Republic Industries, Inc.

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Republic Industries, Inc.

110 S.E. Sixth Street
Fort Lauderdale, Florida 33301
(954) 769-7200
Fax: (954) 769-6408
Web site:

Public Company
Employees: 56,000
Sales: $10.3 billion (1997)
Stock Exchanges: New York
Ticker Symbol: RII
SICs: 7514 Passenger Car Rentals; 5511 Auto New & Used; 5531 Auto Parts DealerRetail

Until H. Wayne Huizenga became chairman of the board of Republic Industries, Inc. in the summer of 1995, the Fort Lauderdalebased car rental and dealership company was little known. Republic originated in the waste disposal business, then moved quickly into used cars and trucks. Huizenga, the driving force behind Waste Management (now WMX Technologies Inc.) and Blockbuster Entertainment Corporation, was determined to make Republic Industries another success story, and he did, propelling the company from $48 million in sales in the early 1990s to over $10.3 billion in 1997. Republic became the nations largest auto retailer in a $1 trillion industry, owning just shy of 320 new car dealerships, a fleet of over 310,000 rental cars in the United States, Canada, the Caribbean, Latin America, Australia, Europe, Africa, and the Middle East (including Alamo Rent A Car, National Car Rental, and CarTemps USA companies), 26 AutoNation USA superstores, and had plans to add the 12outlet Drivers Mart chain to the fold in 1998.

A Brief History of Huizenga, 1960s to 1994

When Huizenga began buying used car dealerships, his intention was to revolutionize the industryto replace dishonesty with truthfulness, and the tacky and disreputable with good, solid sales, and to keep customers coming back for a lifetime. It was a tall orderand one generally sneered at by most analysts; few doubted Huizengas business acumen, just his choice of business. Like many times before, Huizenga took delight in his critics disbelief or outright dismissal, since he had proven them wrong before and figured he would have the last laugh once again.

H. Wayne Huizenga grew up in Chicago, the son of Dutch immigrants. The family business was garbage hauling and Huizenga bought his first garbage truck in 1962 in his early 20s. He built a business buying up dumpsters he rented to others, and his insistence on cleanliness and courtesy set him apart from others in area garbage hauling. In 1966, just four years after purchasing his first garbage truck for $5,000, Huizenga and his family formed Waste Management and used company stock to buy up small waste haulers throughout the Chicago area, then the Midwest, then the rest of the country. By 1984, when Huizenga sold Waste Management to move onto newer, greener pastures, the company was a $3 billion conglomerate.

In the mid1980s Huizenga experimented in various businesses, including bottled water, lawn fertilizer, and even another form of waste managementportable toiletsthen bought controlling interest in an upandcoming yet troubled venture called Blockbuster Video in 1987. Along with a colleague named Steven R. Berrard, Huizenga built the littleknown Blockbuster, with 19 outlets, into an empire of 3,700 stores and sold it for $8.4 billion to entertainment giant Viacom in 1994. Before settling on Republic Industries, Huizenga bought several sport franchises in the early 1990s, including the Florida Marlins, the Miami Dolphins, and the Florida Panthers.

Waynes World, 1995

Well before Huizenga took over Republic, he was considered a controversial figure. He was undeniably successful, and those who had worked with him walked away with millions, yet both WMX Technologies and Blockbuster suffered a host of problems after Huizenga sold them. Waste Management, given its trade, was rumored to have ties with organized crimewhich Huizenga vehemently deniedand was repeatedly investigated by the SEC and environmental agencies, though all charges were later dropped. Blockbuster, though the leader in the video rental industry, ran into major financial problems from toorapid expansion in terms of both new stores and diversifying into music. Critics repeatedly charged Huizenga was a master of building up and bailing, jumping in to cash out when the going was good. Others, of course, begged to differincluding Huizenga who stated in a U.S. News & World Repon article that when he left both WMX Technologies and Blockbuster each was ... in great shape, and to be blamed for their problems years after I left is ridiculous.

Yet the residue of financial difficulties explained why few took serious note of Huizengas latest ventures in 1995, Republic, and a new hotel chain called Extended Stay America. Though Republics primary business was something he knewwaste disposalthe extended stay hotel was a concept yet to take hold in America. As Huizenga built his hotels across the country, he also moved into the highly fragmented and lowly field of used cars with Republic. Some thought he had lost his mind and others figured he bit off far more than he could chew. But Huizengas vision was to take the unwieldy and unpopular used car industry and to make it a standardized, respectable business by introducing a nohaggle pricing policy and quality cars. If the lemons and the slimy tactics were eliminated, what was left was a business like any other with the same potential for profit. Huizengas goal was to knock $1,000 off the price of every used car sold, through efficiency and the nohaggle pricing.

Another piece in the puzzle came with Huizengas interest in AutoNation Incorporated, a growing chain of used auto superstores in direct competition with the similar CarMax, owned by Circuit City. The first AutoNation superstore opened its doors in 1995, and soon CarMaxs management cried foul, suing Republic for copyright infringement and a series of issues Huizenga dismissed as without merit. By the end of the year, Republics yearend sales were hard to ignore at $5.2 billion, giving Huizenga plenty of paper to move forward with his next movefrom used cars to new cars. Huizenga began buying up car dealerships at a dizzying pace throughout the country. Yet many of his acquisitions came with a welcome twist: the owners of the dealerships joined Republics management team with longterm contracts. Some dealers, sensing Huizengas network was the wave of the future, actually sought him out. Republics purpose was made clearto eliminate waste from car buying processes like factory rebates, cashback bonuses, and all the usual tricks of the trade by offering customers the same nohaggle pricing Huizenga had instituted in his used car outfits.

Onward and Upward, 1996 and Beyond

In 1996 Republic still moved at breakneck pace, buying hundreds of car dealerships, building over a dozen AutoNation superstores, and diversifying further into the automotive industry by acquiring several car rental agencies. First came Alamo Rent A Car, followed by National Car Rental, Spirit RentACar, Value RentACar, Snappy Car Rental, and EuroDollar Rent A Car the next year. The move was part of Huizengas total picture for the entire automotive industryfrom new to used to rental vehiclesto be, literally, Americas onestopshop for cars and trucks. New cars would be leased to dealers, then after the leases expired, moved to the rental arena, then moved to the used car lots. With its own reconditioning centers, Republic knew the history of each vehicle and could then offer customers sevenday money back guarantees as well as 99day bumpertobumper warranties.

To Huizenga, it was a simple enough planwaste not, want notbut to others it was idealistic if not impossible. Never one to cave to public opinion, Huizenga continued his quest. While other car dealerships were cannibalizing their own markets, many began to see the logic in Republics buying spree though feared Huizenga having such a stranglehold on the automotive industry. Also in 1996 came a twoforone stock split in June. Though there were some bumps in the road, such as calling off a planned acquisition of ADT Ltd., an electronic security company, yearend sales spoke loud and clear at nearly $6.6 billion. Soon after the ADT deal fell through Huizengas thinking changed from enlarging Republics electronic security division to unloading it to concentrate on his automotive empire.

The sale came in October 1997, and the next logical step was to do the same with Republics waste disposal division. Instead of selling the division, however, Huizenga and Berrard readied it for a spinoff. By the close of 1997 Republic was in the midst of streamlining operations and yearend sales had leapt to $10.3 billion, with a staggering jump in income to $439.7 million. Huizengas naysayers, however, squawked about the companys $244.1 million pretax charge, which consisted of $150 million for combining new and used car operations into one automotive retail division, while an additional $94.1 million was spent to integrate Republics rental operations. Huizengas other ventures, such as the Extended Stay America hotel chain, were experiencing difficulties, while two other companies run by former colleagues, Boston Market and Discovery Zone, had plummeting stock and bankruptcy woes, respectively. Though Huizenga had invested in the companies, he had nothing to do with running them and their failure was ancillary addendum to his résumé.

Company Perspectives:

Republics mission is to build shareholder value by creating customers for life in each of its business segments. The company is growing through internal expansion, strategic acquisitions, and by leveraging the strengths that exist in its complementary lines of business.

Huizengas impact, however, on the United States nearly 23,000 auto dealers in the late 1990s was profound, and more shocking was his direct aim at the automakers themselves. No one ever had the audacity to take on the Big Three nor the Japanese automakers, but Huizengas approach was basically a nonapproach: he bought what he wanted, when he wanted it, and where he wanted it. If his acquisitions stepped on toes, the general attitude was so what. Ford, GM, Chrysler, and Nissan made no waves and allowed Republic to gobble up dealerships, but Toyota and Honda protested. Each was met with a battery of former states attorneys general hired by Republic.

Toyota settled quickly, and though litigation with Honda continued, Huizenga was not concerned. One automaker, however, did win a concession: after buying six Saturn dealerships in Arizona and Florida, Huizenga agreed to sell the dealerships back to Saturn in 1997 because the cars, though a great brand were not big enough sellers. Saturn claimed it wanted to keep the brand exclusive. Both parties claimed victory.

Yet the future seemed bright as Republic wrapped up the July 1998 IPO of Republic Services, the waste disposal division. The original business of the oncefledgling Republic Industries, the waste disposal divisions spinoff of 36.1 percent of its outstanding shares netted proceeds of around $1.4 billion. The remaining shares were later distributed to Republic stockholders the next year. Another big boon in 1998 was the overturning of a $50 million jury award to CarMax. Not only was the award voided, but the judge ruled that Republic had not infringed on any CarMax trademarks, and that the case was closed for goodanother victory for the fastmoving Huizenga and his phenomenal Republic Industries.

Near the end of the century Huizenga and Republic were still dogged by critics. Some claimed Huizenga could not do for the auto industry what he did for Waste Management or Blockbuster, because the auto market was not growing in leaps or bounds but was a mature industry slated to gain only a percentage point or two over the next several years. Further, pundits were convinced Huizenga and his henchmen would bail on Republic and leave a house of cards. In response to such claims Huizenga told U.S. News & World Reports Dan McGraw, I worked for Waste Management for 24 years and Blockbuster for eight. The whole notion that were going to bail is crazy. Weve told the manufacturers that if we leave, we give the franchises back. To the car dealers and franchisees who joined Republic over the last several years, Huizengas statement seemed like an ironclad parachute. With Huizenga predicting revenue of $50 to $60 billion by 2003, few took him seriously, though most were wary. Is Wayne on the Wane, as Susan Pulliam of the Wall Street Journal predicted? Only time will tell.

Principal Subsidiaries

AutoNation USA; Alamo Rent A Car; National Car Rental; CarTemps USA; Snappy Car Rental, Spirit RentACar; Eurodollar Rent A Car; Republic Services; and nearly 300 car dealerships throughout the United States.

Further Reading

Deogun, Nikhil, Republic Industries Appoints Berrard President, CoCEO, Wall Street Journal, October 24, 1996, p. B3.

Ford or Honda, New or Used, He Wants to Sell It, New York Times, October 16, 1997.

Frank, Robert, Huizenga Faces Challenge in Meshing Eclectic Empire..., Wall Street Journal, July 3, 1996, p. B6.

Judge Says Republic Industries Wont Have to Pay CarMax $50 Million, PR Newswire, November 5, 1998.

Lowenstein, Roger, Intrinsic ValueRepublic Tender: In Huizenga We Trust, Wall Street Journal, July 11, 1996, p. Cl.

McGraw, Dan, Car Guy: Will He Own the Road?, U.S. News & World Report, October 20, 1997.

Pulliam, Susan, Is Huizenga Losing His Magic Touch?, Wall Street Journal, July 10, 1997, p. Cl.

Taryn Benbow-Pfalzgraf