Chrysler Corp. has asked Republic Industries Inc. to slow its acquisition spurt while Chrysler assesses how Republic is performing with the dealerships it already owns.
The two companies met in mid-May at Chrysler headquarters in Auburn Hills, Mich., to discuss their relationship, one of a series of meetings they have held.
So far, Chrysler has approved the acquisition of nine of its dealerships to Republic, one shy of its national limit that can be owned by a single party, said Mike McKesson, Chrysler spokesman. Republic has announced agreements to acquire five others, which Chrysler has yet to approve. McKesson said any new acquisitions will be evaluated individually.
'As they approach our limit, we would appreciate if the pace could slow somewhat to give us an opportunity to better assess Republic's performance with the Chrysler Corp. dealerships it has already acquired,' he said. 'There was no formal agreement. We left the meeting with the feeling they understood our concerns.'
REVIEWING THE TIES
Mike Maroone, president of Republic's AutoNation USA new-vehicle division, said: 'There was nobody saying you can't buy any more deals here. I think it was a review of where we were in the relationship. I think they were looking at how our processes are and how we're working with them.
'We don't have a national framework agreement,' said Maroone, who did not attend the meeting. Among those present were Steve Berrard, president and co-CEO of Republic; Jim Heckert, Republic's senior vice president of operations; and Mark Thimmig, AutoNation USA vice president of new-vehicle network planning and acquisition. McKesson declined to say which Chrysler executives attended.
The Chrysler policy limits a single entity to no more than two stores in a single market and six in a sales zone. The policy was devised before Republic began its acquisition spree late last year. The two companies have met regularly to work out terms of their future relationship. The May meeting was one in a series of those meetings.
'The limits are designed to insure that the competitive marketplace is maintained, and designed to insure customers are served adequately,' said McKesson.
When someone wishes to exceed the limit, Chrysler would have to evaluate on an individual basis, McKesson said.
'We look at their proposed acquisitions one at a time as we do anybody's proposed acquisitions,' he said.
Republic's swift acquisitions have alarmed some manufacturers. Toyota and Honda have taken legal steps to get Republic to slow down. Saturn Corp. also has expressed reservations. The Big 3, including Chrysler, have adopted a less confrontational approach and have for the most part embraced Republic.
GM spokeswoman Anne Marie Sylvester said: 'So far they've been able to accomplish everything they've said they would do. There is no reason why we should not continue to have a good relationship with them.'