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Zimbrick fights Honda's plan for east side showroom

Mike Ivey  —  10/16/2008 1:24 pm

For nearly 40 years, Zimbrick of Madison has been selling reliable and fuel-efficient Honda vehicles, helping the automaker establish a strong name in the local market.

But Zimbrick is now taking the same manufacturer to court over the awarding of a new Honda dealership near East Towne to Wilde Automotive Group of Waukesha.

In a case involving two of the biggest auto dealers in the state, Zimbrick has filed a complaint with the Wisconsin Division of Hearings and Appeals, protesting American Honda Motor Co.'s proposal to let Wilde open on the far east side.

"We took this action reluctantly but feel it's necessary to protect the interests of both our employees and our loyal Honda customers," said Zimbrick CEO Tom Zimbrick.

Zimbrick has appealed under the state's relevant market area law, a 1980s reform designed to provide stability to sales of new cars and trucks by limiting the number of dealerships in an area.

Honda earlier this year awarded a franchise to Wilde to open a $10 million, 45,000-square-foot facility at the intersection of High Crossing Boulevard and Nelson Road. One of the oldest names in the Wisconsin automobile business with 12 dealerships, Wilde projects selling 250 new vehicles and 200 used vehicles per month there.

Honda has been seeking a second dealership in the Madison market. State law requires new dealerships be located at least 10 miles apart; the site under discussion is just over 10 miles from Zimbrick Honda at Fish Hatchery Road and the Beltline.

Development of the new Wilde East Towne Honda could be on hold, however, pending settlement of the Zimbrick-Honda legal dispute. A hearing before judge Mark Kaiser isn't tentatively scheduled until June 2009.

"Certainly we're following the case it but frankly it's not our fight," said Wilde's local attorney, Kevin Delorey. "It's between Zimbrick and Honda."

The law in question is designed to protect both dealers and consumers, said Gary Williams, president of the Wisconsin Auto and Truck Dealers Association. He said it prevents dealers from flooding a market in good times only to abandon it when sales slow, with buyers having nowhere to turn for service or warranty.

"It's not just for dealers, there's a public interest," said Williams. "Before the law, dealers could just come and go and leave a community in the lurch."

The hearing examiner can consider a variety of factors in making a decision, including the financial impact on consumers or existing dealers.

Zimbrick notes it has been recognized on numerous occasions for outstanding customer service by Honda and has helped build brand loyalty.

Tom Zimbrick argues that having another dealer in Madison will not significantly increase the number of Hondas sold, but simply dilute existing sales by spreading them between two dealerships, ultimately costing both the dealers and consumers more money.

"Given the existing state of the economy, particularly in the auto industry, this is absolutely the worst time to be raising the cost of selling and servicing Hondas in this market," he said.

Honda Motors is represented in the case by Minneapolis attorney Steve Wells.

"Honda disagrees with Mr. Zimbrick's statements, but will not comment further on this matter, which is in litigation commenced by Zimbrick," said Wells.

The legal fight over the Honda brand isn't the only issue.

Concerns have also been raised about whether an auto dealership fits into existing land use plans on the far east side. The property has been designated in neighborhood plans as office or service space. But those plans have been altered over the years to allow auto dealers to locate along High Crossing Boulevard, which is across U.S. 151 from the American Center.

Also, there are new apartments south of the site, with plans for a mixed-use development, including a new Marcus Theatre, to the north.

Plan Commission member James Boll has said the city should decide whether neighborhood plans are simply advisory or carry no weight at all.

Other concerns were raised by landowner Harry Field, who is still farming adjacent undeveloped property in the town of Burke. He said stormwater runoff from all the development in the area is already eroding his soil.

But the project, which could bring up to 125 new jobs, enjoys the backing of east side Ald. Joe Clausius.

The dealership itself would be owned by businessman Jorge Hidalgo, a former vice president at Harley Davidson. The building has been designed on two levels, with service below and a showroom upstairs, to reduce the building footprint and give it a more urban feel.

City planning unit director Brad Murphy noted that auto dealers have been moving into the area since it was first developed 15 years ago. Planners had initially envisioned more of a mixed-use neighborhood but have been flexible, he said.

Mike Ivey  —  10/16/2008 1:24 pm