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Republic reshapes car sales
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October 29, 1998: 1:14 p.m. ET
Amid strong profits, company mulls new value-added sales approach
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NEW YORK (CNNfn) - Republic Industries Inc., amid strong quarterly earnings results, is trying to change the way Americans buy cars, according to the company's chief executive.
Much like General Motors' Saturn unit, Republic wants to make the auto-buying experience more pleasant for consumers.
"Currently, 55 percent of the people that buy a car from a dealership never return to the dealership because they are so upset with the selling process," Huizenga told CNNfn.
Republic hopes to change that with a program that fixes the sale price of automobiles and includes many value-added services, including discounts on loaner cars and gasoline.
The Fortune 200 company is launching the new retailing strategy in Denver, with almost 20 dealerships taking part in the $2 billion revenue region.
Huizenga says the strategy "will change the way customers think about their automobile dealer" and points to the success of Republic's Auto Nation U.S.A. used car dealerships, which offer similar incentives.
"Ninety-six percent of the people that buy a car at our used car megastores buy the car because they like the selling process, not necessarily because of the price of the car," Huizenga said, adding that Republic still plans to offer competitive prices.
Strong profit = weak stock?
Despite reporting strong earnings Wednesday, Republic's stock price has remained relatively weak and Huizenga admits he is "disappointed."
"It doesn't make any sense," he said.
The Fort Lauderdale, Fla.-based automotive and solid-waste company posted earnings of $180 million, or 38 cents per share, in line with analysts' expectations according to First Call, and above last year's $125 million, or 28 cents per share. Revenues totaled $4.869 billion, up from $2.921 billion a year earlier.
Huizenga shrugged off suggestions that weaker auto sales related to a potential recession could be affecting the stock price.
"People have the retail part of the industry confused with the manufacturing part of the industry," Huizenga said. "Even if there were a severe economic depression, 70 percent of our profits at the dealership come from everything other than selling a new car."
Shares of Republic (RII) were up 1-5/16 to 16-7/16 Thursday morning.
Huizenga also dismissed Republic's marginal 1 percent decline in same-store sales.
"Being flat is really being up when you take into consideration the (General Motors) strike," he said.
Huizenga remained enthusiastic about the company's future, especially that of waste collection service provider Republic Services, of which it owns almost 64 percent.
"We have zero debt at that company and about a $1 billion line of credit," Huizenga said. "We're poised to take advantage of that industry and we have the strongest balance sheet in the industry."
Republic plans to grow the company about 10 percent a year, Huizenga said. 
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