BRP Ending Production of Evinrude E-TEC

A conversation among Whalers
jimh
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Re: BRP Ending Production of Evinrude E-TEC

Postby jimh » Thu Jun 04, 2020 6:32 am

BRP remains in operation. Exactly what level of OEM part support for outboard engines they will provide is impossible to predict, but there seems to be an expectation or sense or perhaps blind faith that BRP will offer some OEM parts for outboard engines. This is based on the press release, which I will repeat:

BRP Press Release wrote:We will continue to supply customers and our dealer network service parts and will honour our manufacturer limited warranties, plus offer select programs to manage inventory.


I also believe they will continue to have relationships with outboard engine service dealers to provide service. If BRP completely abandons all their servicing dealers and provides zero OEM part support, they will be creating massive ill will among recreation boaters. Since BRP has publicly announced they will continue to manufacture recreational boats and plan to introduce new propulsion engine products, they would be crazy to poison their own well will such a poor decision to stop providing at least some support for E-TEC engines.

There is no guarantee that any obsolete product will continue to be given complete support by a manufacturer, even though the manufacturer remains in business and continues to make similar new products.

As for the analogy to the Chevrolet Corvette, I think if GM announced they were ending production of the Corvette the value of all existing late-model Corvettes would increase significantly. It's not a great analogy to outboard engines. Demand for the Corvette is mostly constrained by production capacity. GM sells every Corvette it makes. You don't find a dusty three-year-old Corvette sitting on a back lot of a car dealer that hasn't sold yet.

biggiefl
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Re: BRP Ending Production of Evinrude E-TEC

Postby biggiefl » Thu Jun 04, 2020 10:34 am

It was not about Corvettes. It was about a car model and an entire car company.
On my 24th Whaler. Currently in the stable: 86 18' Outrage, 81 13' Sport(original owner), 87 11' Sport, 69 Squall(for sale cheap).

jimh
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Re: BRP Ending Production of Evinrude E-TEC

Postby jimh » Thu Jun 04, 2020 11:13 am

The analogy is right on the money about models and companies.

It may even apply to the E-TEC legacy small V6 engine, which was the last of the legacy engines still being made. I think that was probably the best-selling of the legacy E-TEC engines. If you have a late model E-TEC small V6 150-HP engine, its value has probably increased as a used engine with the end of production--or at least not decreased to zero as some seem to think is inevitable.

As I said, you can get up every morning for 17 years and predict rain, and when it finally rains you can declare it a 100-year flood--really quite a good metaphor in the case of Evinrude-Johnson and their production history--even if the rain is just a good soaking--another good term in this case in some people's view.

biggiefl
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Re: BRP Ending Production of Evinrude E-TEC

Postby biggiefl » Thu Jun 04, 2020 12:11 pm

I agree with that
On my 24th Whaler. Currently in the stable: 86 18' Outrage, 81 13' Sport(original owner), 87 11' Sport, 69 Squall(for sale cheap).

Masbama
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Re: BRP Ending Production of Evinrude E-TEC

Postby Masbama » Sun Jun 07, 2020 6:14 pm

Even though Evinrude engine production has been halted, they will still be part of the boating experience for a while.

engines.jpg
Three generations of Evinrude outboard engines seen at Dauphin Island, Alabama, June 2020.
engines.jpg (84.93 KiB) Viewed 3237 times

jimh
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Re: BRP Ending Production of Evinrude E-TEC

Postby jimh » Tue Jun 16, 2020 9:36 am

USA TODAY's website has a good article on BRP's decision to halt outboard engine production. The article is written by Rick Barrett of the MILWAUKEE JOURNAL SENTINEL newspaper, and includes quotes from a number of well-known Evinrude dealers and other boating writers. The article also has some new quotes from senior BRP management about the decision to end production of outboard engines. The article originally appeared on the newspaper's website but required a subscription to read it there.

https://www.usatoday.com/story/money/2020/06/14/evinrude-outboard-motors-demise-shocked-saddened-boaters-dealers/3187353001/

Mr. Barrett often writes about the business aspects of outboard engine manufacturing in Wisconsin, home to both Brunswick and BRP engine production facilities.

frontier
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Re: New Boston Whaler Boat Inventory and Sales

Postby frontier » Sun Jul 05, 2020 3:25 pm

[With new boats sales] such a hot market and the reports of best-year-ever sales, I wonder about the BRP decision to [discontinue] Evinrude E-TEC production.

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Re: BRP Ending Production of Evinrude E-TEC

Postby jimh » Tue Jul 07, 2020 9:40 am

BRP continues to sell their several new boat lines, but they have an agreement with Brunswick to supply Mercury engines on those new boats.

I don’t see a basis for BRP to maintain production of the Evinrude outboard engines just to have them available for sale with new boats that are BRP brands.

Sale of Evinrude outboard engines on new boat transoms as a package probably represented only a fraction of all Evinrude new engine sales. To continue production to take advantage of a temporary surge in new boat sales would evoke more wondering about their long term plans than what they actually did.

Assume BRP had a five percent market share in all outboards. I suspect their market share in new boat package deals was lower, perhaps much lower, as most of the new boat transom have been captured for a long time by Mercury and Yamaha. If there were any market in which BRP was not particularly competitive, new boat sales may have been it.

jimh
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Re: BRP Ending Production of Evinrude E-TEC

Postby jimh » Sat Dec 05, 2020 10:17 am

I came across some further information that was mentioned by BRP executives in a transcript of a conference call with investors and analysts that gives more information about BRP's reasons for this unusual and unanticipated decision. Here are some excerpts: first from the CEO of BRP Jose Boisjoli:

Jose Boisjoli wrote:[Referencing actions being taken as result of the pandemic] ...we expect that these different initiatives will allow us to navigate through the uncertain times while allowing us to continue investing for the long-term growth of the company. However, these measures do not come without sacrifice and one of the toughest decisions we had to make, as we announced yesterday evening, is the discontinuation of outboard engine production.

As you have witnessed over the last few years, despite its innovative technology, our outboard engine line-up has been losing share in a market that was already difficult. Our strength was in the early power segment while the industry growth was driven by the package sector, which led to continued share erosion. Given this trend, our outboard engine had fallen behind in terms of profitability and cash generation potential.

As the current situation forces us to reduce our investment plan and reviews downward our growth expectations for the business, the path to profitability improvement for outboard engine was too long. It became apparent that we had to discontinue production. For Evinrude employees, let me say that I am very proud of the part they have played over the past years, and in particular their efforts over the past 18 months. Although we have made progress, the impact of the COVID-19 has left us no choice. I wish to thank them for their dedication and commitment in helping us create the Marine Group.


Next are comments from the CFO, Sebastien Martel:

Sebastien Martel wrote:... on the OE [Outboard Engine] business, there's actually two components; there's the unit business and there's the parts business. And the parts business is a business that we're going to be continuing. Obviously, we're going to be servicing our dealers for warranty but also for our consumers that are no longer under warranty but need service, so that business is going to keep going on.

As Jose mentioned, the unit business, so the actual engine, was a business that we were sub-scale. We've been losing market share over the last few years. And from a margin perspective, it's a business that was almost breakeven. And from a profitability, it was a business that was actually at a loss position, and that's why we took the decision to discontinue it.


I think we have the bottom line cause for the end of E-TEC and Evinrude outboards--literally it was the bottom line: losing money in that business segment. And this is from the corporate CFO.