PRESS RELEASE
Toyota Claims Republic Industries Proposal to Buy Texas Dealership Harms Public Interest
3 April 1997
Toyota Claims Republic Industries Proposal to Buy Texas Dealership Harms Public Interest
AUSTIN, Texas, April 2 -- Citing harm to the public interest
and a threat to Toyota's representation in the marketplace, Toyota Motor
Sales, U.S.A., Inc. (TMS), and its independent Distributor, Gulf States Toyota
(GST), jointly filed a petition here today with the Texas Motor Vehicle Board
to block the sale of a Houston Toyota dealership to Republic Industries.
The purchase by Republic, which acquired a Florida Toyota dealership in
February, 1997, would violate Toyota's required nine-month waiting period
between acquisitions of Toyota dealerships. In addition, Republic has refused
to sign Toyota's standard Public Entity Agreement in conjunction with its
proposed purchase of Joe Myers Toyota. The Agreement, among other provisions,
limits the number of Toyota and Lexus franchises any dealer group may own, as
well as imposes the nine-month waiting period between the acquisition of
dealerships.
Toyota limits the number of dealerships a single individual or entity may
own primarily to preserve intrabrand competition among its dealers and to
ensure that public interests aren't threatened by the actions, performance and
financial stability of a single entity.
Republic, a waste management and home-security company, entered the new-
car retailing market late last year and has gone on an acquisition binge to
become the largest new-car retailing chain in the country. Despite its lack
of experience in managing automobile dealership chains, it has informed Toyota
of its intent to acquire 59 Toyota dealerships within the next 18 months,
which could represent up to 20 percent of the annual sales of Toyota brand
vehicles in the U.S. Under its proposed plan, Republic could request to
acquire even more Toyota dealerships in the future.
"By seeking to purchase Joe Myers Toyota within three months of acquiring
its first Toyota franchise and refusing to sign our Public Entity Agreement,
Republic is making a clear statement that it intends to acquire Toyota
dealerships in disregard of Toyota's policies," said Yale Gieszl, TMS
executive vice president.
Gieszl explained that Republic's actions and stated strategy would prevent
Toyota from evaluating whether Republic's sales, customer service and
financial performance at its existing Toyota dealership are satisfactory. In
addition, Toyota would be unable to determine whether Republic can properly
integrate and manage a large number of different auto retailing operations as
well as its other diverse business interests, and whether Republic's
operations are compatible with Toyota's overall marketing plans.
He also expressed concern that Republic's desire to gain control of 50 top
local markets over the next 18 months could cause problems for customers,
dealers and manufacturers.
"If Republic's rapid expansion should fail, it would leave Toyota and its
customers without adequate sales and service representation in a significant
number of markets, including Houston. This is precisely the sort of danger to
the consumer and the marketplace that Toyota's multiple dealership policies
are designed to avoid," he said.
In the petition, TMS and GST are asking the Board to:
* Stop the proposed sale of Joe Myers Toyota to Republic Industries and
preserve the status quo, until a full and final hearing on the matter is
completed;
* Find that the proposed sale is detrimental to the public and to the
respective representation of GST and/or Toyota; and
* Find that the provisions of Toyota's Public Entity Agreement are
reasonable.
Toyota made it clear it will continue to object to any proposed dealership
sale that does not honor its policies.
"For nearly 40 years, Toyota and its dealers have worked hard to build a
successful business based on quality products and customer satisfaction," said
Gieszl. "Our concern is that a rapid, uncontrolled aggregation of large
numbers of our dealerships by a single owner could be harmful not only to us
and our dealers, but to the public as well."
SOURCE Toyota Motor Sales
CONTACT: Bob Wade or Nancy Hubbell, both of Toyota Media
Relations, 310-618-5260 or 310-618-5297