FORT LAUDERDALE, Fla. - Responding to a growing host of critics, top officers of Republic Industries Inc. outlined a five-part strategy to overcome slumps in the auto industry.
Republic Chairman H. Wayne Huizenga and his partner Steve Berrard, the main architect of Republic's automotive strategy, told shareholders at the annual meeting here that the auto industry is a '$1.3 trillion opportunity.' Republic, Huizenga predicted, would change the way cars are sold in the same way McDonald's revolutionized the fast-food industry.
Huizenga and Berrard put on the show-biz-style production to demonstrate, for shareholders who might still have doubts, that the auto business will bring them long-term profits, even though Republic's stock price is lower than Republic executives and the shareholders believe it should be.
Speaking to a packed house of about 3,000 shareholders and employees at the Broward Center for the Performing Arts, Berrard, Republic president and co-CEO, told the gathering Republic's AutoNation USA automotive strategy hinges on the synergies between the automotive building blocks: new-car, used-car, rental, finance and service businesses.
If new-car sales slump in a recession, for example, Republic will also be selling used cars. Republic will also be in the parts and service business to help customers fix their older cars.
The businesses will permit Republic to achieve economies of scale that will make it difficult for others to compete with, he said.
Huizenga vowed to take the high road in legal battles with Toyota and Honda over the sale of dealerships.
'We don't want to start fighting with our partners before they're even our partners,' he said. If the two Japanese makers manage to impose limits, Republic will find a way to get used cars into its pipeline, he said.
If Honda and Toyota limit Republic to owning 10 stores or so, the company might form joint ventures with 20 or 30 other dealerships to secure a pipeline of used cars, he said.
'We view this (the Honda and Toyota actions) as somewhat of an annoyance, an irritant, but we don't view it as a setback,' he said.
Answering critics who called Republic a newcomer lacking automotive know-how, Berrard said Republic has hired - through dealership acquisition - some of the best and most experienced auto dealers in the country.
He said he started adding up the figures at a Republic dealer meeting a few weeks ago and determined Republic now has about 1,200 years of dealership management experience.
'I want to know who has more automotive experience,' he said.
Berrard and Huizenga announced two Republic automotive initiatives.
1. The company plans to build 11 regional auto reconditioning centers by 2000. These centers will serve as the heart of the AutoNation USA 'clustering' strategy. Each of the $7 million, 100,000-square-foot centers will serve five or six AutoNation USA used-car superstores. Each also will serve the new-car dealerships and the Republic rental car operations in its region.
2. Republic also plans stand-alone parts and service operations in some cities.
In addition, Republic is making a bid to join the elite of American corporations. Huizenga said the company's stock will be traded on the New York Stock Exchange rather than the NASDAQ National Market as in the past.
Republic, which now has 34,000 employees worldwide, reported $2.4 billion in revenues in 1996. Huizenga said that will grow to $10 billion this year and to $15 billion in 1998, which he said would put the company on equal footing with companies such as Federal Express and Marriott.
Said Huizenga: 'It's time for our company to take a position as one of the world's leading companies.'