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Random Quote: When I read about the evils of drinking, I gave up reading.
I guess this would be a good time to start calling about those leftover '07, '08, and '09 Parkers that I've been looking at.
What is interesting is Parker hasn't changed their stance on dealers selling to buyers outside of their defined "area", unless the boats are 07 or older, so you still cant shop around.....short sighted policy if you ask me
What is interesting is Parker hasn't changed their stance on dealers selling to buyers outside of their defined "area", unless the boats are 07 or older, so you still cant shop around.....short sighted policy if you ask me
Ah...that explains the unfriendly e-mail from New Jersey that I just received.
What is interesting is Parker hasn't changed their stance on dealers selling to buyers outside of their defined "area", unless the boats are 07 or older, so you still cant shop around.....short sighted policy if you ask me
I think it ensures stability in your network. Why would they want dealers competing with each other? Its tough enough to compete with other brands. Dealers would end up putting each other out of business, then customers have no nearby dealer.
What is interesting is Parker hasn't changed their stance on dealers selling to buyers outside of their defined "area", unless the boats are 07 or older, so you still cant shop around.....short sighted policy if you ask me
That too will change. Manufacturer arrogance on 1)territorial exclusivity 2)sticking it to the dealers on unreimbursed warranty work 3)Pricing! - i.e. being stingy with discounts on ordered boats but selling leftovers that have accrued a few years of floor plan costs at double the discount rates...I never understood that. and 4) the overall business model and coercion of dealers to take product....All of that is going out the window.
I think it ensures stability in your network. Why would they want dealers competing with each other? Its tough enough to compete with other brands. Dealers would end up putting each other out of business, then customers have no nearby dealer.
I don't agree. Competition strengthens the players, and makes it necessary for them to improve operations. Think Post Office and DMV....not perfect analogies, but a regional monopoly is anti-consumer on price and quality. And an open market will also incentivize the manufacturers to help the dealers improve operations to compete against other brands.
If they arent willing to embrace the outside scope they are done!
Quote:
Originally Posted by nausetlight
What is interesting is Parker hasn't changed their stance on dealers selling to buyers outside of their defined "area", unless the boats are 07 or older, so you still cant shop around.....short sighted policy if you ask me
Its changing and after being involved in the boat business most of my life I have almost no investment money involved right now.Thank God. I have seen many down turns in the boating industry. The early 70s gas crunch. the reagan lux tax??? This is going to be much worse and last longer.I dont think most of the chickens have come home to roost yet? We are mostly in denial right now. I was at the marina yesterday talking with a top broker{in todays market} And a former big boat sales manager? Both think the lauderdale show is a waste of their time and expense$. Thats not the way these people used to think a short while ago?
I love listening to this. You people have absolutely NO idea of the amount of overhead a big dealership has.
Just to start
Payroll - even a small dealership is over half a million a year.
Equipment - One hydraulic trailer is over 65,000.00, a forklift is 105,000.00
Oils and parts, 60,000 in stock at all times
Fuel for Fleet - 2,000.00 a week
Employee Benefits
Property Maintenance
Dock Repairs
Tools
Shrinkwrap
Fuel
Prep Costs
Freight on Boats
Light Bill
Oil Bill
Advertising
Floorplan
Boat Shows - a 40x40 space is over 13,000.00 not counting carpet
Brochures - yeah we pay for those.
Office Supplies
It goes on and on. To seriously say that a Marina should be able to support itself on service is a very tough statement. A typical marina needs the sales department to keep the lights on. Some are fortunate enough to have service completely support them.
Just to show it out there,
Lets take a 21,500.00 selling price on a boat with your "20% margin"
Dead Cost on that boat would be 17,500.00
so we figure freight to us is about a 1,000.00 making the boat cost, 16500.
Ok, so on this imaginary boat, we made 4,000.00
Now take out floorplan from that boat sitting on the lot for 6 months at 10% interest rate.
Then take out the cost of prep (rigging a motor), and a coast guard pack and full tank of fuel.
all of a sudden, that 4,000.00 went to about 1500.00/1,000.00 very quickly.
Now add in the fact that your going to come back a week later with a simple problem, take a tech for an hour and not be charged for it as good will and theres another minus.
Keep in mind, I say this without ever talking about throwing anything in.
To Sum it all up, a boat sale can very quickly turn from a profit to 0.
With all business you all know that you need to make money to survive. Most marinas cannot survive on a small profit and continue to provide the level of service that customers want and deserve.
Heres a good example, ever brought your car in for service at Mercedes or BMW, notice how they come out and put a mat down and cover your seat in plastic, then they take your car and clean it and wash it for you. Well, you paid extra for that when you bought your car. Try taking your car for service at the Kia dealership, not quite the same is it?
It all boils down to the simple fact, if customers want the high level of service they demand, they should be willing to realize that it costs extra. We have no holdbacks in the marine industry from the manufacturer. Invoice is invoice.
I am not trying to pick on anyone, but seriously, think about the real costs before you make a statement that a boat dealer should make a tiny margin. Tiny margin boat dealers dont stay around, they also devalue your product, if I can buy a new bayliner down the road for 15,000.00 then why is your two year old boat worth 13,000.00?
Think about it, its not as cut and dry as some people think.
By the way, to those who said dealers should not stock boats........ When was the last time you bought something out a book that cost 50,000.00. I seriously doubt most of you would buy a car without being able to sit in it first, why would you buy a boat like that? You want to see it, touch it, feel it, sea trial it. Well, to do this, we have to have the boat here first! How many times have I seen threads on here about the size of the cockpit in a boat and how it feels tight, cant really tell that without being on the boat! Stocking Inventory is a necessary evil, the way around it is to get a good feel for what sells in your area. Every year all boat dealers take a gamble. Ours just happens to be a lot bigger then most other companies.
Last edited by Post50; 10-24-2009 at 08:59 AM.
Reason: More
I love listening to this. You people have absolutely NO idea of the amount of overhead a big dealership has.
I am not trying to pick on anyone, but seriously, think about the real costs before you make a statement that a boat dealer should make a tiny margin. Tiny margin boat dealers dont stay around, they also devalue your product, if I can buy a new bayliner down the road for 15,000.00 then why is your two year old boat worth 13,000.00?
Think about it, its not as cut and dry as some people think.
I totally understand everything you're saying and have a full appreciation for it, but some folks just don't care and are only looking at the bottom line for themselves in the short term, not paying more to keep a dealer in business and what that means economically and maintenance wise in the long term.
I love listening to this. You people have absolutely NO idea of the amount of overhead a big dealership has.
Just to start
Payroll - even a small dealership is over half a million a year.
Equipment - One hydraulic trailer is over 65,000.00, a forklift is 105,000.00
Oils and parts, 60,000 in stock at all times
Fuel for Fleet - 2,000.00 a week
Employee Benefits
Property Maintenance
Dock Repairs
Tools
Shrinkwrap
Fuel
Prep Costs
Freight on Boats
Light Bill
Oil Bill
Advertising
Floorplan
Boat Shows - a 40x40 space is over 13,000.00 not counting carpet
Brochures - yeah we pay for those.
Office Supplies
It goes on and on. To seriously say that a Marina should be able to support itself on service is a very tough statement. A typical marina needs the sales department to keep the lights on. Some are fortunate enough to have service completely support them.
Just to show it out there,
Lets take a 21,500.00 selling price on a boat with your "20% margin"
Dead Cost on that boat would be 17,500.00
so we figure freight to us is about a 1,000.00 making the boat cost, 16500.
Ok, so on this imaginary boat, we made 4,000.00
Now take out floorplan from that boat sitting on the lot for 6 months at 10% interest rate.
Then take out the cost of prep (rigging a motor), and a coast guard pack and full tank of fuel.
all of a sudden, that 4,000.00 went to about 1500.00/1,000.00 very quickly.
Now add in the fact that your going to come back a week later with a simple problem, take a tech for an hour and not be charged for it as good will and theres another minus.
Keep in mind, I say this without ever talking about throwing anything in.
To Sum it all up, a boat sale can very quickly turn from a profit to 0.
With all business you all know that you need to make money to survive. Most marinas cannot survive on a small profit and continue to provide the level of service that customers want and deserve.
Heres a good example, ever brought your car in for service at Mercedes or BMW, notice how they come out and put a mat down and cover your seat in plastic, then they take your car and clean it and wash it for you. Well, you paid extra for that when you bought your car. Try taking your car for service at the Kia dealership, not quite the same is it?
It all boils down to the simple fact, if customers want the high level of service they demand, they should be willing to realize that it costs extra. We have no holdbacks in the marine industry from the manufacturer. Invoice is invoice.
I am not trying to pick on anyone, but seriously, think about the real costs before you make a statement that a boat dealer should make a tiny margin. Tiny margin boat dealers dont stay around, they also devalue your product, if I can buy a new bayliner down the road for 15,000.00 then why is your two year old boat worth 13,000.00?
Think about it, its not as cut and dry as some people think.
By the way, to those who said dealers should not stock boats........ When was the last time you bought something out a book that cost 50,000.00. I seriously doubt most of you would buy a car without being able to sit in it first, why would you buy a boat like that? You want to see it, touch it, feel it, sea trial it. Well, to do this, we have to have the boat here first! How many times have I seen threads on here about the size of the cockpit in a boat and how it feels tight, cant really tell that without being on the boat! Stocking Inventory is a necessary evil, the way around it is to get a good feel for what sells in your area. Every year all boat dealers take a gamble. Ours just happens to be a lot bigger then most other companies.
This is exactly what I was trying to get across. I am sure this guy would agree with me that some of you are correct, and the industry needs to change.. but most customers have no clue what it takes to run a boat business.
No one is paying me to read THT. Factory direct is better in my opinion.
First read the full post and don't just take one sentence out of context. Factory direct.... hummm... where are you going to go when your new boat is delivered to your house 2000 miles away from the factory and let's say the fly-by-wire shifting does not work. I know, your response is that you will just have some dealer fix it and send the bill to the factory. Ok... the factory only wants to pay 50% of the dealer's bill. You going to pay the difference? Oh... forgot to mention it took 8 weeks to get someone from the factory to return your call.
PA - I think you missed the intentions... Certainly can understand why you are pi$$ed in general, the economy sucks, and you are taking the brunt of it. I think at least my point was, something has to change to help you pay your employees, and hopefully make a few bucks for yourself as well. I may be wrong, but the model of having you to have to take on huge floor plans, for something that is not selling right now, does not work unless you can get a sizable margin. I think most get that. On the flip side there is no way Grady, Parker, or who ever can think about selling what they have in the past, without some type of dealer support. Who knows what this will look like in the future, but there has to be some in between. Maybe they provide a few boats to you on consignment for demos and such so you dont have to lay out the cash you have in the past and give you a reasonable amount of money for each order. But I would suspect (don't know) if you offer decent service without a huge floor plan as overhead, which I assume you do- you could make a good go at it.
At the end of the day we need you guys to provide a much needed service for our addiction... no one wants you to go away
Please do not get me wrong... I did not miss your point and I agree that the industry needs to change. But there are way too many people who feel that the dealers are just pulling in the cash and that is just not true.
Everyone should own their own business at least once. It is murder in a good economy to make a profit. I have been in the boating industry for 25 years and have never seen it as an easy way to make money. The mfg do only slightly better than the dealers. Overhead? Try 1 million dollars for a mold to produce a new model of boat. The average boater has no idea how little money most boat dealers make....
Most boating customers would never get into the boat business, I agree that yes it probably is a very difficult business to make a profit. That being said, why are you in the business if there is no money in it as you say............Nobody forced you into the boat business and if it is so difficult then get the hell out, its still a free country isn't it. I am only looking at it from a consumers point of view because yes I am a consumer and no I am not in the boat business, Do you think that the average consumer gives a rats ass about the local car dealership having a tough time when they walk in to haggle a deal? Same for boats, consumers may be buying a "lifestyle" in your mind but the bottom line is you are trying to sell a boat and the buyer is trying to pay as little as possible for it, they don't care how much you are into the boat for , if you were taking a trade you would try to pay as little as possible for it.
I agree with you that there is a lot of ignorance out there about the business model and economics of boat dealerships. People expect you to do like the auto dealers do - sell at cost, collect some mystery kickback that makes them actually make a small profit, and make their money on service. They don't have an appreciation for floor plan costs, dealing with leftovers and heavy discounts, seasonality, and all the dedicated fixed overhead involved with selling boats.
I come at this from a Strategic consulting perspective, with a few assignments in this industry under my belt. Let me see if we can engage in some constructive dialogue on this, and I promise to keep it civil if you do.
This industry has gone through business cycle challenges in waves roughly every 7-10 years. Weak dealers got purged after overextending themselves in the boom, and manufacturers increased capacity and wasted a lot of money on R&D and product development just because they had the cash flow, even though it inevitably put them in risky positions for when the market inevitably contracted. There is an extremely high amount of leverage in this industry.
But this time is different. There is a real shift in the long term ability of people to afford luxuries like boats. The political reasons behind that are better left discussed in the bilge, but it is happening. In addition, the population is getting older so there are fewer families moving through the upwardly mobile phase to drive demand. Most of the population growth is in the lower income groups. The average size of boats being sold can’t increase like it had, nor can features make them more appealing, so the trade up market is drying up. Fuel costs are permanently higher, and will only increase. Leisure time is less, because it is more difficult for people to make ends meet. Due to all of the above there is a glut in used boats. Those that might have increasing disposable income are going to be asked to close the gap on federal budget deficits. None of these are just short term problems.
What all that means is that there is much less money on the table to support all the participants in this industry supply chain. Something is going to have to change. You can’t just have fewer dealers selling fewer boats, because at a certain level of reduction, people won’t live near their dealer – meaning the whole appeal of buying from a local dealer and getting support becomes weak.
Now you mentioned all the costs involved with supporting your new boat sales. What would happen if you made an objective compilation of all of the costs that would disappear if you no longer sold new boats, and compared that to the gross margin that you make on new boat sales? You would probably find that the margin barely covers your incremental cost of selling the boats. But the buyer is paying for all of those costs and your very small net margin, and getting no incremental value for that. That is the part of this whole equation that will have to “give” in order to keep the industry healthy.
The big losers are the finance companies. The manufacturer has to pick up some of the distribution costs, but will have 20%+ of retail price on the table as a cushion – most of which will go back to the customer to spur demand. Dealers lose that small incremental net margin, but the manufacturers will need to ensure local support, so can take some of that cushion and spread it to the (service) dealers network. Buyers have to make arrangements to see and test the boats outside of the dealer network, but that just changes the way they shop. They can look at used versions to narrow it down, and make a factory trip to close the deal. Manufacturers of smaller boats will likely become more regional – a CT buyer isn’t going to fly to California to sea trial a $75k boat.
Change can be painful, but in this case it is inevitable – those that adapt survive.
I agree with most of what you say, but some of what you say is just not that black and white.
Exclusive dealer areas, low balling on trade ins, gouging on freight and prep, less than professional service. People the time has come to treat the consumer as a long term customer instead of a one time easy mark. If you do not change your business model to reflect changing times, you'll all be extinct. Complain and make all of the excuses you wish........all the way to out of business
I love listening to this. You people have absolutely NO idea of the amount of overhead a big dealership has.
Just to start
Payroll - even a small dealership is over half a million a year.
Equipment - One hydraulic trailer is over 65,000.00, a forklift is 105,000.00
Oils and parts, 60,000 in stock at all times
Fuel for Fleet - 2,000.00 a week
Employee Benefits
Property Maintenance
Dock Repairs
Tools
Shrinkwrap
Fuel
Prep Costs
Freight on Boats
Light Bill
Oil Bill
Advertising
Floorplan
Boat Shows - a 40x40 space is over 13,000.00 not counting carpet
Brochures - yeah we pay for those.
Office Supplies
It goes on and on. To seriously say that a Marina should be able to support itself on service is a very tough statement. A typical marina needs the sales department to keep the lights on. Some are fortunate enough to have service completely support them.
Just to show it out there,
Lets take a 21,500.00 selling price on a boat with your "20% margin"
Dead Cost on that boat would be 17,500.00
so we figure freight to us is about a 1,000.00 making the boat cost, 16500.
Ok, so on this imaginary boat, we made 4,000.00
Now take out floorplan from that boat sitting on the lot for 6 months at 10% interest rate.
Then take out the cost of prep (rigging a motor), and a coast guard pack and full tank of fuel.
all of a sudden, that 4,000.00 went to about 1500.00/1,000.00 very quickly.
Now add in the fact that your going to come back a week later with a simple problem, take a tech for an hour and not be charged for it as good will and theres another minus.
Keep in mind, I say this without ever talking about throwing anything in.
To Sum it all up, a boat sale can very quickly turn from a profit to 0.
With all business you all know that you need to make money to survive. Most marinas cannot survive on a small profit and continue to provide the level of service that customers want and deserve.
Heres a good example, ever brought your car in for service at Mercedes or BMW, notice how they come out and put a mat down and cover your seat in plastic, then they take your car and clean it and wash it for you. Well, you paid extra for that when you bought your car. Try taking your car for service at the Kia dealership, not quite the same is it?
It all boils down to the simple fact, if customers want the high level of service they demand, they should be willing to realize that it costs extra. We have no holdbacks in the marine industry from the manufacturer. Invoice is invoice.
I am not trying to pick on anyone, but seriously, think about the real costs before you make a statement that a boat dealer should make a tiny margin. Tiny margin boat dealers dont stay around, they also devalue your product, if I can buy a new bayliner down the road for 15,000.00 then why is your two year old boat worth 13,000.00?
Think about it, its not as cut and dry as some people think.
By the way, to those who said dealers should not stock boats........ When was the last time you bought something out a book that cost 50,000.00. I seriously doubt most of you would buy a car without being able to sit in it first, why would you buy a boat like that? You want to see it, touch it, feel it, sea trial it. Well, to do this, we have to have the boat here first! How many times have I seen threads on here about the size of the cockpit in a boat and how it feels tight, cant really tell that without being on the boat! Stocking Inventory is a necessary evil, the way around it is to get a good feel for what sells in your area. Every year all boat dealers take a gamble. Ours just happens to be a lot bigger then most other companies.
Your numbers are all correct, and your description of the current boat buying dynamic from the customer perspective is correct, but your conclusion seems to be coming from the perspective of the way things have always been. Are you arguing in favor of manufacturer direct or against?
The littany of costs you listed are precisely why it is suspect to conclude that selling new boats is a necessary part of the profit equation. You said yourself that the net margin after prep, sales and marketing costs, warranty repair, floor plan, losses on old stock, is close to zero - I agree.
So if you looked at the operation objectively, if you are making money overall, and are breaking even on stocking and selling boats, then why stock and sell boats, if you can simply provide a service to the manufacturers to support them without the ups and downs and risks and exposure required to be a stocking dealer?
The manufacturers can take some of the margin that they get in a direct sales model and use it to boost service profitability - they would have to have a fixed or at least a virtual network to service their customers.
I am not saying there is too much margin and you have a license to print money. My point is that the advantage to the dealers of selling boats is marginal, and in an industry as price and volume challenged as this, the convenience of the full service dealer model has to be revisited to get pricing back to a point where people won't just stop boating or just continue to turn over used boats, which are a much better value now.
I am only looking at it from a consumer's point of view, Do you think that the average consumer gives a rat's ass about the local car dealership having a tough time when they walk in to haggle a deal? Same for boats. Consumers may be buying a "lifestyle" in your mind, but the bottom line is that you are trying to sell a boat and the buyer is trying to pay as little as possible for it. They don't care how much you are into the boat for...[edited]
Most boating customers would never get into the boat business, I agree that yes it probably is a very difficult business to make a profit. That being said, why are you in the business if there is no money in it as you say............Nobody forced you into the boat business and if it is so difficult then get the hell out, its still a free country isn't it. I am only looking at it from a consumers point of view because yes I am a consumer and no I am not in the boat business, Do you think that the average consumer gives a rats ass about the local car dealership having a tough time when they walk in to haggle a deal? Same for boats, consumers may be buying a "lifestyle" in your mind but the bottom line is you are trying to sell a boat and the buyer is trying to pay as little as possible for it, they don't care how much you are into the boat for , if you were taking a trade you would try to pay as little as possible for it.
Dealers that floor plan are required to sign personal gauranties. That means they cannot simple get out of the business. They will loose everything when they go down. I would say a good 95% of dealers would go home if they could lock the door without loosing everything they personally own.
