Republic Industries Inc. added the missing link to its automotive strategy last week by forging an alliance with a major aftermarket parts and service company, Pep Boys-Manny Moe & Jack.
The Philadelphia-based aftermarket parts and service company will supply all AutoNation USA stores and reconditioning centers with parts, accessories and tires. AutoNation USA customers also will be able to get warranty service at Pep Boys service centers, said Nancy Kyle, Pep Boys director of investor relations. AutoNation USA is owned by Republic, based in Fort Lauderdale, Fla.
Pep Boys Chairman Mitch Leibovitz said the two companies are exploring opportunities to expand their relationship.
The agreement between Pep Boys and Republic's AutoNation USA provides the final piece in Republic Chairman H. Wayne Huizenga's strategy of giving customers cradle-to-grave automotive service.
AutoNation USA has 14 used-car megastores open and plans to have about 100 open by 2000. Pep Boys has 620 stores in 33 states, the District of Columbia and Puerto Rico. Sales for the 1997 fiscal year were $1.8 billion.
Republic officers have said they want to serve customers in five principal areas: new cars, used cars, rental cars, finance, and parts and service.
Republic had assembled the first four components of its strategy by acquiring about 100 new-car franchises; opening AutoNation USA used-car superstores; purchasing the Alamo, National and Spirit rental-car companies; and forming AutoNation Financial Services.
The Pep Boys announcement helped resuscitate Republic's stock price, which had been sagging, giving rise to speculation that Huizenga's strategy was in jeopardy.
The stock had dipped as low as $20.12 on June 13. By midday Friday, June 20, the stock was trading near $25.88.
Inaccurate rumors that Huizenga had been dumping stock helped depress the price. There also have been rumors that Republic dealers were selling stock to take a quick profit.
Those rumors among dealers and the investment community may have been triggered in part by a Republic registration statement June 12 listing shares of stock with the U.S. Securities and Exchange Commission. The registration statement was a formality permitting a number of large shareholders, including several dealers, to sell their stock whenever they wish. Republic officials say there are no restrictions on the stock and dealers can sell when they choose.
Steve Kalafer, president of Flemington Car and Truck Co., a dealership bought by Republic and one of the dealers listed in the registration statement, said he had not sold any stock, and is excited about future prospects for his dealership.
Huizenga, who likes to move at lightning speed, had seen his pace slowed in recent weeks by American Honda Motor Co. Inc. and Toyota Motor Sales U.S.A. Inc., which had filed lawsuits designed to slow or stop Republic's rapid acquisition of their dealerships. Those lawsuits also helped send Republic's stock price down.
In other developments, Republic last week switched its stock listing to the New York Stock Exchange, from the NASDAQ National Market.
Pep Boys stock also is traded on the New York Stock Exchange.