Republic Goes Public in Feud With Toyota, Honda
Billionaire H. Wayne Huizenga’s Republic Industries, whose ambitious campaign to acquire auto dealerships has been clouded by the legal maneuvers of Toyota and Honda, took its battle with the Japanese auto makers to the court of public opinion Thursday.
Republic paraded 23 former state attorneys general before a news conference in New York. They endorsed the company’s right to buy multiple dealerships of the two Japanese manufacturers and said the acquisitions would benefit consumers.
“We see this as very pro-consumer,” said Neil Hartigan, former Illinois attorney general.
Toyota and Honda dismissed the findings as a Republic-financed publicity stunt aimed at a skeptical Wall Street audience wary about the outcome of the complex dispute.
Republic’s efforts to build a new-car retailing empire have been challenged in court by Toyota and Honda through lawsuits in several states accusing Republic of violating rules limiting the number of dealerships one entity can own.
The litigation already has made Republic’s nationwide expansion more difficult and depressed its stock price. The company’s stock peaked at $42.75 in January, but has tumbled by nearly half, closing down 38 cents Thursday at $22.75 on the New York Stock Exchange. Republic thus far has used stock for the acquisitions, so a lower price makes future dealer buyouts more expensive.
Republic would prefer to settle the disputes out of court because the litigation is costly and could drag on for years, giving competitors in the fast-changing world of auto retailing a chance to acquire some of the best dealerships. Late Thursday, a top Toyota official agreed to meet with Huizenga on Monday in Dallas.
Despite the legal dispute being waged in state and federal courts and before numerous state regulatory agencies, Republic has become the nation’s leading new-car dealer in less than a year. Since December, it has acquired 108 new-car franchises with annual revenue of more than $5 billion. It has agreements pending to acquire about 50 more dealerships.
The new-car operations are just one piece of Huizenga’s vision to create a cradle-to-grave transportation-services Goliath. He is also building a chain of used-car superstores, owns several auto rental companies and provides repair and financing services.
Huizenga, who made a fortune in video rental and waste disposal, is the most visible symbol of the changes roiling auto retailing. Dealerships are being consolidated and modernized as consumers demand better service, greater selection and standardized prices.
While the major auto makers are embracing many of the changes, they also fear it could shift more power to dealers. General Motors and Ford, which need to trim their dealer ranks, have signed agreements with Republic. But Toyota and Honda have balked, saying Republic’s growth could limit competition and hurt their images with consumers.
The dispute is becoming increasingly nasty as the litigation has mounted. Toyota refers to Republic’s acquisitions as a “hostile takeover” of its retail network and equated Thursday’s findings by the ex-state prosecutors to a “kangaroo court” reached with information from only one side.
‘This is a PR stunt with their paid consultants giving a one-way interpretation,” said Jim Press, senior vice president of Toyota Motor Sales.
Noted Los Angeles attorney Daniel Petrocelli, representing Honda, said the company would argue its case in the courtroom, not the newsroom. He said Republic’s news conference indicated that it doubts the strength of its case in federal court.
But Republic officials said their legal position is bolstered by franchise laws that in most states offer protection to dealers against unfair manufacturer restrictions, including limitations on dealership sales.
In a 14-page report, the former attorneys general retained by Republic said most states protect a dealer’s right to sell a business to a qualified buyer. Republic clearly is qualified because of its substantial capital and management experience, they said. Finally, they said Republic had a pro-consumer operating philosophy, including an emphasis on one-price, no-haggle sales, extensive warranties and money-back guarantees.
Republic suggested Honda and Toyota’s position amounts to foreign companies limiting free trade. “As an American, I find it outrageous,” said Steven Berrard, co-chairman and president of Republic.
Some dealers are angry as well. Bob Navarre, owner of a Toyota dealership in Libertyville, Ill., said the sale of his outlet is being blocked by Toyota’s “unilateral” and “arbitrary” restrictions.
Toyota, which has 1,100 dealerships nationwide, last year adopted rules that limit to seven the number of stores any one entity can own. It also requires a nine-month wait between purchases and prevents an owner from controlling more than 20% of sales in one metro region.
