Japanese equipment manufacturer Kubota last week restricted the number of locations a dealership group or individual can own on a state and national basis.
Kubota Tractor Corp. (KTC), the U.S. division of Kubota, put the policy into effect May 17, according to a memo sent to its more than 1,100 dealerships. The company developed the policy to better maintain the customer experience and brand balance, according to the memo.
“KTC recognizes that the over-concentration of KTC dealers or retail stores owned by the same owner or groups of owners in a geographic location can affect intra-brand competition and, consequently, Kubota customers,” according to the memo, obtained this week by Equipment Finance News.
“This policy is intended to allow dealers to grow, to promote healthy intra-brand balance, and to maintain a strong market presence for the benefit of our customers, by limiting the total number of KTC dealers and retail stores any owner or group of owners may own or control, directly or indirectly, on a national and state level.”
Kubota wants customers to have access to dedicated local dealers, while acknowledging a dealer can still operate multiple locations within limitations, according to the memo.
“KTC acknowledges that dealers can achieve Kubota’s expectations to be the local dealer of choice, can deliver improved customer experiences and customer satisfaction, and can operate multiple dealer locations,” the memo stated. “Maintaining KTC’s reputation for excellent customer service through dedicated local dealers of choice enhances the success of the KTC brand name and KTC authorized dealers nationwide.”
Despite the policy, one East Coast Kubota dealership hit the market this week, according to Performance Brokerage Services.
State, national limits
Kubota’s acquisition limitation policy limits dealership groups and individuals to owning 50 locations nationwide, while creating different limits for different states.
Under the policy, Montana, a state with only six store locations, could not all consolidate under one ownership group. Meanwhile, Hawaii has five stores, but all are owned by Bacon Universal Co. The policy would allow Bacon Universal to add one more Hawaii location before meeting the state’s threshold.
Exceeding the limits
One dealership group already exceeds the number of allotted locations for its state, with Bingham Equipment Co. owning all 11 Kubota locations in Arizona, according to Bingham’s website. Bingham also owns a New Holland Ag store in Arizona and two farm implement locations in California. For comparison, Ewald Kubota, the largest Kubota dealership group in Texas, owns 11 locations out of the 62 in the state.
No dealer group comes close to hitting the new national limit of 50 Kubota dealership locations, according to the Farm Equipment 100, which lists North America’s largest dealer groups by number of stores. The largest Kubota dealer groups have between nine and 11 Kubota locations, and total locations numbering 20 and 22.
Still, Kubota intends to evaluate the national and state restrictions separately, according to the memo.
“Adherence to one set of geographic restrictions will not excuse the owners from adhering to all other geographic restrictions,” the memo said. “For example, acquisition of a given retail store that would be within the national limitations may nevertheless not be permitted because it is in violation of state limitations.”
