REPUBLIC'S REGIONAL SETUP CUTS ITS AD COSTS, SAY TOP EXECS: HUIZENGA BRINGS AUTO DEALERSHIPS' CLOUT TO BEAR

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Wayne Huizenga's Republic Industries is using the clout of its growing new- and used-car dealerships and rental businesses to buy regional media.

As a result, Republic, which has geographic clusters of car dealerships, has slashed advertising costs by 35% to 50%, said Steve Berrard, president and co-CEO of Republic.

"We get a much broader advertising reach," Mr. Berrard said in a joint interview with Mr. Huizenga.

REPUBLIC PROPERTIES

With last week's announcement of the purchase of a new-car group in Atlanta, Republic will soon own 48 new-car dealer groups with 233 stores in 17 states. It also owns 23 AutoNation USA used-car stores and Alamo Rent A Car, National Car Rental Systems, Snappy Car Rental and Value-Rent-A-Car.

In the past month, Republic has been making a transition into nine regional districts to unify business and advertising policies, said Jim Donahue, VP-corporate communications.

With the economies of scale these operations can muster, the marketer figures it can outspend its competitors if the economy dips.

In the event of a downturn or recession, "We've positioned our company to take full advantage," Mr. Berrard said. "The [auto] retailers are not going to have the capital to advertise as regularly as they did and probably not invest as heavily. In fact, they don't do a lot of that now."

AD BUDGET 'HUGE'

Co-CEO Mr. Huizenga described Republic's ad budget as huge but declined to be more specific. Ad spending on the new-car dealership side is difficult to determine, since each new dealer group in the fold makes its own agency and ad decisions.

The AutoNation USA used-car chain spent $4 million on measured media via agency Hill, Holliday, Connors, Cosmopulos, Boston, in the first half of 1997, compared with $3 million for all of 1996, according to Competitive Media Reporting. Alamo's ad budget is about $15 million annually, National's about $10 million and Value's about $7 million.

There is no central buying service at this time; each brand agency works with other agencies involved, including those of dealers. The company in 1998 will look at more efficient ways to buy media, said Mr. Donahue.

'SERVICE OF TRANSPORTATION'

The goal is to integrate operations to create a brand "for the service of transportation," Mr. Berrard said, indicating a plan for an umbrella name. No decision has been made on which brand will be used.

Since Mr. Huizenga said Republic only acquires the best dealer groups, in terms of customer satisfaction and profitability, "the dealer's name will still stay on the building even with AutoNation. We have agreements with some dealers to keep their names on the buildings for five years."

Mr. Berrard said it's possible new-car dealers may combine their names with AutoNation.

Republic's grand plan is to be a one-stop transportation company, also offering financing, insurance, leasing and service.

"The key to making money for us is the longer we can hold onto a car, the more opportunities we have to make money," Mr. Berrard said.

For example, he explained that Republic can place a 2-year-old vehicle coming off a lease into its rental fleet, sell it or re-lease it.

LOWER AUTO PRICES

"If all of this works, and some of it is working now, we end up making more profit per car and lowering the price of the car to the consumer," Mr. Huizenga said.

A number of carmakers studied re-leasing vehicles, but never implemented it, said auto consultant Christopher Cedergren, managing director of Nextrend.

"The reason the industry never had to resort to that is their old-fashioned ways of selling cars," he said, adding "auto manufacturers may not be the best

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