DETROIT - Republic Industries Inc. is getting rid of low-volume franchises as part of its strategy to focus narrowly on relationships with six core manufacturers.
That core group is composed of General Motors, Ford Motor Co., DaimlerChrysler Corp., Toyota Motor Sales U.S.A. Inc., American Honda Motor Co. Inc. and Nissan North America Inc.
The goal of this narrower emphasis is more efficient brand marketing. On its buying sprees, Republic has picked up low-volume franchises when it acquires large dealership groups. The company wants to promote the brands that are the most profitable, according to Michael Maroone, president of Republic's Automotive Retail Group.
'We can't support 35 brands,' said Maroone during a panel discussion at the Automotive News World Congress last week. (Story on Page 28.) 'We want to focus where we think we have the biggest opportunities.'
Republic already has started selling some dealerships. Market sources say the Fort Lauderdale, Fla.-based retailer has at least 16 up for sale. Republic, the nation's largest dealership group, has more than 250 dealerships and annual pro forma revenues of $18 billion.
'You will see us divest some dealerships,' Maroone said. 'It depends on the geographic region and what our strategy is in that market.'
Republic also is interested in forming joint ventures similar to the arrangement it has with Ford Motor Co. in Rochester, N.Y., where the two companies jointly own dealerships and Republic is the dealer operator.
'We are talking to six core manufacturers - not just on joint ventures,' Maroone said. 'We want to learn together, share information together. The goal is to be their best dealer.'
Sheldon Sandler, senior managing director and CEO of Bel Air Partners LLC, a Princeton, N.J., investment firm serving dealers, including Republic, said he doesn't see Republic dropping all but the six manufacturers in all of its markets. 'When they divest a dealership, they are also divesting sales and earnings,' he said. 'It will be a struggle for them. But it's the right thing. They don't want to diffuse their energy in stores where they can't make much money.'