13-003345 South M. M., Llc, D/B/A South Motors Mazda vs. Mazda Motor Of America, Inc., And Miami Automotive Retail, Inc., D/B/A Brickell Mazda Status: Closed Recommended Order on Friday, August 1, 2014.

Summary: Respondent demonstrated by a preponderance of the evidence that existing Mazda dealers are not adequately representing Mazda in the Miami community or territory. Recommend order granting the application to establish Miami Automotive Retail Inc.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOUTH M. M., LLC, d/b/a SOUTH

MOTORS MAZDA,

Petitioner,

vs. Case No. 13 - 3345

MAZDA MOTOR OF AMERICA, INC.,

AND MIAMI AUTOMOTIVE RETAIL,

INC., d/b/a BRICKELL MAZDA,

Respondents.

__________________________ _____/

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was

conducted before Administrative Law Judge Mary Li Creasy in

Tallahassee, Florida, on April 21 through April 23, and April 28

through May 1, 2014.

AP PEARANCES

For Petitioner: John W. Forehand, Esquire

South Motors Automotive Group

16165 South Dixie Highway

Miami, Florida 33157

Juan P. Loumiet, Esquire

Greenberg Traurig, P.A.

Suite 4400

333 Avenue of the Americas

Miami, Florida 33131

For Respondent Mazda Motor of America, Inc.:

J. Andrew Bertron, Esquire

Melissa Fletcher Allaman, Esquire

Nelson, Mullins, Riley,

and Scarborough, LLP

Suite 202

3600 Maclay Boulevard, South

Tallahassee, Florida 32312

For Respondent Miami Automotive Retail, Inc., d/b/a

Brickell Mazda

Craig Julian Trigoboff, Esquire

Waldman, Trigoboff, Hildebrandt,

Marx and Calnan, P.A.

Suite 202

2200 North Commerce Parkway

Weston, Florida 33326

STATEMENT OF THE ISSUE

Whether existing Mazda dealers are providing adequate

representation of the Mazda li ne - make in the c ommunity or

t erritory in which Mazda Motor of America, Inc., proposes to add

a dealer. 1/

PRELIMINARY STATEMENT

On August 9, 2013, notice was published in the Florida

Administrative Register announcing Mazda Motor of America,

Inc. Ó s ( Ð MMA s Ñ ) , intent to establish Miami Automotive Retail,

Inc., d/b/a Brickell Mazda ( Ð Brickell Mazda Ñ ), as a dealer for

the sale of Mazda vehicles at 618 Southwest Eighth Street,

Miami, and for the service of Mazda vehicles at 665 S outhwest

Eighth Street, Miami. Pr otests to the proposed additional

dealer were timely filed with the Department of Highway Safety

and Motor Vehicles (Department) by South M.M., LLC, d/b/a South

Motors Mazda (SMM), and FRLJ - MAZ, LLC, d/b/a Lehman Mazda. The

protests were forwarded to the Division of Administrative

Hearings for formal administrative hearing and were consolidated

by Order dated September 18, 2013. Subsequently, the protest

filed by FRLJ - MAZ, LLC, d/b/a Lehman Mazda, Case No. 13 - 3367,

was dismissed , and an Order was entered closing the file and

relinquishing jurisdiction to the Department.

A P re - hearing S tipulation was filed by the parties on

April 11, 2014.

By j oint m otion filed May 20, 2014, the parties requested

an extension until June 23, 2014, t o fil e post - hearing

submit tals. By Order of May 20, 2014, a deadline of June 23,

2014, was set for filing post - hearing submittals.

At the final hearing, MMA presented the testimony of the

following witnesses during its case - in - chief: Sharif Farhat,

Vice President of Expert Analyt ical Services, Urban Science

Applications, Inc. (who was accepted as an expert in dealer

network analysis); Blase De Leo, General Manager, Southeast

Region, MMA; Daniel Devenny, Manager Market Representation,

Southeast Region, MMA; and Alexander Ramos, Zon e Sales Manager,

Southeast Region, MMA. During its rebuttal case, MMA presented

the following witnesses: Blase De Leo ; Sharif Farhat ; and

Mario Murgado, Owner, Brickell Mazda.

Brickell Mazda presented the testimony of Mario Murgado.

SMM presented the tes timony of : Ricardo Lujan, Manager,

SMM; Jose Prieto, General Manager, SMM; Christopher Crawford,

Regional Operations Manager, Southeast Region, MMA;

Alexander Sanchez, Media Director, South Motors Automotive

Group; Tony Garcia, President, Menda Group (who was accepted as

an expert in retail automobile advertising in the South Florida

market); and Joseph Roesner, President, The Fontana Group, Inc.

(who was accepted as an expert in local retail automobile

industry analysis and dealer performance analysis).

A lso submitted and received into evidence were transcripts

and exhibits of the following depositions: Robert Davis, Senior

Vice President of Operations, MMA; Russell Wager, Vice

President of Marketing, MMA; Ronald Stettner, Vice President of

U.S. Sales Op erations, MMA; Barry Brittingham, Manager of Dealer

Development, MMA; Jeffrey Dixon, Associate Media Director of

Regional Planning, Garage Team Mazda; Mark Brown, Senior Vice

President, Managing Director, Garage Team Mazda; Craig Willard,

Manager, Dealer P erformance Management, MMA; George Wiltz,

Controller, South Motors Automotive Group (designated transcript

portions only); and John Hilton, Chief Financial Officer, South

Motors Automotive Group (designated transcript portions only).

Petitioner Ó s E xhibits 2 through 6, 8 through 19, 21 through

42, 45, 51, 55 through 57, 59, 60, 65, and 72 through 78 were

admitted into evidence. Exhibit 42 was admitted over objection.

Respondents Ó E xhibits 1 through 4, 5 (with respect to

page 19, only the lower portion of th e page), 6, 9, 11, 13

through 16, 19, 22, 32, 43, 45, 49, 54, 57, 58, 60 through 65,

and 67 through 70 were admitted into evidence. Respondents Ó

E xhibits 5 (page 6) and 32 (pages 27086, 5966, 27081, 27082, and

27106) were admitted over objection.

The comp lete T ranscript of the final hearing, consisting of

12 volumes, was filed on May 23, 2014. The parties timely filed

p roposed r ecommended o rders that have been given due

consideration in the preparation of this Recommended Order.

Unless otherwise noted, a ll statutory references are to the

Florida Statutes (2013).

FINDING S OF FACT

I. The Parties

1. MMA is a Ð licensee Ñ as defined by section 320.60(8),

Florida Statutes.

2. SMM is a Ð motor vehicle dealer Ñ as defined by

section 320.60(11).

II. Notice and S tanding

3. On August 9, 2013, notice was published in the Florida

Administrative Register announcing MMA Ó s intent to establish

Brickell Mazda as a dealer for the sale of Mazda vehicles at

618 S outhwest Eighth Street, Miami, and for the service of Mazda

ve hicles at 665 Southwest Eighth Street, Miami (jointly referred

to as the Proposed Point). These two parcels of real property

are situated 71 feet apart and directly across from each other on

opposite sides of Southwest Eighth Street, a three - lane one - way

street that is not a limited access highway. The proposed

additional dealer would be located in Miami - Dade County, Florida,

which has a population of more than three million persons.

4. SMM is an existing franchised Mazda dealer operating

from a fac ility located at 18010 South Dixie Highway, Miami,

Florida. SMM timely protested the proposed additional dealer.

During several 12 - month periods within the 36 months preceding

publication of notice of the proposed additional dealer, SMM made

more than 25 % of its retail sales of new Mazda vehicles to

persons who registered those vehicles within a radius of 12 and

one - half miles of the proposed location of the proposed

additional dealer.

5. If Brickell Mazda is permitted to open at the Proposed

Point, its Mazda sales operations and its Mazda service and parts

operations will open on the same day , and it will operate its

Mazda sales and service operations at the Proposed Point until

completion of construction of a new Mazda sales and service

facility to be located within two miles of the Proposed Point.

III. Community or Territory

6. The first issue to be addressed in this protest is the

identification of an appropriate Ð community or territory Ñ

(Comm/Terr) , which is the relevant geography within w hich to

judge the performance of the Mazda brand.

7. Section 320.642, Florida Statutes, does not provide any

specific criteria for geographically defining the Comm/Terr.

8. In determining the geographic boundaries of the

Comm/Terr, consideratio n is given to the areas assigned to Mazda

dealers by MMA. MMA assigns to each of its dealers a geographic

area known as a Statistical Observation Area (SOA), which is

comprised of United States ( U.S. ) Census Bureau census tracts

close to each dealer.

9. A dealer Ó s SOA is the area in which a dealer has a

geographic advantage with respect to consumers, who generally

will shop for a new vehicle at the closest dealer, unless they

are dissatisfied with that dealer for some reason.

10. In determining the geographic boundaries of the

Comm/Terr, consideration is also given to the buyer behavior of

new Mazda consumers -- what is the geographic area where consumers

in that area buy the majority of their new vehicles from dealers

in that area, and where the dealers in that area sell the

majority of their new vehicles to consumers in that area.

11. The Comm/Terr should also have Ð connectivity Ñ meaning

that the areas within the Comm/Terr are reasonably connected from

a buyer behavior point of view.

1 2. MMA defines the Miami Metro market as an area

encompassing all of Miami - Dade County, all of Broward County, a

portion of northern Monroe County (consisting of the upper Keys),

and a portion of southern Palm Beach County. MMA employs the

2010 version o f U.S. Census Bureau census tracts to define the

Miami Metro market.

13. Sharif Farhat, MMA Ó s expert witness, testified that the

proper Comm/Terr in this case is the geographic area within the

four Miami - Dade SOAs Î - Ocean Mazda (Ocean), Mazda of North Miami

(North Miami), SMM, and the open point (formerly Potamkin Mazda Ó s

SOA), which shall be referred to hereinafter as the Ð Miami

Comm/Terr. Ñ Joseph Roesner, SMM Ó s expert witness, agreed that

the Miami Comm/Terr is the proper Comm/Terr.

14. Based on a consideration of all relevant evidence, the

proper Comm/Terr in this case is the Miami Comm/Terr.

15. Within the Miami Comm/Terr, Mazda Ó s competitors are

represented in the areas near SMM, Ocean, and North Miami, and

also in the open point SOA w here Brickell Mazda is proposed, but

where there is no current Mazda dealer.

IV. Historical Network Changes, Existing Dealer Network

16. For over 16 years, from April 1992 until Potamkin Mazda

(Potamkin) closed in March 2009, there were four Mazda

d ealerships operating in Miami - Dade County Î - Ocean Mazda, North

Miami/Marlin Mazda, SMM/Kendall Mazda and its predecessors, and

Potamkin. If the operations of Williamson Mazda and Spitzer

Mazda in Homestead are considered, there were five Mazda

dealerships operating in Miami - Dade County for some of those

years.

17. It has only been since March 2009, or a little over

five years, that there have been only three Mazda dealerships

operating in Miami - Dade County. The current Mazda dealers in

Miami - Dade Cou nty are Ocean (9.3 miles from the Proposed Point),

North Miami (13.8 miles from the Proposed Point), and SMM

(14.6 miles from the Proposed Point). In 2012, within the SOA of

the Proposed Point, North Miami registered the most new Mazda

vehicles (204) and SMM registered the least (73), whether

measured by number of units or percentage of registrations in the

SOA.

18. Brickell Mazda will be the first Mazda dealer added

since the 2008/2009 downturn in the automotive industry, and the

fourth Mazda deale r in the Miami Comm/Terr, with no plans by MMA

to add a fifth dealer.

19. Prior to SMM opening in October 2007, Kendall Mazda

(Kendall) operated at 18010 South Dixie Highway, Miami. Kendall

lost its floor plan (the bank credit line used to purchase new

vehicles from MMA), and it sought bankruptcy court protection.

20. On March 19, 2007, SMM Ó s parent company, South Motors

Company of Dade County, purchased the Kendall dealership property

from the trustee for the Kendall bankruptcy. When South Mo tors

Company of Dade County purchased the property, SMM did not yet

have a Mazda dealership agreement.

21. Prior to its closing, Kendall received negative local

publicity, caused in part by that dealership not paying off loans

on customers Ó trade - in vehicles. Kendall Ó s actions could have

damaged Mazda in the market place. Before being awarded a Mazda

franchise by Mazda and opening the Mazda dealership, SMM knew of

the problems caused by the prior dealer, and expected that SMM

would struggle to be p rofitable because of issues with Kendall.

SMM even considered not opening the dealership. However, SMM

expected that , in time , it could overcome these issues and

decided to open the dealership.

22. SMM was awarded its Mazda franchise by Mazda and d id

not have to purchase the franchise rights from another Mazda

dealer. Not only did SMM not pay any money for acquiring the

franchise, but MMA provided $200,000.00 in monetary assistance to

SMM specifically to assist in establishing itself in the market.

Kendall Ó s actions no longer impair SMM Ó s performance as a Mazda

dealer.

23. Potamkin was previously located in the open point SOA

where the Proposed Point is located. Potamkin Ó s location was

9.3 miles from Kendall, which is where SMM is located t oday. The

Proposed Point is 14.6 miles from SMM and will provide better

spacing between Mazda dealers.

24. Potamkin Ó s dealership facility was located on four

different properties, the leases for which were expiring in

February 2009. Potamkin told M MA that it wanted to either close

or sell the dealership. The proposed buyer was a prior Mazda

dealer, but MMA did not consider him to be a successful dealer

and was not interested in him as a buyer for the Potamkin point.

25. Potamkin closed in Mar ch 2009, the same year that

General Motors and Chrysler filed for bankruptcy and many

dealers, not just Mazda dealers, were struggling financially on

the heels of the financial crisis and the bottoming out of the

automobile market the year before. MMA mad e the decision to

negotiate a voluntary termination of Potamkin and temporarily

close the point, in order to provide Ocean and SMM two years to

absorb the sales and fixed operations business of Potamkin.

26. In making this decision, MMA conducted a risk/benefit

analysis. One potential benefit was that Ocean and SMM might be

able to increase sales and profitability. Other benefits were

that MMA could Ð control the point and plan for the future Ñ and

Ð attract a top tier dealer candidate. Ñ The risk was that Ocean

and SMM would not be able to Ð absorb sales and fixed operations

business. Ñ

27. MMA believed closing Potamkin would also help the

Ð crowded Ñ Miami dealer representation, caused by Ocean Ó s

relocation to within four miles of Potamkin. MMA ap proved

Ocean Ó s relocation because Ocean Ó s dealership facility was in the

direct flight path of jets landing at Miami International

Airport, and the noise disrupted sales and service operations.

There is no evidence that Potamkin voluntarily terminated bec ause

there were four Mazda dealers in Miami - Dade County.

28. MMA kept the SOA formerly assigned to Potamkin as an

open point and did not assign any of Potamkin Ó s market area to

Ocean or SMM. The Proposed Point is further away from both Ocean

and SM M than was the prior Potamkin location.

29. After Potamkin closed in 2009, Ocean and SMM were not

able to increase their sales to Ð absorb Ñ Potamkin Ó s sales

business or achieve an acceptable level of sales in the market

area previously served by Potam kin. Furthermore, SMM was not

able to increase its profitability, and it continued to operate

at a loss, which has been the case since the dealership opened in

2007. SMM Ó s losses decreased in 2010, but then increased in 2011

and 2012.

30. Mario Mu rgado is an experienced and successful new car

dealer who expressed interest to MMA in becoming a Mazda dealer.

Mr. Murgado was born in Havana, Cuba, is fluent in Spanish and

English, and is experienced in marketing and selling new motor

vehicles to Hispan ic and non - Hispanic customers in the Miami

market. Mr. Murgado owns several successful automobile

dealerships on S outhwest Eigh th Street in Miami, which is within

the open point SOA formerly assigned to Potamkin, including

Honda, Buick, GMC , and Pontiac. This area is within Ð Little

Havana, Ñ one of the most densely Hispanic populated areas in

Miami. Mr. Murgado also owns and operates Audi and Infinity

dealerships in Stuart, Florida.

31. Mr. Murgado entered into a Letter of Intent with MMA in

which h e agreed that Ð the Permanent Dealership Site shall meet

Mazda Ó s design and image standards Ñ and which contains specified

minimum square footage requirements at the proposed Brickell

location. On August 9, 2013, MMA gave notice of its intent to

allow the e stablishment of Brickell Mazda at the Proposed Point. 2/

V. Adequacy of Representation in the Community or Territory - Î

Statutory Criteria

32. After establishing the proper Comm/Terr,

section 320.642(2)(b) outlines 11 factors to be balanced whe n

determining whether or not current representation in the

Comm/Terr is adequate.

A. Impact of the Proposed Additional Dealer on Consumers,

Public Interest, Existing Dealers, and MMA

i. Impact on Consumers and Public Interest

33. The Miami Comm/Terr is currently served by three Mazda

dealers located in the northern (North Miami), western middle

(Ocean), and southern (SMM) portions of the market. The proposed

Brickell Mazda location would service the eastern middle portion

of the Miami Comm/Terr.

34. Each of the three existing dealers is located in a

large cluster of other dealers that offer competing line - make

vehicles. These locations provide consumers with convenient

access to cross shopping opportunities. The propo sed additional

dealer would also be located next to a Honda, Buick , and GMC

dealership.

35. The travel distance from the proposed location to SMM

is 15.4 miles. From the proposed location to Ocean is

10.5 miles. From the proposed location to most o f North Miami,

the travel distance is 14.5 miles. The proposed location is

approximately 2.4 miles east of the former Potamkin, which would

place it further away from its nearest competing Mazda

dealership, Ocean.

36. The existing road network provi des consumers access to

one or more Mazda dealers via major arterial roadways: North

Miami is accessed from Interstate 95 or the Florida Turnpike,

major north/south arteries; Ocean is accessed from the Dolphin

Expressway, a major east/west artery, the Pal metto Expressway, a

major n orth/ s outh artery, or the Florida Turnpike; and SMM is

located on U.S. 1, a major north/south artery, and is also

accessible from the Florida Turnpike. Drive times between the

existing Mazda dealerships vary dramatically based u pon traffic

congestion, which can be notoriously heavy.

37. Consumers would have convenient access to the proposed

Brickell Mazda location from U.S. 1, the Dolphin Expressway, and

Interstate 95. The Proposed Point is on S outhwest Eighth Street

(Tami ami Trail/U.S. 41) , which is an east - west three - lane main

artery leading into downtown Miami. Brickell Mazda will provide

a shuttle service for Mazda customers who work in downtown Miami.

Downtown Miami workers and residents would have the greatest

enhan ced accessibility to Mazda sales and service due to the

close proximity of the proposed location to downtown.

38. On average, Mazda consumers in the Miami Comm/Terr have

to travel 10.2 miles to a Mazda dealer, which is the highest

distance of all bra nds in the Miami Comm/Terr , placing the Mazda

brand at a significant disadvantage to other competitors offering

more convenience in terms of travel distance. The establishment

of Brickell Mazda would reduce the average distance to the

nearest Mazda dealer in the Miami Comm/Terr from 10.2 miles to

five miles, which would place Mazda in the middle of its

competitors in terms of customer convenience based on travel

distance.

39. The proposed additional dealer will benefit consumers

by providing an addit ional choice for Mazda sales and service at

a new facility owned and operated by an experienced and

successful automobile dealer and shortening the travel distance

for some consumers in the Comm/Terr. More specifically, the

addition of a new Mazda dealer at the proposed Brickell location

will make sales and service of Mazdas significantly more

accessible to the growing residential population of downtown

Miami.

ii. Impact On Existing Dealers

40. The analysis of the potential impact on exist ing

dealers begins with an assessment of the opportunity for Mazda

sales in the Miami Comm/Terr in addition to the sales occurring

historically.

41. These are additional sales available to existing

dealers who compete aggressively that will offset an y potential

impact resulting from Brickell Mazda Ó s establishment. These

additional sales come from two sources Î - sales by competitors

(conquest sales) and Mazda sales by Mazda dealers outside the

Miami Comm/Terr into the Miami Comm/Terr (in - sell).

42 . Based on 2012 registration data, there were 1,729

additional conquest sales available if the Miami Comm/Terr

achieves the Broward average. 3/ A significant number of these

conquest sales are located in and around the central part of the

Miami Comm/Terr where Brickell Mazda is proposed.

43. Based on 2012 registration data, there are

775 additional in - sell registrations available to Mazda dealers

in the Miami Comm/Terr. The total of these conquest sales and

in - sell sales is 2,504 units, which is a significant missed

opportunity.

44. Brickell Mazda Ó s potential sales of 647 within

20 miles, and 56 beyond 20 miles, total 703 units, leaving an

additional 1,801 units available to the existing dealers.

45. Another way to measure impact is to examine the change

in the existing dealers Ó expected sales based on the changes to

their SOAs that would occur if Brickell Mazda is established.

The changes in the SOAs reflect changes in each dealer Ó s

geographic advantage.

46. All of the existing d ealers have significant sales

opportunities within their assigned SOAs, and should suffer no

negative impact after Brickell Mazda opens. SMM had the

opportunity to capture 84 additional sales just as a result of

in - sells made by North Miami alone in 2012, which are more sales

than SMM made into the open point SOA the same year.

47. SMM argues that the addition of another Mazda dealer in

the Comm/Terr will necessarily result in each of the existing

dealers receiving a lesser share of total sales. How ever, this

argumemt was not supported by credible testimony.

48. To the contrary, a review of the data regarding the

addition of a new Mazda dealership in other markets demonstrates

that there is a likely benefit to existing dealers. For example,

af ter the addition of a Mazda dealer in Wesley Chapel (Tampa

area), registration effectiveness increased 65.5%, indicating

that the result was an effective, aggressively - competing dealer

network. The sales performance of the existing dealers also

improved, indicating no negative impact on sales relative to

their historical sales.

49. After the addition of a Mazda dealer in Jacksonville,

Mazda Ó s market share increased 29% because of conquest sales, and

in - sell sales decreased. After the addition of a M azda dealer in

Royal Palm Beach, following the closing of two Mazda dealers, and

at a very difficult time for the automotive industry in 2008

and 2009, Mazda Ó s market penetration was better than in the s tate

of Florida as a whole, and the SOA with a Mazda dealer had

improved sales performance.

50. These case studies indicate that the addition of a

Mazda dealer, where there is inadequate performance, results in

increased Mazda market penetration due to increased customer

satisfaction, and that existing dealers are not negatively

impacted because of the new dealer.

iii. Financial Impact on South Motors 4/

51. SMM is wholly owned by South Motors Company of Dade

County, which also owns and operates several other automobile

dealerships in S outh Florida. Since commencing operations in

2007, SMM has continually operated at a loss, averaging

approximately $750,000 in losses each year since 2008. 5/

52. SMM executives have made no decision and have not even

discussed whether to close the d ealership if losses continue.

53. Ricardo Lujan, Vice President of Finance for South

Motors Company of Dade County, testified that SMM can Ð continue

to increase our revenues and get to profitability , Ñ but he will

recommend that SMM close if Brickell Mazda is established because

new vehicle sales will be split among four dealers instead of

three. This erroneously assumes that the number of new vehicle

sales is a Ð fixed pie, Ñ which ignores conquest sales and in - sell

sales available in the Miami Comm/T err to dealers willing to

compete for automotive sales and service, as well as future

growth in the market.

54. Mr. Roesner acknowledged that a new Mazda dealer in a

market can generate new excitement in the Mazda brand and cause

people who would no t otherwise do so to buy new Mazda vehicles,

resulting in increased conquest sales. The mere existence of

Brickell Mazda with new Mazda signage may cause people to take

note of the brand. The increase in sales has the potential to

lead to increased servi ce business for existing Mazda dealers.

55. Mr. Roesner estimates that based on 2012 sales volume,

SMM would lose between 67 and 135 new Mazda sales if Brickell

Mazda is established. This calculation ignores the fact that SMM

failed to capture 233 units sold to customers in SMM Ó s SOA by

other Mazda dealers. In short, Mr. Roesner Ó s financial analysis

merely states that SMM will lose more business with the addition

of Brickell Mazda without considering the opportunity that

currently exists for SMM an d all Mazda dealers in the Miami

Comm/Terr.

56. Further, if SMM operates according to Mr. Roesner Ó s

financial analysis, SMM will never be profitable -- even if

Brickell Mazda is never established. Mr. Roesner Ó s financial

analysis fails to include any calculation of the new car sales

volume necessary for SMM to break even.

57. Using Mr. Roesner Ó s calculations and assumptions,

Mr. Farhat analyzed SMM Ó s break - even point and determined SMM

would have to more than double its annual sales in its new c ar

department, and also double its volume in every other department

to break - even, regardless of whether Brickell Mazda is

established. In short, if Mr. Roesner Ó s financial/sales analysis

is to be believed, SMM will not be able to grow sales and will

neve r be profitable even if Brickell Mazda does not open.

58. SMM Ó s financial problems and inability to make a profit

result from poor dealership operations, not the opening of

Brickell Mazda, and only SMM can address and rectify its own

operational issu es. There is no competent, substantial evidence

in the record that Brickell Mazda Ó s opening will cause SMM to go

out of business.

iv. Impact on MMA

59. With the addition of Brickell Mazda, MMA will have

greater market penetration (as disc ussed in greater detail below)

and a more competitive dealer network in the Miami Comm/Terr,

resulting in increased sales of MMA vehicles, and more satisfied

Mazda customers , which will enhance the Mazda reputation to the

benefit of MMA and its dealers.

B. Investment of Existing Dealers

60. SMM has invested $6.6 million in its dealership

operations, and its parent company, South Motor Company of Dade

County, has invested $6.8 million in the facilities from which

SMM operates. The undisputed tes timony establishes that the

other existing Mazda dealers in the Comm/Terr have made similar

facility investments.

61. SMM Ó s investment does not include the dealership

property, which is owned by SMM Ó s parent company, S outh Motors

Company of Dade Coun ty. SMM Ó s investment in its Mazda dealership

is substantially less than what it would be in the ordinary

course of business, because it does not own the dealership

property and has entered into an interest - only, below - market - rate

lease with S outh Motors C ompany of Dade County. SMM Ó s investment

is also less because many of its ordinary business expenses are

paid by South Motors Company of Dade County.

C. Reasonably Expected Market Penetration

62. Market penetration, or registration performance, is a

measure of the share of the retail automobile market which a

line - make achieves during a defined period of time in a

particular geographic area.

63. In the automobile industry, market penetration is

calculated by dividing the number of new ve hicles of a line - make

that are registered by the number of all new vehicles of

competing line - makes that are registered. Thus, for instance,

the calculation of the 2013 Mazda market penetration in the

Comm/Terr would be: Total Number of New Mazda Registr ations in

the Comm/Terr during 2013 divided by the Total Number of New

Competitive Line - Make Registrations in the Comm/Terr during 2013.

i. Appropriate Benchmark

a. Identifying an Appropriate Comparison Area

64. In determini ng whether Mazda is currently achieving a

reasonably expected level of market penetration in the Comm/Terr,

a standard or benchmark for market penetration must first be

established against which Mazda Ó s performance is compared. That

benchmark must be reas onable, and should be neither too high nor

too low.

65. In determining a standard to measure performance in the

Miami Comm/Terr, market penetration in another geographic area

( Ð comparison area Ñ ) is assessed in order to arrive at a level or

standard of performance that can reasonably be achieved in the

Miami Comm/Terr. The comparison area must be independent of the

Miami Comm/Terr, so that the Miami Comm/Terr is not being

measured against itself.

66. A smaller comparison area close to the Miam i Comm/Terr

is superior to a larger comparison area that is farther away

because the larger area will include dealers in diverse areas

whose performance could be affected by market occurrences such as

buy - sells, relocations, and facility changes, and becau se the

larger area will include areas that have no Mazda dealer.

67. For a larger comparison area, such as the U.S. or

Florida, it is appropriate to consider only the areas that have a

Mazda dealer, known as U.S. Represented SOAs or Florida

Represen ted SOAs.

68. The combined SOAs of the three Mazda dealers in Broward

County, Florida -- Gunther and the two Lou Bachrodt dealerships Î -

comprise a smaller comparison area adjacent to the Miami

Comm/Terr in the same state and climate.

69. The larg er comparison areas suggested by SMM, of U.S.

Represented and Florida Represented, are not appropriate

benchmarks to determine adequate representation in the Miami

Comm/Terr because over the period of 2010 through July 2013, the

Broward SOAs consistently a chieve higher market penetrations and

demonstrate what an adequately represented market can achieve.

70. MMA Ó s use of regional averages or other comparison

areas in standardized reports to dealers is not a reason to use

Region as the comparison area in this case. Instead, a more

thorough analysis of the South Florida market is appropriate in

determining adequacy of performance, as required under

s ection 320.642.

71. Using the Broward SOAs as the comparison area (Broward

average) results in the dealers in the Miami Comm/Terr being

compared to dealers in Broward County, and not to dealers in

distant and diverse parts of the U.S. or Florida. The dealers in

the Broward SOAs are in the same advertising market as the

dealers in the Miami Comm/Terr; w ere in the same dealer

advertising group with the Miami Comm/Terr dealers until

March 2012; and, like the Miami Comm/Terr dealers, had no dealer

advertising association after March 2012.

72. Another key factor weighing in favor of using the

Broward SOAs as the comparison area is the similar Hispanic

population to the Miami Comm/Terr. While not as high as the

Miami Comm/Terr, the Broward SOAs have high percentages of

Hispanic population compared to most other SOAs in Florida.

b. Segme ntation Analysis

73. The second step in determining the benchmark is

segmentation analysis, the process by which any differences in

product popularity caused by consumer purchase preferences

between the Miami Comm/Terr and the benchmark area are addr essed.

This analysis accounts for any differences between the Miami

Comm/Terr and the Broward SOAs for consumers purchasing certain

types of vehicles, such as trucks or SUVs, and not others.

74. MMA Ó s product lines are broken down into various

segmen ts, such as subcompact, mid - size , and SUV, and then Mazda

registrations in those segments are compared to industry

registrations in those same segments. By dividing the number of

Mazda registrations in each segment by the number of industry

registrations in each segment, the actual penetration rate in

each segment in the Miami Comm/Terr is obtained.

75. The overall actual Mazda penetration rate in 2012 in

the Miami Comm/Terr for all segments was 3.43%. This is computed

by dividing the total actual Mazda registrations within the Mazda

Comm/Terr by the actual industry registrations.

76. These same computations using the actual Mazda and

industry registrations in the Broward SOAs yield the actual

penetration rate in each segment for 2012 in the Broward SOAs.

77. The number of expected registrations in 2012 in the

Miami Comm/Terr in each segment is computed by multiplying each

segment Ó s actual penetration rate in the Broward SOAs by the

number of industry registrations in that same segment i n the

Miami Comm/Terr.

78. The overall expected Mazda penetration rate in 2012 for

all segments in the Miami Comm/Terr is 5.29%, computed by

dividing the number of expected registrations of 4,320 (Mazda

registrations in Miami Comm/Terr if Mazda cap tured what the

Broward SOAs dealers captured) by 81,721 (total competitive

registrations in the Comm/Terr).

79. Mazda Ó s expected registrations, or market penetration,

for other years can be computed by multiplying the expected

penetration rate for th at time period by the number of actual

industry registrations in the Miami Comm/Terr for that time

period. For example, applying the 2012 Broward average expected

penetration rate of 5.29%, Mazda Ó s expected registrations in the

Miami Comm/Terr were 4,320 r egistrations, while its actual

registrations were only 2,800.

c. Confirmation of the Benchmark as Reasonable

80. The third step in determining the benchmark is to test

the reasonableness of the benchmark by determining if it has been

a chieved.

81. There are many areas in Southeast Florida, including

areas in Miami - Dade, Broward , and Palm Beach c ounties, that

achieve or exceed the Broward average of 5.29%. The Broward

average of 5.29% has also been consistently achieved or exceede d

in various markets in Florida over a period of time from 2010 to

July 2013.

82. Although the Broward average include s Gunther, one of

MMA Ó s highest selling dealers, this is not a valid reason to

reject it as the benchmark because the Broward averag e of 5.29%

is achieved in numerous areas in Southeast Florida, and over time

in various other markets in Florida.

83. Mr. Roesner proposed alternative benchmarks of U.S.,

comprised of the entire U.S.; the Region, comprised of several

states in additi on to Florida; and the entire state of Florida.

Mr. Roesner Ó s Florida benchmark includes many areas with no Mazda

dealer representation.

84. Mr. Roesner Ó s U.S., Region, and Florida benchmarks are

not appropriate benchmarks because those areas are t oo diverse or

different from the Miami Comm/Terr to permit a meaningful

comparison.

85. Based on a consideration of all relevant evidence, the

appropriate comparison area is the Broward SOAs, and the segment -

adjusted Broward average of 5.29% is a re asonably expected market

penetration level for adequate representation in the Miami

Comm/Terr.

d. Performance of Dealer Network in Miami

Comm/Terr Compared to Reasonably Expected

Market Penetration

86. Mazda Ó s performance in the Miami Comm/Terr (actual

market penetration) is measured relative to the segment - adjusted

Broward average (expected market penetration) to determine if the

dealer network in the Miami Comm/Terr is providing adequate

represent ation.

87. For the years 2010 through July 2013, the Miami

Comm/Terr performed well below the reasonably expected Broward

average performance. Specifically, in 2010 , the Miami Comm/Terr

performed at 68.7% of the reasonably expected Broward average,

with a loss of 1,604 new vehicle registrations; in 2011 , at 67.4%

of reasonably expected Broward average and 1,535 lost

registrations; in 2012 , at 64.8% of reasonably expected Broward

average and 1,520 lost registrations; and calendar year to date

( CYTD ) J uly 2013 , at 65.8% of reasonably expected Broward average

and 1,659 lost registrations (on an annualized basis).

88. The Miami Comm/Terr Ó s performance in the 60 th to 70 th

percentile range is not a low Ð C Ñ average; rather it is

considered very low ach ievement because the Broward average is

considered to be reasonably expected, and not superlative,

performance. In another words, 100% is merely average and to be

expected.

89. The Miami Comm/Terr is performing well below a

reasonable level of perfo rmance, and its performance has been

consistently below average - Î 65% of Broward SOAs.

90. Mr. Farhat credibly testified as to the import of this

performance --

consumers are saying they Ó re dissatisfied

with the Mazda effort, the Mazda Network.

Consum ers in Broward County are buying at a

certain rate. Consumers in this area [the

Miami Comm/Terr] are buying at 50 or 60

percent of that rate. So consumers are

telling Mazda they Ó re not happy. This is not

an adequately represented [market ] - Î there Ó s

not e nough competition. There Ó s not enough

convenience. And it Ó s displayed in

ultimately, you know, their purchases. They

put their money where their mouth is, and

it Ó s not going to Mazda.

91. The fact that the Miami Comm/Terr Ó s performance has

been c onsistently below the Broward average indicates inadequate

performance by the Mazda dealer network. This below - average

performance is evident throughout the Miami Comm/Terr in all four

of the SOAs Î - Ocean, SMM, North Miami, and the open point.

92. No rth Miami Ó s performance (although still below the

Broward average) is better than the other SOAs Ó performance and

indicates that a stronger performing dealer can do better, so

that improved performance is available with a stronger dealer

effort.

93. The Miami Comm/Terr Ó s performance is still inadequate

when compared to the more conservative benchmark, suggested by

SMM, of the Florida Represented average. The Miami Comm/Terr Ó s

performance declined in each year from 2010 through CYTD

July 2013 as meas ured by the Florida Represented average,

indicating inadequate performance and consumer dissatisfaction

with the level of Mazda dealership competition. Specifically, in

2010 , the Miami Comm/Terr performed at 95.2% of Florida

Represented average, with a lo ss of 179 new vehicle

registrations; in 2011 , at 94.3% of Florida Represented average ,

with a loss of 191 registrations; in 2012 , at 84.3% of Florida

Represented average , with a loss of 522 registrations; and CYTD

July 2013 (MMA gave notice of establishing Brickell Mazda in

August 2013) , at 80.8% of Florida Represented average , with a

loss of 759 registrations (on an annualized basis).

94. This same below average and declining performance

measured against the Florida Represented average is evident in

the Ocean, SMM, and open point SOAs. North Miami Ó s performance

is better as measured against the Florida Represented average,

which indicates the very conservative nature of the Florida

Represented as a benchmark. However, even North Miami Ó s

performance is declining under the Florida Represented average,

dropping over 20% from 2010 to CYTD July 2013.

95. As Mr. Farhat testified, under either the Broward or

Florida Represented benchmarks, his conclusions are the same --

So the pattern, I think, is similar. The

conclusion is, ultimately, relative to the

reasonable benchmark, which is the Broward

County SOAs, the Miami Comm/Terr, and in

particular, areas south of the Lehman [North

Miami] SOA are inadequately represented.

There is very poor performan ce. There is

significant incremental opportunity. And

even to the more conservative Florida

benchmark, you have the same conclusion:

Areas below or South of Lehman are not

adequately represented by the existing Mazda

dealer network.

96. Based on a consideration of all relevant evidence, it

is determined that there is an inadequate level of representation

of Mazda in the Miami Comm/Terr.

e. Consideration of All Factors Which May Affect

Market Penetration

97. T he Ð market penetration Ñ factor requires not only a

determination of the appropriate comparison and analysis of how

the existing dealers are penetrating their market, but requires

Ð consideration of all factors which may affect said penetration,

including, b ut not limited to, demographic factors such as age,

income, education, size class preference, product popularity,

retail lease transactions, or other factors affecting sales to

consumers of the community or territory. Ñ § 320.642(2)(b)3. ,

Fla. Stat.

9 8. In addition to the segmentation analysis discussed

above, which takes into consideration vehicle size and class

preference, both MMA and SMM presented extensive evidence

regarding the potential effect of the Miami Comm/Terr Hispanic

population, and the lack of Spanish - language advertising by MMA

and the Miami Comm/Terr Mazda dealer group.

99. SMM argues that there are unique demographic factors in

the Comm/Terr which explain why Mazda Ó s market penetration

dropped from 2011 to 2012 and through July 2013. Further, SMM

argues that MMA Ó s failure to conduct advertising in Spanish , i n

the Miami Comm/Terr , resulted in Mazda Ó s declining market

penetration. These arguments were not supported by credible

evidence.

100. Miami - Dade County makes up the vast majority of the

Comm/Terr . The population of Miami - Dade County is 67% Hispanic.

By contrast, the population of Broward County is just 27%

Hispanic.

101. Within Miami - Dade County more than 50% of the Hispanic

population is Spanish d ominant, meaning that they speak mostly or

only Spanish. Spanish d ominance is high across Hispanic

nationalities and socio - economic levels.

102. A vast majority of the Hispanic population in Miami -

Dade County are Latin Americans who immigrated to this Count ry.

The population of Miami - Dade County is such that Spanish speakers

immigrating to the county are not required to assimilate by

learning English. Even those Spanish speakers who also speak

English are able to live their daily lives without communicatin g

in English. A large portion of the Miami - Dade County population

consumes Spanish media, in the form of El Nuevo Herald (the

Spanish language version of The Miami Herald); the numerous

Spanish language radio stations; and the four Spanish broadcast

telev ision (TV) stations.

103. Spanish broadcast TV stations are the most popular in

Miami - Dade County. The two top - rated six o Ó clock TV newscasts in

Miami - Dade County are on Spanish stations. Among broadcast TV

viewers, greater than 50% watch Spanish T V stations between the

hours of 6:00 p . m . and 11:00 p . m.

104. Because of the high concentration of Hispanics in

Miami - Dade County, along with the high percentage of Hispanics

that are Spanish d ominant and the popularity of Spanish media,

Spanish adve rtising is very common throughout Miami - Dade County.

105. There are three categories or Ð tiers Ñ of advertising

in the automotive industry Î - Tier 1, Tier 2 , and Tier 3.

106. Tier 1 advertising is designed to promote the Mazda

brand to a national audience ; for example , a Mazda automobile

advertisement during a sporting event. MMA pays for all Tier 1

advertising.

107. Tier 2 advertising is designed to advertise the Mazda

brand in connection with specific offers available to potential

custom ers in a market area, and usually includes some reference

to the local dealers.

108. Dealer groups, known as Dealer Marketing Groups

(DMGs), purchase Tier 2 advertising with funds derived from two

sources: 1) member dealers contribute on a per - car basis for all

cars purchased from MMA (currently 1.5% of base MSRP) 6 / ; and

2) MMA contributes an additional amount (currently $.50 for each

dollar contributed by dealers).

109. DMGs are formed when dealers in the same media market

area, known as a D ominant Market Area (DMA), voluntarily join

together to pool their advertising dollars to fund advertising in

their DMA. South Motors, Ocean , and North Miami are not part of

a DMG.

110. If a dealer is not a member of a DMG, the per - car

contribution that would otherwise go to the DMG is kept by the

dealer and can be used for advertising.

111. DMGs work with MMA to make advertising buys in the

local media. MMA Ó s advertising agency will propose advertising

content and buys, and the DMGs decide h ow and on what ads to

spend their money.

112. Prior to DMGs, Mazda dealers joined Tier 2 marketing

groups known as voluntary or Ð Vol Ñ groups, which were similar to

DMGs, and used dealer contributions and matching funds from MMA

to engage in Tier 2 a dvertising. The Vol groups disbanded in

2012 when the DMG program began.

113. Not all Mazda dealers are in DMGs. A single point

market (only one Mazda dealer) does not have a DMG because with

no pooling of funds, the dealer can make its own decisi on about

advertising content and buys. In multi - point markets (more than

one Mazda dealer), if the dealers voluntarily agree to form a

DMG , MMA will support them. If dealers in a market decide not to

form a DMG, MMA does not attempt to force them. If M MA were to

provide funds for Tier 2 advertising in markets where there is no

DMG, it would discourage dealers from participating in DMGs and

contributing to the cost.

114. MMA has 18 multi - point markets in the Southeast

Region, and ten do not have DM Gs. The Mazda dealers in Nashville

and Winston - Salem formed DMGs and later disbanded them. MMA

currently has six multi - point markets in Florida with DMGs and

two multi - point markets without DMGs.

115. There are two DMGs in Florida with some, but no t all,

dealers participating - Î West Palm and Orlando. In Palm Beach

County, there are two high - volume dealers in the southernmost

part of the county who agreed to form a DMG because the dealers

to the north do not compete with them.

116. In Orlando, there is one dealer in Ocala who is on the

fringe of the DMG and does not strongly compete with the f ive

Orlando dealers in the DMG.

117. MMA prefers not to have DMGs with less than all

dealers participating because of the Ð free rider Ñ problem, wher e

the non - participating dealers may benefit from the advertising

paid for by the participating dealers. In both West Palm and

Orlando, all of the dealers are aware of and have consented to

the formation of the DMGs without the participation of all

dealers in these DMAs.

118. Tier 3 advertising is designed to persuade individual

local consumers to do business with a particular dealership ; for

example , advertising of the dealership in local media, the

internet , or on billboards.

119. Each individ ual dealership pays for its Tier 3

advertising. MMA reimburses a portion of each dealership Ó s

Tier 3 advertising costs by crediting the dealer Ó s account with

amounts known as Co - Op funds. In addition to Co - Op funds, if a

dealer is not a member of a DMG , the per - car contribution that

would have gone to the DMG is returned to the dealer and can be

used for additional Tier 3 advertising.

120. In addition to providing funds for the three

advertising tiers, MMA periodically has available regional

marketi ng funds used for additional regional advertising or

events, or to assist dealers with grassroots events or additional

local advertising.

121. MMA ran Tier 1 advertising in English during all times

relevant to this proceeding. Tier 1 advertising p rovides the

same coverage in all markets for all dealers. Beginning in 2013,

MMA increased its Tier 1 advertising to be Ð always on Ñ for all

dealers 52 weeks a year.

122. Since October 2010, the majority of Mazda Hispanic

advertising has been at the Tier 2 level by the Vol groups or

DMGs. MMA Ó s decision to shift Hispanic advertising to the Tier 2

level is consistent with its overall marketing strategy to put

greater emphasis on local versus national media.

12 3 . MMA Ó s marketing strategy allows DMGs to focus on

Hispanic advertising in markets where there is a large population

of Spanish - dominant speaking consumers.

12 4 . DMGs vote and determine whether to engage in Hispanic

advertising. DMGs in some markets have elected to engage in

Hisp anic advertising. Currently, DMGs engage in Hispanic

advertising in the following markets Î - Tampa, Orlando, West Palm,

Los Angeles, Sacramento, San Francisco, Houston, Dallas, and the

lower Rio Grande Valley.

12 5 . In 2013, MMA investigated the feasi bility of a Tier 1

national Hispanic advertising effort, but concluded that Hispanic

advertising was best done at the Tier 2 and 3 levels.

12 6 . MMA is not the only manufacturer that does not engage

in Hispanic advertising at the Tier 1 level Î - Kia and Hyundai do

not conduct Tier 1 Hispanic advertising. In addition, at various

times from 2010 to 2013, Hyundai, Buick, Mitsubishi, Volvo, GMC,

Smart, Subaru, and Mini have not engaged in Tier 1 Hispanic

advertising on local Spanish TV stations in the Miami -

Dade/Broward market.

12 7 . MMA decided not to do Tier 1 Hispanic advertising

because over two - thirds of the national Hispanic audience either

speak English fluently or speak both English and Spanish.

12 8 . Miami - Dade and Broward c ounties compr ise one market

for advertising purposes (Miami - Dade/Broward Market).

1 29 . MMA Ó s Tier 1 advertising reaches a national audience

(which would include the Miami - Dade/Broward Market) through its

national TV, digital, and print categories. Through 2012 , MMA

engaged in Tier 1 English and Hispanic advertising in the

Miami - Dade/Broward market, including Tier 1 Hispanic advertising

on local Spanish TV stations. In 2013, MMA continued its Tier 1

English advertising in the Miami - Dade/Broward Market and also

conducted a small amount ($5,663 .00 ) of Tier 1 Hispanic

advertising on local Spanish TV stations.

13 0 . Garage Team Mazda is MMA Ó s contracted advertising

agency and tracks MMA Ó s media planning and spending. Garage Team

Mazda prepares summaries of M MA spending on Tier 1 and Tier 2

advertising. MMA and Garage Team Mazda compute the actual

advertising dollars spent in the Miami - Dade/Broward M arket by

taking the percentage of U.S. households defined by Nielsen to be

in the Miami - Dade/Broward M arket (1. 4%) and applying that

percentage to the total national spending.

13 1 . For the fiscal year ending March 201 0 , MMA spent

$30,407,616.00 on Tier 1 TV advertising, of which 1.4%, or

$425,706.00 was spent in the Miami - Dade/Broward market. For the

fiscal year ending March 2011, MMA spent $35,715,344.00 on Tier 1

TV advertising, of which 1.4%, or $500,014.00 was spent in the

Miami - Dade/Broward M arket. For the fiscal year ending

March 2012 , MMA spent $80,401,232.00 on Tier 1 TV advertising, of

which 1.4%, or $1,125,617.00 was spent in the Miami - Dade/Broward

M arket.

133. For the fiscal year ending March 2013, MMA spent

$87,530,735.00 on Tier 1 TV advertising, of which 1.4%, or

$1,225,430.00 was spent in the Miami - Dade/Broward M arket. For

the fiscal y ear ending March 2014, MMA spent $108,065,318.00 on

Tier 1 TV advertising, of which 1.4%, or $1,512,914.00 was spent

in the Miami - Dade/Broward M arket.

134. These sums represent only Tier 1 advertising on

national TV , and do not include other Tier 1 a dvertising such as

national radio, print, spot TV, digital, etc.

135. Tony Garcia, SMM Ó s advertising expert, testified that

MMA Ó s spending on general and Hispanic advertising in Miami - Dade

and Broward c ounties has been decreasing, and as a result Maz da

Ð gets lost in the shuffle. Ñ However, Mr. Garcia based his

conclusions on advertising spending figures that include only a

limited number of local TV stations ; and , even for those

stations , the figures do not include national broadcast

advertising. As a result, Mr. Garcia does not know what

additional Tier 1 advertising each manufacturer is doing. The

Tier 1 spending in Mr. Garcia Ó s report could reflect as little as

5% or more than 75% of Tier 1 spending in the Miami - Dade/Broward

M arket ; and , thus , Mr. Garcia did not know the true percent of

spending for Tier 1 advertising of each brand.

136. With regard to Tier 2 spending, Mr. Garcia did not

know whether the data he relied on included all Tier 2 spending

by dealer advertising associations or whet her the data correctly

segregated Tier 1 and Tier 2 spending.

137. Mr. Garcia also testified that MMA Ó s Mazda advertising

is not reaching an important segment of the market, specifically

Hispanics. However, Mr. Garcia does not know what portion of the

Hispanic population that speaks Ð mostly Spanish Ñ is not reached

by English language advertising. Mr. Garcia also does not know

how likely Hispanics are to purchase new motor vehicles, but

admits that is something a new car dealer would want to know

be fore spending money on Hispanic advertising.

13 8 . Roughly 12.5% of the Miami - Dade population speak only

Spanish.

13 9 . Before the DMG program started in 2012, all Mazda

dealers in Miami - Dade and Broward c ounties belonged to the Vol

group and en gaged in Tier 2 English and Hispanic advertising.

The Miami - Dade/Broward Mazda Vol group did not agree on Hispanic

advertising and compromised on spending a very small amount on

Hispanic advertising.

1 40 . The Miami - Dade/Broward Mazda Vol group dis banded at

the start of the DMG program. Hispanic advertising placed by the

Vol group continued to run in the Miami - Dade/Broward Market until

February or March 2012.

14 1 . After the Vol group disbanded, the dealers in the

Miami - Dade/Broward M arket di d not agree to form a DMG because

some dealers were not interested.

14 2 . Mazda dealers are free to engage in Hispanic

advertising at the Tier 3 level and , in fact , can use the funds

that would otherwise go to the DMG, along with Co - Op funds which

are reimbursed by MMA.

14 3 . MMA cannot force its dealers to join a DMG.

Less than all of the dealers can form a DMG, but this was not

proposed by SMM, Ocean , or North Miami.

14 4 . Mazda dealers can also request reimbursement for

advertising, inclu ding Hispanic advertising, from the Region Ó s

yearly marketing funds. In January 2013, SMM requested regional

marketing funds to reimburse expenses of a Ð grass roots event. Ñ

The request was not approved due to a lack of funds left in the

regional budget fo r the fiscal year ending March 31, 2013.

14 5 . The open point SOA is 63.79% Hispanic, the second -

highest Hispanic density of all the Mazda SOAs in Florida. In

2012, SMM sold 73 new Mazda vehicles to customers in the open

point SOA, while North Miami sold 204. The disparity in the

ability of these two dealers to penetrate the open point SOA - -

under the same conditions of no DMG and no Hispanic Tier 2

advertising - - belies the contention that Mazda Ó s performance in

the open point SOA is affected by a lack of Hispanic advertising.

14 6 . If the lack of Tier 1 and/or Tier 2 Spanish language

advertising is hampering SMM Ó s ability to sell to customers in

the open point SOA, North Miami would not be able to sell almost

three times as many vehicles to custom ers in the same highly

Hispanic SOA. The disparity points to differences in individual

dealer operations, not a lack of Hispanic advertising.

14 7 . SMM also contends that the cessation of Tier 2

advertising, in any language, in March 2012 is responsi ble for

Mazda Ó s declining market penetration in the Miami Comm/Terr.

However, as noted above, the performance of all the SOAs in

Broward and Dade c ount ies had already peaked in 2010 and had

started to decline in 2011. After the Miami - Dade and Broward

dea lers Ó DMG ceased, the per - car contributions by the dealers

were returned by Mazda to the dealers, which funds may be spent

on advertising or other purposes.

14 8 . Based on a consideration of all relevant evidence, it

is determined that the economic a nd marketing conditions in the

Miami Comm/Terr are not likely causes of the inadequate

representation and , in fact , support the need for the

establishment of Brickell Mazda .

14 9 . Based on a consideration of all relevant evidence, it

is determined th at the Hispanic population in the Miami Comm/Terr

and the end of Tier 2 Hispanic and/or English advertising in 2012

are not likely causes of the inadequate representation.

D. Action by MMA Denying Existing Dealers Opportunity for

Reasonable Growth and Market Expansion

1 50 . There is no evidence establishing that MMA has taken

any action to deny existing dealers an opportunity for reasonable

growth and market expansion.

E. Attempts by MMA to Coerce Existing Dealers to Consent to

the Proposed Additional Dealer

15 1 . There is no evidence establishing that MMA attempted

to coerce existing dealers to consent to the proposed additional

dealer.

F. Distance, Travel Time, Traffic Patterns, and

Accessibility Be tween Existing Dealers and the Location

of the Proposed Additional Dealer

15 2 . As discussed in greater detail above, SMM, Ocean,

North Miami, and the proposed Brickell Mazda location are all

accessible by major north/south and east/west tho roughfares.

Travel times between existing dealers and the proposed location

will vary significantly depending upon traffic conditions.

15 3 . The drive time between the Proposed Point and SMM is

approximately 20 to 25 minutes but will take longer if t here is

congested traffic. The establishment of Brickell Mazda will

reduce the average distance to the nearest Mazda dealer in the

Miami Comm/Terr in half and eliminate any significant drive time

for those who live and work in the immediate downtown Miami area.

G. Benefits to Consumers Not Likely to be Obtained by

Geographic, Demographic, or Other Expected Changes

15 4 . As discussed above, it is likely that consumers will

benefit from Brickell Mazda Ó s opening, through greater

convenien ce in accessing Mazda sales and service, and increased

competition among competitive dealerships and Mazda dealers,

resulting in lower prices and improved facilities with better

customer care and service.

H. Whether the Protesting Dealer is in Compl iance with Its

Dealer Agreement

15 5 . SMM is in compliance with its Mazda franchise

agreement.

I. Adequacy of Interbrand and Intrabrand Competition and

Adequacy of Convenient Consumer Care, including Adequacy

of Sales and Service Facilities

15 6 . The presence of interbrand competition (Mazda dealers

vs. other brand dealers) and intrabrand competition (Mazda

dealers vs. other Mazda dealers) in the Miami Comm/Terr is also

assessed as a factor influencing consumer b ehavior.

15 7 . With respect to intrabrand competition, existing

dealers strenuously compete for new Mazda vehicle sales and

service business throughout the Comm/Terr . Each of the three

existing Mazda dealers in the Comm/Terr sells into the SOAs in

wh ich the other dealers are located, and into the open point SOA

in which the proposed additional dealer would be located.

However, Ocean and SMM consistently lagged behind North Miami in

terms of market performance.

15 8 . With respect to interbrand c ompetition, every line -

make that Mazda competes with is represented by at least one

dealer in the Comm/Terr (all line - makes except for Smart have

more than one dealer). The evidence is that there is inadequate

interbrand competition because consumers are not buying Mazda

vehicles at the rate projected by the Broward average benchmark,

thus indicating their dissatisfaction with the Mazda dealer

network in the Miami Comm/Terr.

J. Whether the Proposed Additional Dealer is Justified

Based on Eco nomic and Marketing Conditions

15 9 . The Miami Comm/Terr, which is composed of the four

SOAs of North Miami, Ocean, SMM, and the open point, constitutes

a big market, by any measure, with a 2012 population of roughly

3,080,000. The four SOAs all hav e significant concentrations of

populations, with the open point SOA having the greatest density

of population.

1 60 . Mr. Farhat testified that this indicates a Ð hole for

the Mazda network Ñ where Brickell is proposed, and where there is

no current c onvenient Mazda dealership.

16 1 . The same pattern is true for households in the Miami

Comm/Terr, with high household density and past and projected

growth both throughout the area and in the open point SOA. A

general pattern of population, househol d, and employment growth,

while not a direct predictor of new vehicle sales, does indicate

more new vehicle sales over time. Based on the overall

population and number of households, the Miami Comm/Terr is a

very large, strong, and growing market in terms of new vehicle

sales opportunities.

16 2 . Employment in Miami - Dade County has also grown

steadily since the bottom of the recent economic recession in

2009, another positive indicator for new vehicle sales.

Households with median incomes between $25 ,000 and $85,000

(potential Mazda purchasers based on buyer reports), are found

throughout the Miami Comm/Terr, a further indicator of new Mazda

vehicle sales opportunities.

16 3 . Mr. Farhat assessed the number of Mazda dealerships

relative to competi tor dealerships to calculate Mazda Ó s Ð shelf

space, Ñ or share of franchise. Mr. Farhat calculated that

Mazda Ó s share of franchises in the Miami Comm/Terr of 3.1% is low

compared to 4.9% in the Broward SOAs and 4.7% in the Florida

Represented SOAs, which ha s caused Miami Comm/Terr consumers to

buy other brands and not Mazda. Mazda has three dealers in the

Miami Comm/Terr. Only four other competitive brands (Fiat,

Subaru, Mini , and Smart) have three or fewer dealers. Fourteen

other competitive brands have four or more dealers. MMA wants to

be located where its competitors have dealers.

16 4 . Using regression analysis, Mr. Farhat testified to the

direct correlation between shelf space and higher market share,

and concluded that the Miami Comm/Terr ne eds Ð 4.8 Mazda dealers,

or, essentially, more than four, which is five Ñ dealers in order

to be able to achieve the Broward average. Using the more

conservative Florida R epresented standard, Mazda would still need

more than four dealers to achieve the same shelf space as its

competitors, indicating that the Miami Comm/Terr is too big for

just three Mazda dealers.

16 5 . Based on a consideration of all relevant evidence, it

is determined that the economic and marketing conditions in the

Miami Comm/Terr support the need for the establishment of

Brickell Mazda .

K. Volume of Registrations and Service Business Transacted

by Existing Dealers

16 6 . As discussed above , the existing dealers are not

meeting the Broward average or the Florid a Represented benchmark

for registrations. Registrations have been declining in the

Miami Comm/Terr for the last three years.

16 7 . With only three Mazda dealers, the Miami Comm/Terr

currently provides the greatest sales opportunity per dealer

among all Florida markets. If Brickell Mazda is added, the Miami

Comm/Terr will have four Mazda dealers and will still present

substantial opportunities for sales, ranking as the second

largest opportunity per dealer just behind Orlando.

16 8 . The same is true with respect to expected service

opportunities as measured by units in operation per dealer. With

three dealers, the Miami Comm/Terr currently provides the largest

service opportunity per dealer among all Florida markets. If

Brickell Mazda is added, the Miami Comm/Terr will still be a very

large service market, ranking fourth in opportunity per dealer

behind Orlando.

CONCLUSIONS OF LAW

16 9 . The Division of Administrative Hearings has

jurisdiction over the parties to, and the subject matter of,

these proceedings. § 120.569, Fla. Stat.

1 70 . Petitioner has standing to protest the proposed

additional dealer pursuant to section 320.642(3)(b)2., Florida

Statutes.

17 1 . MMA bears the burden of establishing, by a

preponderance of the evidence, that existin g franchised Mazda

dealers who register retail sales or retail leases of new Mazda

vehicles in the Comm/Terr of the proposed additional dealer are

not providing adequate representation of Mazda in the Comm/Terr.

§ 320.642(2)(a)2., Fla. Stat.; BMW of N . Am . , LLC, et al. v.

Pompano Imports, Inc., et al. , Case Nos. 08 - 1160, 08 - 1161,

08 - 1295, 08 - 1296, and 08 - 1321 at 64 (Fla. DOAH Apr . 27, 2009;

DMSMV June 18, 2009).

17 2 . This matter is governed by chapter 320, including the

eleven non - exclusive factors to asse ss the adequacy of

representation set forth in section 320.642(2)(b ) :

In determining whether the existing

franchised motor vehicle dealer or dealers

are providing adequate representation in the

community or territory for the line - make, the

department may c onsider evidence which may

include, but is not limited to:

1. The impact of the establishment of the

proposed or relocated dealer on the

consumers, public interest, existing dealers,

and the licensee; provided, however, that

financial impact may only be considered with

respect to the protesting dealer or dealers.

2. The size and permanency of investment

reasonably made and reasonable obligations

incurred by the existing dealer or dealers to

perform their obligations under the dealer

agreement.

3. The reasonably expected market

penetration of the line - make motor vehicle

for the community or territory involved,

after consideration of all factors which may

affect said penetration, including, but not

limited to, demographic factors such as age,

income, edu cation, size class preference,

product popularity, retail lease

transactions, or other factors affecting

sales to consumers of the community or

territory.

4. Any actions by the licensees in denying

its existing dealer or dealers of the same

line - make the opportunity for reasonable

growth, market expansion, or relocation,

including the availability of line - make

vehicles in keeping with the reasonable

expectations of the licensee in providing an

adequate number of dealers in the community

or territory.

5. Any attempts by the licensee to coerce

the existing dealer or dealers into

consenting to additional or relocated

franchises of the same line - make in the

community or territory.

6. Distance, travel time, traffic patterns,

and accessibility between the ex isting dealer

or dealers of the same line - make and the

location of the proposed additional or

relocated dealer.

7. Whether benefits to consumers will likely

occur from the establishment or relocation of

the dealership which cannot be obtained by

other ge ographic or demographic changes or

expected changes in the community or

territory.

8. Whether the protesting dealer or dealers

are in substantial compliance with their

dealer agreement.

9. Whether there is adequate interbrand and

intrabrand competition with respect to said

line - make in the community or territory and

adequately convenient consumer care for the

motor vehicles of the line - make, including

the adequacy of sales and service facilities.

10. Whether the establishment or relocation

of the prop osed dealership appears to be

warranted and justified based on economic and

marketing conditions pertinent to dealers

competing in the community or territory,

including anticipated future changes.

11. The volume of registrations and service

business tran sacted by the existing dealer or

dealers of the same line - make in the relevant

community or territory of the proposed

dealership.

17 3 . The purpose of s ection 320.642 was summarized in Bill

Kelley Chevrolet v. Calvin , 322 So. 2d 52 (Fla. 1st DCA 1975),

c ert. den ied 336 So. 2d 1180 (Fla. 1976), as follows:

The purpose of § 320.642, F.S. 1973, is to

prevent powerful manufacturers from taking

unfair advantage of their dealers by

overloading a market area with more dealers

than can be justified by the legitim ate

interests of the manufacturer and its

dealers, existing and prospective.

Plantation Datsun, Inc. v. Calvin , 275 So. 2d

26 (Fla. 1st DCA 1973). Its purpose is not

to foster combinations to prevent the

introduction of dealer competition which is

reason ably justified in terms of market

potential. Antitrust laws have proscribed

such combinations in the United States since

1890 and in this State since 1915. Tit. 15

U.S.C. § 1 et seq.; Ch. 6933, Fla. Laws 1915

as amended, Ch. 542, F.S. 1973.

17 4. This p roceeding requires a balancing of any deficiency

in MazdaÓs performance within the Comm/Terr, the degree to which

that deficiency will be addressed by the proposed additional

dealer, and the impact the proposed additional dealer will have

upon the other ex isting dealers and consumers. Gen . Motors Corp.

v. Roger Whitley Chevrolet, Inc. , Case Nos. 03 - 4083 and 03 - 4084

at 24 - 25 (Fla. DOAH Feb. 16, 2005; DHSMV May 9, 2005).

175. That MMA may be better represented in the Comm/Terr if

the proposed additional dea ler is established is not dispositive

of the issue of whether the proposed additional dealer should be

approved. BMW of North America , at 68.

17 6 . Neither may MMA satisfy its burden of proof by simply

establishing that existing Mazda dealers could do a b etter job:

In making the determination that a

manufacturer is not being adequately

represented in a market, it is not enough to

simply conclude that the existing dealers

could do a better job, or that the proposed

dealer network change will improve the

man ufacturerÓs performance in the market.

Hess Marine, Inc. v. Calvin , 296 So. 2d 114,

115 (Fla. 1st DCA 1974). While, however, one

must not forget the famous words of Louise

Heath Leber that Ð [t]hereÓs always room for

improvement, you know - itÓs the biggest room

in the house, Ñ that sentiment does not equate

to inadequate representation. The real focus

of proceedings brought under Section 320.642

is whether the existing dealers are doing

enough.

Gen . Motors Corp. v. Roger Whitley Chevrolet, Inc. , s upra .

17 7 . Rather, MMA must establish that existing Mazda

representation in the Comm/Terr falls short of the standard of

Ð adequacy. Ñ Adequate representation does not equate to

exceptional representation. Adequate representation refers to

representation that is ju st barely satisfactory or sufficient.

BMW of North Am . , at 69 - 70; see also United Steelworkers of Am .

v. Marshall , 647 F.2d 1189, 1251 (D.C. Cir. 1980) ( Ð ÒAdequately,Ó

both in normal use and as a contemporary legal cliché, means

ÒsuitablyÓ or ÒpassablyÓ or Òjust barely.Ó Ñ ).

17 8. The Florida statute does not proscribe what weight, if

any, should be given to each factor, in contrast to WashingtonÓs

law that requires that each factor be given equal weight. See

§ 46.96.160, Wash. Rev. Code Ann .

17 9 . In Loke y Oldsmobile Countryside, Inc. v. Sunshine

Chevrolet - Geo - Oldsmobile, Inc. , Case N o . 92 - 0021 ( Fla. DOAH

Sept. 21, 1992; DHSMV Nov. 5, 1992), the Hearing Officer

recognized this balancing test and held that:

Application of the criteria set forth in

Section 3 20.642(2)(b)1, Florida Statutes, to

the evidence presented at hearing reveals

that the negative impacts that could occur

from the relocation involve economic and

marketing conditions pertinent to [the

protesting dealer]. These negative impacts,

such as the loss of two census tracts with

its financial impact on [the protesting

dealer], must be balanced with the overall

impact of the proposed relocation on the

public and all of the dealers in the

territory.

Lokey , ¶ 28. The Hearing Officer further concluded that Ð the

temporary adverse impact of the proposed relocation . . . is

outweighed by the long term advantages, Ñ such as increased

convenience and competition. Lokey , ¶ 29.

1 80 . Similarly, in American Honda Motor Co. v. Hollywood

Imports, Inc. , Case No. 95 - 3673 ( Fla. DOAH June 7, 1996 ; DHSMV

Sept. 12, 1996), affirmed by Hollywood Imports, Ltd., Inc. v.

American Honda Motor Co. , 695 So. 2d 793 (Fla. 1st DCA 1997), the

Hearing Officer found that because Hollywood Honda, the

protesting dealer, made 34% of it s sales in the primary market

area where the proposed relocation would occur, it was

Ð reasonable to expect that Hollywood Honda would lose sales . . .

if the relocation is approved. Ñ Id. ¶ 37. However, the Hearing

Officer held that Ð [i]n weighing the imp acts of this proposed

relocation, it is concluded that the benefits to the public and

to the dealer network outweigh the impact the relocation will

have Ñ on the protesting dealer. Id. ¶ 42.

18 1 . These cases demonstrate that any impact on the

existing dea ler must be weighed against the benefits that could

be provided by a proposed relocation or additional dealer.

18 2 . The Miami Comm/Terr has experienced considerable

economic and market growth. Population, households, employment,

and new car registrations have all expanded substantially and

rapidly since as far back as 2000. All of this growth, with

Mazda representation below reasonably expected levels for at

least the last three and one - half years, also indicates

inadequate representation.

18 3 . The exis ting Mazda dealers are located far enough away

from Brickell Mazda's proposed location that their sales are not

likely to be substantially impacted by Brickell Mazda's

establishment.

18 4 . The greater convenience offered by interbrand

competitors, in and n ear Brickell Mazda's proposed location, has

resulted in inadequate Mazda interbrand competition in the open

point SOA. This is reflected in MazdaÓs low market share as

compared to the expected market share in the open point SOA.

18 5 . In the Miami Comm/T err, currently there are seven

Toyota Dealers, seven Honda Dealers, five Nissan Dealers, five

Hyundai , and five Kia dealerships covering the same geographical

territory as three Mazda dealerships. There is not enough Mazda

dealer presence in the Miami - Dad e/Broward M arket for MMA or its

dealers to adequately compete with their major competitors.

18 6 . Credible evidence establishes that the optimal

location for a fourth Mazda dealership is at Brickell Mazda's

proposed location, which will achieve maximum sep aration between

dealers, as opposed to the previous , more crowded dealer network.

Brickell Mazda's location will allow it to serve the burgeoning

growth in downtown Miami. With the addition of Brickell Mazda,

there will be optimal customer convenience f or sales and service

of Mazda vehicles throughout the Miami Comm/Terr.

18 7 . The concept that conquest sales (gross registration

losses) plus in - sell sales by other dealers represents lost

opportunity has been affirmed in other cases, including General

Mot ors Corporation , Chevrolet Division v. Anthony Abraham

Chevrolet Co., et al. , Case No. 95 - 2543 ¶ 40 (Fla. DOAH

Sept. 5, 1997; DHSMV Oct. 17, 1997) ; Terry Ford Co. v. Hollywood

Ford, Inc., et al. , Case No. 94 - 0402 ¶ 45 (Fla. DOAH June 13,

1995; DH S MV July 1 4, 1995)(Rec. Order); and Southeast Toyota

Distributors, Inc. viangle Auto Center, Inc. , Case N o. 97 -

2002 ¶ 34 (Fla. DOAH June 19, 1998; DHSMV Aug. 1, 1998)(Rec.

Order).

18 8 . The concept that there will be no additional sales

generated by the new deal er (a Ð fixed pie Ñ ) was rejected in

General Motors Corporation/Pontiac Motor Division v. Colonial

Pontiac, Inc. , Case No. 89 - 6832 ¶ 28 (Fla. DOAH Aug. 21, 1991;

DHSMV Jan. 29, 199 2 ) (The protesting dealer's calculation of

financial impact was Ð inherently fl awed Ñ because it was Ð based on

the fundamental assumption that there will be no additional sales

generated by the new dealer, and in fact, that there would be a

net loss of sales. This primary assumption is rejected as not

established by persuasive eviden ce. Ñ ).

18 9 . The failure of the existing dealers to reach minimum

expected market share in the Miami Comm/Terr, and the existence

of in - sell from dealers outside the Miami Comm/Terr, demonstrate

that existing Mazda dealers are not nearly capturing all

re asonably available sales.

19 0 . No credible evidence was presented that a lack of

Tier 2 Hispanic advertising caused the existing dealers' poor

performance in the Miami Comm/Terr. Moreover, Tier 2 advertising

is the responsibility of the local dealers ; so , to the extent the

existing dealers were not providing adequate Tier 2 Hispanic

advertising, which caused poor performance, this confirms that

Mazda is not receiving adequate representation. See Gen . Motors

Corp . Pontiac Motor Div . & Trevor Duhaney v. Co lonial Pontiac,

Inc. , s upra . ( Ð More importantly, local advertising is the

responsibility of the local dealers. Thus to the extent that the

local dealers are not providing adequate advertising,

Petitioner's contention that it is not receiving adequate

repr esentation is confirmed. Ñ ).

19 1 . MMAÓs experiences in Wesley Chapel, Jacksonville, and

Royal Palm Beach confirm that an additional, properly located

dealer stimulates increased sales for Mazda dealers across the

market.

19 2. If existing Mazda dealers res pond positively and offer

competitive value, they will likely capture some of the increased

sales generated by Brickell Mazda's opening. Volkswagen of Am . ,

Inc. v. Pompano Imports, Inc. , Case No. 98 - 2394 ¶¶ 71, 74 ( Fla.

DOAH Dec. 17, 1999) (reasonable to anticipate that protesting

dealer will respond competitively to additional dealer and offset

any loss of sales); Gen . Motors Corp . Chevrolet Div . & Beacon

Motors, Inc. v. Anthony Abraham Chevrolet Co., et al. , s upra .

¶ 41 (stimulated competitive response s hould benefit the

surrounding Chevrolet dealers).

19 3 . When the existing dealers become more competitive,

they can take advantage of their geographic locations to increase

penetration near their own dealerships.

19 4 . S MM did not offer any reliable compet ent evidence that

its sales would be negatively impacted by Brickell Mazda 's

opening. SM M Ó s expertÓs evaluation of the sales to be lost in

the event of Brickell MazdaÓs opening was unsupported by credible

evidence.

19 5 . MMA's expertÓs opinion, that S MM Ós sales would

increase after Brickell Mazda opens, is based on competent

evidence and empirical data and is accepted as true.

19 6 . With over three million people, Miami - Dade is the most

populous county in Florida. Mazda has three dealerships in the

Miami Comm/Terr, while its major Asian competitors have no less

than five dealerships . Honda and Toyota ha ve seven . MazdaÓs

market share in the Miami Comm/Terr is a fraction of neighboring

Broward C ounty (which is heavily Hispanic and share s the same

advertisi ng association as Miami) and is lower than the Florida

Represented standard. The Miami Comm/Terr has been declining ,

and Mazda must re - establish representation in order to create

better customer convenience and competitiveness in a market where

it is not able to adequately compete.

19 7 . The likely benefits to the public and to the dealer

network from the addition of Brickell Mazda outweigh any negative

impact it may have on SMM.

19 8 . Taking all of the relevant factors listed in

s ection 320.642 into cons ideration, MMA demonstrated by a

preponderance of the evidence that the existing Mazda dealers are

not adequately representing Mazda in the open point SOA or in the

Miami Comm/Terr.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that :

A final order be entered by the Department of Highway Safety

and Motor Vehicles granting the application to establish Miami

Automotive Retail, Inc., d/b/a Brickell Mazda, as a dealer for

the sale and service of Mazda vehicles, with sales to be located

at 618 Southwest Eighth Street, Miami, Miami - Dade County, Florida

33130, and service to be located at 665 Southwest Eighth Street,

Miami, Miami - Dade County, Florida 33130.

DONE AND ENTERED this 1st day of August , 2014 , in

Tallahass ee, Leon County, Florida.

S

MARY LI CREASY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1st day of August , 2014 .

ENDNOTE S

1/ ÐLine - makeÑ refers to a group of vehicles sold under a common

name, trademark, service mark, or brand. § 320.60(14), Fla.

S tat.

2/ MMA previously gave notice of the establishment of Brickell

Mazda in 2011, SMM protested and MMA withdrew the notice (DOAH

Case Nos. 11 - 4529 and 11 - 4538).

3/ As discussed in further detail herein, the ÐBroward averageÑ

refers to what the unders igned has concluded is the appropriate

benchmark used to determine whether Mazda is currently achieving

a reasonably expected level of market penetration in the Miami

Comm/Terr.

4/ The financial impact may only be considered with respect to

the protestin g dealer or dealers. § 320.642(2)(b)1 . , Fla. Stat.

5/ Since it opened in 2007, SMM has not had a profitable year.

Its total losses to date exceed $5.5 million, with average yearly

losses in the range of $800,000 per year. One might question why

South Motors Automotive Group continues to operate South Motors

Mazda given the level of losses it has sustained. Historically,

South Motors Automotive Group has been very successful by opening

dealerships representing line - makes with a relatively small U.S.

pre sence and growing those dealerships as the line - makes have

grown (e.g. , since South Motors Automotive Group opened

dealerships representing BMW, Honda, Infiniti, and MINI , BMW

registrations nationally have more than tripled; Honda and

Infiniti registration s nationally have increased nearly five

times; and MINI registrations nationally have nearly tripled).

South Motors Automotive Group maintains SMM because it believes

the same trend is possible with the Mazda line - make.

6/ ÐMSRPÑ is manufacturerÓs sugges ted retail price.

COPIES FURNISHED:

Jennifer Clark, Agency Clerk

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building, Room A430

2900 Apalachee Parkway, MS 61

Tallahassee, Florida 32399

John W. Forehand, Esquire

South Motors Automot ive Group

16165 South Dixie Highway

Miami, Florida 33157

J. Andrew Bertron, Esquire

Melissa Fletcher Allaman, Esquire

Nelson, Mullins, Riley,

and Scarborough, LLP

Suite 202

3600 Maclay Boulevard, South

Tallahassee, Florida 32312

Craig Julian Trigobof f, Esquire

Waldman, Trigoboff, Hildebrandt,

Marx and Calnan, P.A.

Suite 202

2200 North Commerce Parkway

Weston, Florida 33326

Juan P. Loumiet, Esquire

Greenberg Traurig, P.A.

Suite 4400

333 Avenue of the Americas

Miami, Florida 33131

Terry L. Rhodes , Executive Director

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building, Room B - 4 43

2900 Apalachee Parkway

Tallahassee, Florida 32399 - 0 500

Steve Hurm, General Counsel

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Buil ding , Room A - 432

2900 Apalachee Parkway

Tallahassee, Florida 32399 - 0500

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recomme nded Order should be filed with the agency that

will issue the Final Order in this case.