Embroiled in a legal battle between Toyota Motor Sales U.S.A. Inc. and Republic Industries Inc., Houston dealer Joe Myers has postponed the sale of his dealership group to Republic.
The withdrawal of Joe Myers Auto Group is the latest development in a growing legal fracas between Toyota and Republic over Republic's auto-dealership buying spree.
In May, Toyota and Republic also traded legal salvos in Arizona over the proposed sale of a Phoenix-area dealership, and Republic last week announced plans to buy another Toyota store and another Lexus store, both in Spokane, Wash.
Toyota had opposed the sale of one of Myers' dealerships, Joe Myers Toyota, and had won a preliminary legal battle at the Texas Motor Vehicle Board in May.
Jim Donahue, Republic vice president of corporate communications, said Republic's draft agreement with Myers expired May 31 and that Myers requested 'we postpone any further discussions with him until such time as we resolve the macro issues with Toyota, and we've agreed to do that.'
Republic had offered Myers $33 million in common stock for his four Houston area dealerships. Joe Myers Automotive reported $223 million in sales in 1996.
Auto franchises cannot be transferred without the consent of the franchiser.
Toyota fears that Republic is acquiring dealerships too rapidly, and that only time will tell how successful the company would be operating those dealerships.
Toyota wants Republic to abide by its rules, which prohibit any entity from owning more than seven Toyota and three Lexus stores nationwide. Toyota requires a nine-month waiting period between purchases.
REPUBLIC MOVES AHEAD
Toyota's objections and its legal maneuvers have not deterred Republic. The conglomerate has announced plans to buy four Toyota stores, including the Myers outlet, and four Lexus stores. As part of that plan, Republic last week announced the purchase of Appleway Toyota and Appleway Lexus in Spokane. The dealerships are part of a larger group under the corporate banner Appleway Chevrolet.
The Lexus acquisition would put Republic one over the limit of three that Lexus has set. Toyota has vowed to continue trying to slow Republic's acquisition pace.
In a separate development, Republic and Toyota have exchanged legal shots in Phoenix. Republic filed a complaint May 8 with the Arizona Motor Vehicle Department alleging that Toyota had unreasonably withheld consent of Republic's planned purchase of Tempe Toyota. Toyota filed a motion to dismiss the Republic complaint.
Toyota also filed a complaint May 22 in U.S. District Court in Phoenix, asking a judge to uphold Toyota's franchise policies and to stop Republic from purchasing any dealerships until it agrees to abide by those policies.
Dan Myers, a Tallahassee, Fla., attorney specializing in state franchise laws, said Toyota appears to have thought carefully about its legal battle with Republic.
'From the Toyota standpoint it's going to look like a chessboard all around the United States,' he said. 'It would appear, like Sir Winston (Churchill), that Toyota is saying, 'We're going to fight you on the beaches, on the shores and in the fields.' '
Neither Republic or Toyota appears to be backing off, said Myers. In addition, American Honda Motor Co. Inc. has filed suit in U.S. District Court in Los Angeles to slow Republic's shopping spree. 'It's beginning to look like high noon,' said Myers.
In April, Toyota filed a petition with the Texas Motor Vehicle Board asking that the Joe Myers sale be stayed. Republic and Joe Myers Auto Group objected; they requested that the deal be permitted to go through.
In May, an administrative law judge ruled in favor of Toyota -the judge said sale could not proceed until a hearing is conducted. Toyota proclaimed the ruling a victory, while Republic portrayed it as a temporary setback.
James Press, Toyota Motor Sales senior vice president, repeated Toyota's vow to take necessary steps to get Republic to abide by Toyota's policies. 'We have repeatedly expressed our concern that the rapid, uncontrolled acquisition of dealerships by a single entity could harm consumers,' Press said.
PART OF THE PLAN
Republic's Donahue responded to Press by saying Republic does indeed want to acquire dealerships rapidly and that speed is important to its strategy. He disagreed with the assertion that Republic's acquisitions have been uncontrolled.
'We know quite a bit about the dealerships we become involved with and feel we know quite a bit about the auto industry,' Donahue said. 'We've got a definite strategy we intend to execute, and we want Toyota to be part of that.
'We think some of the posturing that's going on right now is just that. It makes nice headlines, but the issues will be resolved.'
Republic plans to pay for the Appleway dealership group with $42.6 million in common stock. In addition to the Appleway Toyota and Lexus stores, the Spokane deal includes Appleway Chevrolet-Geo, Appleway Mazda-Subaru-Volkswagen-Audi and Appleway Mitsubishi. The Appleway dealerships reported sales of about about 7,500 new and used vehicles and revenue of $160 million in 1996.
Tim Pring, Appleway president, will remain with the dealership for at least three years. Critics who worry about dealers selling out have it all wrong, he said.
'Our whole position is we didn't sell out, we bought in,' he said.
Driver's Mart Worldwide Inc., a rival chain of used-car superstores to Republic's AutoNation USA, earlier had announced Tim Pring and Appleway would become a franchisee. Pring's move to Republic marks the second time in recent weeks Driver's Mart has lost a dealer to Republic.
To date, Republic has purchased 87 dealerships (minus the Myers acquisition) that had revenue in excess of $5 billion in 1996. It makes Republic the nation's largest dealer group.