards deal with such things as the "size of [the] showroom," the "size of the new car display area," and the "number of service stalls in the service department," and they are "based on factors such as market potential, units in operation, and potential growth." In PMAs with two dealership locations, in determining whether the dealer has facilities that are in compliance with minimum standards, the facilities at both locations are "combined" and looked at together. Notwithstanding BMW NA's and Holman's dissatisfaction with the existing facilities at the Holman BMW Fort Lauderdale and Holman MINI dealership locations, Holman's BMW Vehicle and MINI facilities in Broward County meet the minimum standards required by BMW NA. Despite the facility-related operational challenges it faces, Holman's CSIs for its BMW Vehicle and MINI franchises are at or slightly above average, with the CSI for Holman BMW Fort Lauderdale being comparable to that for Holman BMW Pembroke Pines. Moreover, Holman is one of the highest volume BMW Vehicle dealers in the United States, and with respect to its new MINI sales, in 2007, these sales exceeded Holman's 400 unit SPG and were greater, by 38, than the new MINI sales of Holman's Broward County intrabrand competitor, Vista, which operated out of newer and more spacious facilities. According to Daniel Villani, the general manager of Holman BMW Fort Lauderdale, selling 175 new BMW Vehicles per month (2,100 per year) "pushes right up against" the limit of "what th[at] facility can handle" to "maintain an appropriate sales experience for the customers." In 2007, Holman BMW Fort Lauderdale sold a total of "a little less" than 1,800 new BMW Vehicles (1,748 of which were registered in Florida). Its sales declined in 2008. Holman made an extensive, good faith, but unsuccessful, effort over several years to find a reasonable and feasible way to have the sales and service facilities it wants for Holman BMW Fort Lauderdale and Holman MINI without having to relocate these dealerships outside a two-mile radius of their present locations. Holman purchased the Proposed Location (for $27 million) only after having engaged in this exhaustive search. The Proposed Location is a 10-acre site that is large enough to accommodate the facilities that Holman wants to construct for Holman BMW Fort Lauderdale and Holman MINI. These facilities would be considerably larger and more modern than those that these dealerships now have, potentially making consumers' shopping and service experiences at the dealerships more pleasant and enjoyable and improving the working conditions of the dealerships' employees. Construction of these new facilities would cost, according to Holman's current plans, between $20 and $25 million. There is no reason to believe that, if the Department approved the proposed relocations of Holman BMW Fort Lauderdale and Holman MINI to the Proposed Location (which is already zoned appropriately "for a car dealership"), Holman would not carry through with its construction plans. No evidence was presented of any obstacles, financial or otherwise, that would prevent or deter it from doing so. Accordingly, in assessing the potential impact of these proposed relocations, it is reasonable to assume that, if the proposed relocations are approved by the Department, the planned facilities will be built at the Proposed Location. Holman will be allocated more BMW Vehicles and MINIs to sell at these larger, new facilities inasmuch as BMW NA has agreed of increase Holman's SPGs if Holman BMW Fort Lauderdale and Holman MINI are relocated, as proposed. The Proposed Location is situated at the intersection of U.S. Route 1/Federal Highway and East Sunrise Boulevard in Fort Lauderdale, which, in 2007, had an average daily traffic count of 63,500 vehicles, 15,500 more vehicles than passed by the existing sales facilities of Holman BMW Fort Lauderdale and Holman MINI (Existing Sales Facilities). More vehicles going to and coming from downtown Fort Lauderdale, however, travel past the Existing Sales Facilities than the Proposed Location. To state the obvious, for these motorists, the Existing Sales Facilities would be more convenient, whereas the Proposed Location would be more convenient for those who drive by it every day. The Proposed Location is in an area that the Holman organization knows well as a result of its years of experience operating Honda, Rolls-Royce, and Bentley dealerships a short distance away. There has been new development in the immediate vicinity of the Proposed Location. A new Home Depot was recently constructed and condominium apartment buildings are under construction. To the south and west is Holiday Park, next to which is an established residential neighborhood. The Proposed Location is 2.23 miles (by air) north of the Existing Sales Facilities (2.5 miles, if driving). Moving Holman BMW Fort Lauderdale and Holman MINI to this location would situate them closer to their Vista intrabrand competitors to the north and further away from their Braman Miami intrabrand competitors to the south. The relocated dealerships would be 7.3 miles (by air) from Vista BMW Pompano Beach (8.2 miles, if driving); 10 miles (by air) from Vista BMW Coconut Creek and Vista MINI (12.4 miles, if driving); and 23.8 miles from Braman Miami BMW and Braman Miami MINI (24.8 miles, if driving), leaving consumers in northeastern Miami-Dade County and southeastern Broward County with slightly farther to travel to comparison shop for BMW and MINI products. The proposed relocations would also result in slight increases in the average distances BMW Vehicle and MINI customers in Holman's BMW Vehicle and MINI PMAs would have to travel to reach the nearest BMW or MINI dealership location. In short, the Proposed Location "is not optimal" and is less convenient "from a distance perspective" than the Existing Sales Facilities. The proposed relocation of Holman BMW Fort Lauderdale would result in Vista's BMW Vehicle dealerships losing "geographic advantage" to Holman BMW Fort Lauderdale in three zip codes (one zip code in which Vista BMW Coconut Creek currently has geographic advantage and, in 2007, 18 new BMW passenger vehicles and four new BMW light trucks sold by Vista BMW Coconut Creek were registered; and two zip codes in which Vista BMW Pompano Beach currently has geographic advantage and, in 2007, a total of 23 new BMW passenger vehicles and three new BMW light trucks sold by Vista BMW Pompano Beach were registered). The proposed relocation of Holman MINI would result in Vista MINI losing "geographic advantage" to Holman MINI in one zip code. In 2007, Vista MINI did not sell any MINIs that were registered in this zip code in which it would losing "geographic advantage." Any loss of "geographic advantage" to Holman would make it more difficult, but not impossible, for Vista to compete effectively against Holman. Vista is certainly capable of capturing sales in zip codes in which another dealer has "geographic advantage." Vista would be further disadvantaged as a result of the proposed relocations by having to compete (with respect to both BMW Vehicle and MINI sales and service) against Holman dealerships (Holman BMW Fort Lauderdale and Holman MINI) which would have improved facilities with greater capacity, making these dealerships more formidable competitors than they would be if the status quo were maintained. The impact of the proposed relocations on Vista, if Vista were to make no changes in its operations or facilities, would likely be negative (in terms of lost sales and service business), but the evidentiary record is insufficient for the undersigned, with any degree of confidence, to quantify, in dollars, what that negative impact would be. Vista dealership operations are "extremely profitable," and the company has a "strong" balance sheet, enabling it to withstand the changes in its competitive position of the type that the proposed relocations might bring about. It is possible that Vista could make changes in its operations (such as lowering prices) or to its facilities (such as following through with its "additional plans for expansion and renovation" of Vista BMW Pompano Beach) that would overcome the disadvantages resulting from the proposed relocations and help it to maintain its competitive position. Making these changes, however, could adversely effect Vista's bottom line. Because of the increase in SPGs Holman has been promised if it relocates its Holman BMW Fort Lauderdale and Holman MINI dealerships, Holman would gain allocation and have more BMW Vehicles and MINIs to sell if these proposed relocations were approved. This would result, were market demand to return to pre-2008 levels, in more BMW Vehicles and MINIs being sold in areas served by these Holman dealerships than would otherwise be the case, thereby benefiting BMW NA (a goal BMW NA would also be able to accomplish by simply increasing allocations to its dealers serving these areas to meet demand, without requiring any of them to relocate and build new facilities to receive these increased allocations). The evidentiary record is devoid of any evidence that BMW NA attempted to coerce Vista or any other existing dealer into consenting to the proposed relocations. Neither does the evidentiary record contain evidence that Vista is not in substantial compliance with its franchise agreements with BMW NA.9
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Highway Safety and Motor Vehicles issue a final order denying approval of the proposed relocations of Holman BMW Fort Lauderdale and Holman MINI to the Proposed Location inasmuch as BMW NA has failed to meet its burden of proving a lack of "adequate representation" of the BMW passenger car, BMW light truck, and MINI line-makes in the Relevant Com/Ters. DONE AND ENTERED this 27th day of April, 2009, in Tallahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of April, 2009.
Findings Of Fact By an application dated October 19, 1982 Petitioner Losada applied for a license to engage in the business of buying, selling, or dealing in motor vehicles bearing the name plates of Volvo, White, Autocar and Western Star in the State of Florida with an area of responsibility (AOR) of Dade County. The address of the dealership to be franchised by Petitioner Volvo White is 6000 Northwest 77 Court, Miami, Florida 33166. Volvo White came into existence as a corporate entity in the United States in June of 1981. It began business operations in September of the same year. Volvo White distributes trucks under the name plates of Volvo, White and Autocar throughout the Continental United States. The company previously distributed Western Star trucks until March 1983, at which time its agreement with the manufacturer terminated. Prior to September 1981 Volvo trucks were distributed in the United States by the Freightliner Corporation. White, Autocar and Western Star trucks were distributed by the White Motor Corporation which Subsequently went into Chapter 11 bankruptcy proceedings. McCasland and Volvo White entered into a Dealer Sales and Service Agreement on September 1, 1981. According to that Agreement Volvo White granted to McCasland the non-exclusive right to purchase White, Western Star and Autocar trucks and parts. In a subsequent Dealer Sales and Service Agreement dated January 1, 1982 Volvo White granted to McCasland a franchise right to purchase Volvo trucks and parts. Both agreements specify that the geographical area of responsibility in which McCasland is required to fulfill its dealer's obligation are the counties of Broward, Collier, Glades, Monroe and Palm Beach in Florida. Prior to entering into an agreement with Volvo White, McCasland had been selling the same products as a dealer for both the now defunct White Motor Corporation and the Freightliner Corporation. McCasland has two facilities. One is in Broward County and the other is in Dade County. The Broward County facility located at 2431 State Road 7 in Fort Lauderdale is its headquarters from which it sells and services the vehicles listed above. In Dade County it operates a parts sales facility at 7388 Northwest 72nd Avenue, Miami, Florida. In the summer of 1982 Volvo White and McCasland discussed an application by McCasland to increase its area of responsibility to include Dade County. In July of 1982 McCasland submitted a Marketing and Sales Action Plan for Dade County which included proposals to hire additional truck salesmen, parts counter people and mechanics. The plan did not include financial information acceptable to Volvo White however. As indicated by the subsequent application of Losada for a dealership license, Volvo White later determined that Losada was better able to serve the Dade County AOR. This decision was based on Losada's existing facilities on a one and one-half acre site, shop facilities of approximately 15,000 square feet, and personnel including five new truck salesmen, nine mechanics, and seven parts men. Another consideration was the capitalization of Losada which was very sound as compared to McCasland's. McCasland had fallen so far behind on payments for his parts ordered from Volvo White that the dealership had to be placed on a C.O.D. status for parts. That status remained in effect as of the date of the final hearing. Both the area of responsibility already assigned to McCasland and the Dade County territory are each larger than the average area of responsibility usually franchised by Volvo White. If the two were combined under a single dealer, the resulting AOR would be the second largest in the southeast region, and would be the largest area of responsibility served by a franchise dealer rather than by a factory branch. It would be extremely difficult for an independent dealer to obtain the necessary capital to adequately serve a market as large as Dade County and McCasland's AOR combined. Due to the size of the Dade County area in terms of population and potential truck sales Volvo White's determination that it should be a separate area of responsibility is not an unreasonable one. The company's primary competitors, International Harvester, General Motors Corporation, Ford Motor Company and Mack Trucks have dealerships both in Broward County and Dade County. McCasland's Fort Lauderdale AOR and an AOR composed of Dade County would each constitute reasonably separate and independent markets capable of supporting independent Volvo White dealerships. The potential growth in both markets, while higher in the existing Fort Lauderdale AOR, is more than adequate for two dealerships. Since truck manufacturers are in the business of selling trucks and truck parts, the primary method of evaluating the adequacy of a dealer's representation in a particular community or territory is to examine the sales made by that dealer. These evaluations are usually competitive. That is, a dealer's sales are compared with the sales of all other competing dealers who sell competing truck lines. Such an evaluation is usually based on a percent of market share. 2/ The following table illustrates Volvo White's percentage of market share for the year of 1982 in the areas indicated: VOLVO WHITE 1982 PERCENT OF MARKET SHARE Ft. Laud National S.E. Region AOR Class 3/ 8 5.77 8.67 1.53 Class 7 1.69 2.42 0.00 Orlando Ft. Pierce AOR Dade AOR Class 8 8.45 20-25 13.64 0.67 /4 0.00 Tampa AOR Class 8 6.53 Class 7 0.00 As can be seen on the above table the percentage of market share for Dade County is from 20 to 25 percent. This high figure is the result of a large sale by McCasland to Metro-Dade County of 56 units. This sale, because of its magnitude, was certainly an unusual event. Because of its size Volvo White was willing to accommodate the county's specifications and to make unusually large concessions on the purchase price. The probability that such a large sale will be made by McCasland in the Dade County area in the future is not high. Nevertheless the sale was most definitely in the interest of Volvo White as the franchising manufacturer. During the 1982 sales year McCasland sold seven Volvo White trucks in the Fort Lauderdale AOR to a total of five customers. Only two of these were new customers. Of the sales made in Dade County only six customers were involved and of these only two were new customers. This is an inadequate development of what is known in the industry as a customer base for Volvo White products. When compared with dealers in Florida having comparable areas of responsibility, the Volvo White sales of truck parts in the Fort Lauderdale AOR is below standard. The sale of truck parts is a significant portion of Volvo White's overall income and is important to the company's interests. The poor sales performance of McCasland in both the Fort Lauderdale area of responsibility for trucks and truck parts and for truck parts in the Dade County area can be explained in a large part by McCasland's not employing sufficient truck salesmen and parts sales personnel. Additionally McCasland's efforts at advertising have been less than minimal in spite of joint participation plans sponsored by Volvo White. At the final hearing Mr. Merritt McCasland explained that if prospective truck customers sincerely wanted to purchase a truck they would discover his facility on their own. For instance, McCasland's salesmen do not contact potential customers in any of the counties within his assigned area of responsibility other than Broward County and to a lesser extent in Palm Beach County. His only advertising is one obsolete mailer. While McCasland does have a yellow page listing for the Broward County telephone directory, Mr. McCasland wasn't sure if he had one for Dade County and remembered that he does not have one for Palm Beach, Glades, Collier and Monroe counties. Mr. McCasland was particularly apathetic about developing customers among the Hispanic community. He saw no need to have salesmen of a Hispanic background able to speak Spanish. In his opinion if someone of a Hispanic background wants to buy a truck, they are only interested in the truck and don't care what language the salespeople speak. This attitude is extremely detrimental to properly representing the interest of Volvo White in Dade County which is the fifth largest Hispanic market in the United States. Volvo White offers training programs for both dealer sales personnel and maintenance people, yet during the period of its franchise, McCasland has not sent any of its staff to any Volvo White sponsored training school. Mr. McCasland believes that they are a waste of time. The agreements between Volvo White and McCasland require McCasland: to diligently and aggressively promote the sale of covered products within the AOR; to advertise and promote the sale of covered products throughout the AOR, making maximum use of advertising, sales promotion, and merchandising materials and programs provided by the company; to provide a full range of service for covered products and maintain equipment and tolls which are required or desirable to provide economical and efficient service to users; to handle customer complaints in a manner which will secure the goodwill of customers and the public toward the dealer, the company, and its products; to maintain its premises in good repair and appearance; to maintain adequate working capital; to employ and compensate trained and competent employees, trained sales and service personnel, and send reasonable numbers of employees to company-sponsored training schools or programs; and to maintain and timely furnish to the company the records and reports specified in the agreements. The terms of paragraphs (1), (2) and (7) of the agreements have been breached by McCasland by its failure to aggressively promote the sale of Volvo White products throughout the entire Fort Lauderdale area of responsibility; by McCasland's failure to advertise Volvo White products and to participate in the company-sponsored cooperative programs for advertising; and by McCasland's failure to send a reasonable number of employees to company-sponsored training schools or programs.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Director of the Division of Motor Vehicles enter a Final Order approving the application of Losada Truck and Equipment, Inc. to become a motor vehicle dealer in Dade County, Florida, under a dealer sales agreement with Volvo White Truck Corporation. DONE and RECOMMENDED this 2nd day of November, 1983, in Tallahassee, Florida. MICHAEL P. DODSON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of November, 1983.
