Chain To Buy Appleway Dealerships Republic Industries To Acquire Company For $42 Million

In a deal that may change the way Inland Northwest consumers buy cars and trucks in the future, the Appleway Group has agreed to sell its five Valley dealerships to a rapidly growing national automotive chain.

Fort Lauderdale, Fla.-based Republic Industries Inc. will acquire Appleway for more than $42 million in Republic stock. Republic is best known for its AutoNation USA used car megastores and co-chief executive officer, Blockbuster Video founder Wayne Huizenga.

“They’re acquiring our current operations, but also what we can bring to the table in the future,” said Appleway President Tim Pring. “We like to think of this as a merger.”

Pring and his partner and brother Brad, would control 1.8 million shares of Republic at Tuesday’s closing price of $23.375.

As one of Spokane’s oldest dealerships, Appleway has for nearly 70 years filled Spokane streets with Chevrolets, Toyotas, Subarus, Mitsubishis and other brands.

Up to 7,500 vehicles are sold by Appleway each year, Pring said, making it one of the largest dealers in the Inland Northwest.

The company generates $160 million in annual sales - more than Republic’s $152 million in total sales of cars and trucks in 1996.

But Republic is just getting started, and flush with money from new stock offerings, is rapidly expanding its volume of vehicle sales nationwide.

In the past nine months, Republic has snapped up 115 new car dealerships. By year-end, it plans to boost the number of AutoNation stores from 13 to 20, with a long-term goal of 80.

Republic also owns Alamo Rent-A-Car Inc. and National Car Rental System Inc.

The Appleway sale marks the first time a Spokane dealership has been sold to one of the national automotive chains, which buy cars cheaply and market them multiple times as they move through their integrated line of new, rental and used car lots.

“Republic has made a science out of acquiring new car dealerships that are well run and profitable,” said Jim Donahue, Republic spokesman. “This is the first step in your neck of the woods to maximize the value of the automobile.”

Competitors disagree with the notion that Republic and Appleway would offer better prices and service. But they concede that as dealerships join chains such as Circuit City’s CarMax and Republic, there will be less room for locally owned dealers.

“There isn’t anything that they’re doing that we aren’t doing in some fashion,” said Chris Marr, general manager of Foothills Lincoln Mercury/Mazda. “But would I be surprised to see fewer dealers in five years? No way. It’s coming.”

The Appleway sale is expected to close in the next 60 days, pending approval from car manufacturers, including Toyota Motors Co., Donahue said.

Toyota is resisting Republic’s rapid acquisition plans. It wants the chain to prove its ability to manage each dealership for several months before it signs off on change of control.

Pring, however, doubts that Toyota would hold up the Spokane sale.

The Appleway Group consists of Appleway Chevrolet/Geo; Appleway Toyota; Appleway Mitsubishi, Subaru, Volkswagen and Audi; and Lexus of Spokane.

The Playfair Race Course, a separate holding of the Pring family, is not part of the deal.

Pring, who agreed to continue at least three years as president of the group, said he expects no changes among the 340 employees who work at the six Appleway lots along East Sprague.

Appleway will retain its name for now, and has been given approval by Republic to acquire additional dealerships in Spokane and along the Interstate 5 corridor in Western Washington and Oregon, Pring said.

The Prings recently had agreed to join Drivers Mart, an organization of independent car dealers who pool their inventories into large used car operations. But that deal was killed when Appleway decided to sell to Republic.

“They’re on the cutting edge of where this industry is going,” Pring said, “and we want to be part of it.”

Dick Wendle, president of Wendle Motors Inc., the city’s largest Ford dealer, said the Appleway sale reflects Republic’s confidence in Spokane’s automotive business.

“This will be a challenge for all of us,” Wendle said. “We’re all interested in the customer. It’s just that they have some Wall Street money behind them.”

Republic hopes to win big in the fragmented $1.1 billion auto industry. Driving Republic’s growth are co-chief executives Steven Berrard and Huizenga, who built the Blockbuster Video chain before selling it to Viacom in 1994.

Some Wall Street analysts are skeptical that Republic can profit from an industry that’s vulnerable to downturns in the economy.

But others project 1997 revenues as high as $7.5 billion. That’s 25 times the company’s 1995 earnings and up from $2.37 billion in 1996 when Republic had a net loss of $59.5 million.

“People have been brand loyal. Now it’s our job to make them dealer loyal,” Pring said.

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