LOS ANGELES - While Honda and Toyota fight to prevent Republic Industries from gaining any sizable number of their dealers, rival Nissan has allowed publicly owned companies to gain footholds in two of its major markets.
In March, Republic purchased W.O. Bankston Enterprises in Dallas, whose three Nissan stores account for about 30 percent of Nissan's Dallas sales. And in April, United Auto Group acquired two Nissan stores in Long Island, N.Y., which generate about 16 percent of Nissan's volume in that market, when it bought Staluppi Auto Group.
Long Island and Dallas are Nissan's sixth- and eighth-largest metro markets in the United States, based on sales volume.
In 1996, Staluppi was the 23rd-largest dealer group in the United States with 13 dealerships, $496 million in revenue and 22,016 new- and used-vehicle sales. Bankston was 92nd with four dealerships, $262 million in revenue and 12,003 total sales.
NEW MARKET CONCEPT
The Nissan stores purchased by the two dealer groups are elements of Nissan's Contiguous Market Organization concept, in which one dealer controls a large portion of a certain market area - similar to Saturn's regional dealer approach.
Satellite sales and service operations, or sometimes separate stores, are involved in such a plan. That cuts overhead, inventory and marketing costs, since there is just one management structure.
Nissan did not oppose the purchases of the two groups, nor the continuation of the contiguous market plan under the new public ownership. Nissan also is testing contiguous markets with privately held dealer groups in Columbia, S.C.; Jacksonville, Fla.; and San Diego.
Robert Thomas, president of Nissan Motor Corp. U.S.A., said Republic's acquisition of Bankston fits in well with Nissan's desire to have fewer dealers control more turf. But he added that Nissan will hold Republic to the same standards as any other franchisee.
'We are pleased that we have no legal differences with Republic at this time, and we'll watch how things go,' Thomas said.'We're watching multiple things, as we would with any dealer group or dealer principal. You want to watch their performance in your franchise and other franchises.'
Will Nissan allow more Contiguous Market Organizations to be held by public companies?
'We will look at each situation, look at the market, the dealer and all the conditions,' Thomas said. 'More than likely, it wouldn't make a difference if it involved a public or private company, so long as the company had demonstrated performance and a capital management structure.' Thomas said.
But he noted that, since Republic and some other public companies are new to the car retailing business, their performance has not been proven. 'And there's the rub,' he said.
Thomas said he will not use Republic as a way to clean up overdealered areas, even though a powerful contiguous dealer might quickly wipe out smaller competitors. 'This is not an attempt to reduce our dealer count artificially,' Thomas said. He added that Nissan is not so much overdealered as hindered by a dealer body that has too much built-in overhead, an industrywide condition.
Regarding the function of the Contiguous Market Organization concept, Thomas said: 'It's a consumer-friendly action having common ownership and no intrabrand competition. The CMO allows things to happen, rather than forces them.'
Jimmy Bankston, president of W.O. Bankston Enterprises, predicted that his already-large share of the Dallas market will grow with Republic behind him.
'They're a class act,' said Bankston, who claimed his Dallas and Irving stores are the No. 1 and No. 2 parts-sellers in the nation for Nissan.