Boats In Dealer's Yard

A conversation among Whalers
Acseatsri
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Boats In Dealer's Yard

Postby Acseatsri » Thu Oct 31, 2019 7:52 pm

I made this interesting observation today: I went by the local Evinrude dealer. For 15 years he has had yard full of boats for sale with E-TEC engines. Today he had yard full of new boats powered by Yamaha engine, and there wasn't a new boat powered by E-TEC in sight.

Evinrude is only selling [legacy E-TEC model] engines up to 150-HP. Above 150-HP you have to buy an E-TEC G2.

The dealer did not sound pleased.

[Moderator's note: separated from a thread on a different topic that was revived from a dormant state. Please do not revive dormant threads and change their topic. Moved to THE GAM for discussion--jimh]

jimh
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Re: Boats In Dealer's Yard

Postby jimh » Fri Nov 01, 2019 12:29 am

I draw this inference from the observation made today: apparently the dealer sold all of his boats with E-TEC engines, and he is left with a yard full of boats with Yamaha engine that he can't sell. I can see why he didn't sound pleased.

Most dealers would rather sell a new boat with a factory rigged engine. When a boat builder contracts with one engine builder to be an exclusive supplier for that brand of boats, it shuts out other outboard engine makers from those transoms. Dealers who have been selling a particular boat brand and putting on their own engines are finding it harder to get boats from a manufacturer without a pre-rigged engine. When that happens, the dealer has to decide what he likes more: the boat brand he has been selling or the engine brand he has been selling. If the dealer decides there is more profit potential in continuing to sell the boat brands he has been selling and will accept the new boats rigged at the factory with an different engine, the dealer may decide to take on that new engine brand.

There is quite a battleground out there to get dealers to switch the brand of engine they sell. If a dealer's primary boat brand switches engine brands, the dealer often has little choice: he can either switch engine brands, too, or look for a new brand of boats to sell.

I have seen that happen at my local dealer. A brand of boats he had been selling for many years suddenly went to only pre-rigged boats with a brand of engine the dealer was not authorized to sell. There was very little option for the dealer. He dropped the boat brand and replaced it with another brand that was not as insistent on only selling him boats with pre-rigged engines.

For boaters, engine brands are something to talk about. For dealers, engine brands can be a battleground because of boat-builder mandatory tie-in sales with pre-rigged engines. It's not a new story.

It is unlikely that you can know the actual story for the change in your dealer's engine brand. Another possibility: Evinrude could have dropped him. He might not have been able to keep his Evinrude franchise due to mandatory training requirements for the all-new line of G2 engines. Mercury had similar problems with the VERADO. Little shops that had been selling Mercury engine for decades could not sell the VERADO without investing a lot of money into new service tools and training.

rtk
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Re: Boats In Dealer's Yard

Postby rtk » Fri Nov 01, 2019 7:10 am

It's tough to watch small local dealers get squeezed out of business or have to change the brand of boat they sell due to the demands of large manufacturers and mandatory engine-boat combinations.

The other part of the equation is some boat manufacturers not only dictate the brand of outboard that is installed on a boat but also have significant requirements that the dealer accept a minimum number of boats from the factory as inventory. This drives up costs because the dealer either has to pay cash or "floor plan" (finance) the inventory of boats until they sell.

A boat and engine dealer I know simply stopped selling boats that had these types of requirements and changed their business model to focus on boat and engine service instead of boat sales.

There was a great little Boston Whaler dealer on North Hero Island, Vermont. The last time I went up I noticed the Boston Whaler sign was no longer up. I never researched or asked what happen but I expect Boston Whaler and Brunswick corporation just simply ran them out of business because of excessive inventory requirements and strict mandatory engine brand requirements.

Rich

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Phil T
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Re: Boats In Dealer's Yard

Postby Phil T » Fri Nov 01, 2019 12:47 pm

The days of small Boston Whaler dealers is over. Consolidation is king and the everyday buyer takes it in the chin.

In looking at Boston Whaler's new models, it is clear, profit is in the larger boats. With the six or 7 digit price, the factory wants dealers that can support this level of clientele, have factory certified Mercury mechanics, amenities etc. With the elimination of floor financing, small dealers can't afford to have $500-1M worth of display models. Boats are all factory orders.

It is what it is.
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rtk
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Re: Boats In Dealer's Yard

Postby rtk » Sat Nov 02, 2019 3:15 pm

According to the same source I just referenced; past conversations and current; Evinrude/BRP does not appear to be engaging in the big corporate market share/game of thrones battles. And I think that is smart.

I listened to a public radio taped broadcast of an interview with Herb Kelleher that was done not too long before he passed away the beginning of this year.

https://en.wikipedia.org/wiki/Herb_Kelleher

He was asked a question about chasing market share as a business model. I believe his reply was something to the effect that market share is irrelevant if a company is not providing a high quality product at a very fair price and making a respectable profit. And a big priority was treating employees exceptionally well with morale a number one task. Why bother being in business if you can't do that?

A ways back in time I had to write a research paper on computer operating systems: open source like Linux and red hat vs closed source like Microsoft and Apple.

The way I look at it is Mercury and Yamaha outboard marine power sources are analogous to the previously mentioned closed source computer operating system and the Evinrude E-TEC is analogous to the previously mentioned open source computer operating system. Closed source = limited options. Open source = unlimited flexible options within reasonable parameters.

Rich

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Re: Boats In Dealer's Yard

Postby jimh » Sun Nov 03, 2019 9:38 am

Regarding anecdotal accounts of a dealer changing engine brands: a local boat dealer with a strong business in servicing outboard engines was for perhaps 50-years only an authorized Mercury outboard engine dealer. Years ago I dropped in at his shop and saw he was now selling Yamaha engines. The owner explained that Yamaha had been making offers to him to become a Yamaha dealer for some time. Their offers were very attractive because they did not impose very high dollar investments in stock and service parts.

At that same time, Mercury had an outboard engine line that was not very attractive to this dealer. The dealer wanted no part of selling OptiMax engines due to their poor track record. The dealer wanted no part of selling VERADO engines due to their enormous size and weight which were not suited for the type of boats this dealer sold, mostly 17 to 20-foot fishing boats, nor did the dealer want to become authorized to service VERADO engines due to the costs involved with proprietary service tool, the specialized training for his mechanics, and the likely very limited number of engines that would be serviced since the dealer was not at an on-water location and primarily worked on trailered boats.

Thus when Yamaha came along with a very attractive offer that allowed this dealer to become an authorized Yamaha engine sales and service dealer with very little up-front cost required, he took on Yamaha engine. I suspect Yamaha has been using this same approach on other smaller volume boat and engine dealers.

Brunswick has been moving in the opposite direction, as noted above, and seems to be aiming for sales of their boats and engines via large multi-location dealerships backed with plenty of capital, big show rooms, and fancy stores, and seems intent on limiting the small volume boat and engine dealers.

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Re: Boats In Dealer's Yard

Postby jimh » Sun Nov 03, 2019 10:45 am

ASIDE:
rtk wrote:...I listened to a public radio taped broadcast of an interview with Herb Kelleher that was done not too long before he passed away...

Thanks for the incidental mention of Herb Kelleher. I was not acquainted with him, but, of course, I was aware of and had flown on SOUTHWEST AIRLINES. As sometimes happens on a Sunday morning with extra time on your hands (due to a change back to EST from EDST) and some good coffee, I set out to find the interview you alluded to. I couldn't find a really recent interview with Herb Kelleher but I did find this one from 2016

How I Built This with Guy Raz: Southwest Airlines: Herb Kelleher
https://www.stitcher.com/podcast/national-public-radio/how-i-built-this/e/59187967

In the above interview I heard this comment about marketshare, which I repeat in paraphrase: "I told people that if anybody mentioned marketshare to me I'd punch them in the nose. I'd rather have four-percent market share and be profitable than to have 90-percent market share and be unprofitable."

With regard to employee morale, Mr. Kelleher also said that Southwest never furloughed any employees, had the highest percentage of unionized employees in the airline business, and the first year the company made a profit they instituted an employee profit-sharing plan.

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Re: Boats In Dealer's Yard

Postby jimh » Mon Nov 04, 2019 1:04 pm

Vis-a-vis the initial comment about E-TEC engines, I want to contrast Bombardier Recreational Products with Brunswick and Yamaha,

Brunswick has been changing corporate strategy in the past decade and has shed all of its non-marine businesses. It is now a corporation that is entirely in the marine business. Their Mercury outboard engine business is a very important core business for them and generates a significant percentage of their corporate revenue.

Yamaha is in many businesses, and outboard sales in the USA is only a part of their global corporate operation.

Bombardier Recreational Products (BRP) is similarly diverse. It makes recreational products in several other businesses that are distinct from recreational marine. It makes SKI-DOO snow machines (or "snow-mobiles" in the USA), on-road CAM-AM vehicles like the three-wheel Spyder and many CAM-AM off-road all-terrain vehicles, SEA-DOO personal watercraft (jet-skis), and ROTAX engines (used in light and ultra-light airplanes, unmanned aerial vehicles (UAV), snow machines, personal water craft, on-road, and off-road vehicles). As a corporation, BRP does not rely on outboard engine sales to contribute to corporate success and profit to the same extent that Brunswick does. That Evinrude market share in new outboard engine sales is not as large as the market share for Mercury or Yamaha outboards does not reflect any notion of doom for BRP.