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Author Topic:   Mercury Outboard Market Share

jimh posted 10-25-2002 11:09 PM ET (US)
According to Brunswick CEO George Buckley, Mercury's share of the domestic outboard market remained static at about 40-percent. He cited the large amount of inventory dumped by OMC into the market at "fire sale" prices as one major factor in preventing market share growth for Mercury.
Outboard product mix was also mentioned as about 40% low-emission engines. Low-emission engines (four stroke and direct-injection two strokes), are also lower margin products. Brunswick hopes to improve margins on these engines as the manufacturing technology for producing them becomes more mature.
Noticeably absent was any mention of the new line of Mercury engineered and manufactured 4-stroke high-power outboards.
We'll have to look to other sources for information on those new products.
Buckley's remarks were web-cast live this morning at 11 a.m. EDST via a link at their corporate website.
jimh posted 10-28-2002 12:04 PM ET (US)
Looking forward to 2006 when conventional outboard 2-stroke engines will be legislated out of existance, Brunswick CEO George Buckley predicted that the market mix will by then have turned to 80-percent four-stroke engines, the remaining 20-percent being low-emission 2-stroke (such as Optimax, Ficht, or HPDI). This will be in the domestic U.S. market, only.
Sales (in terms of of total number) of Mercury outboards outside of the U.S. already exceeds the domestic market numbers. That is, the U.S. market is no longer bigger than the rest of the global market for Mercury.
lhg posted 10-28-2002 03:58 PM ET (US)
So that means 60% of the outboards sold in the US are now foreign made. Scary. Not for me, thank you. I don't buy German or Japanese cars either, since I like to keep the corporate profits in the US stock market.
PMUCCIOLO posted 10-29-2002 05:29 AM ET (US)
Unfortunately, the only individuals who have enjoyed profits from the US stock market are the CEO's and executives. Scary describes their accounting practices.
Peter posted 10-29-2002 07:54 AM ET (US)
Interesting that Buckley sees an 80/20 mix of 4 stroke to 2 stroke in 2006. I wonder how the mix will look in the various horsepower segments. I can see a high weighting, perhaps 100 percent, towards 4 stroke below about 90hp but at 150hp and above, I'm guessing that the mix might end up being closer to 60/40 or 50/50.
jimh posted 10-29-2002 09:23 AM ET (US)
Peter, that is an excellent point. I think your estimate of 4-stroke and 2-stroke percentages versus horsepower range is quite good.
Re Paul's comment about the stock market: In his presentation Buckley reminded the Wall Street boys that his company makes real products that are bought by real people. It's not some nebulous trading firm moving paper assets around.
PMUCCIOLO posted 10-30-2002 01:34 PM ET (US)
I'll bet that Mr. Buckley's income is REAL high, too!
hauptjm posted 10-30-2002 01:56 PM ET (US)
There are tens-of-thousands of publicly traded corporations in the U.S. Just because a very few have run afoul, doesn't mean the entire batch is bad. In fact, the exact opposite is the case. Fortunately, we live in one of the few really free market societies in the history of mankind. Mercury's ascension in the ranks of their peers is justification for whatever Buckley earns. The second it isn't justified, he's out of a job.
Whether it's medicine, manufacturing or candlestick making, I'd rather have the market determine who or what something is worth than the government: which is the only other alternative.
SuburbanBoy posted 10-30-2002 03:01 PM ET (US)
Unless he is the chairman of one well optical company...
sub
jimh posted 10-30-2002 04:09 PM ET (US)
Mercury's recent rebate program makes it quite clear who makes what engines. The $5/horsepower rebate applies only to certain models, apparently the ones made by Mercury themselves, not ones rebadged from Yamaha.
rb posted 10-30-2002 04:30 PM ET (US)
I just returned from vacation in Mexico, a small island 7 miles from Cancun and noticed that 95% of the local Panga fishing fleet(about 30 boats) run 50>80 hp Yamahas. I saw one old worn out Johnson and a newer rig with twin Suzukis, not one single Mercury. Seems funny to me being Mercury and Yamaha are nearly the same engine?
rb
lhg posted 10-30-2002 06:18 PM ET (US)
Certain manufucaturers have large market share in various foreign markets. I know Yamaha is big, and cheaply priced, in Mexico and the Islands. Mercury is huge in Canada. On a recent trip to the BC coast, there were Mercs everywhere, all sizes. Surprisingly, considering they are Canadian now, hardly any J/E's. Guess it's taking some time to get the Bombardier J/E's back on the market in volume.
jimh posted 10-30-2002 11:31 PM ET (US)
Another aspect of Brunswick/Mercury that I like is the fact they are a publicly traded American company. As a result, every three months the chief executives meet publicly with Wall Street analysts to present their business results and face questions. These sessions are broadcast live on the internet, then archived and made available for replay.
I don't think there is anything like this for Japanese companies in the marine business. Can you point your web browser and find a recording of a Q and A session with the head of Yamaha? Of Honda? I don't think so.
Companies who compete in global manufacturing businesses face totally different conditions than American firms in service based industries. As Lee Iacocca explained many years ago, most Americans don't send their dry-cleaning to Tokyo (but they think nothing of buying a car made in Japan).
I think Brunswick is doing the right thing by having these public sessions and taking it one better by having them available on the internet.
lhg posted 10-31-2002 07:44 PM ET (US)
Bombardier is carefully disguising how they are doing in the outboard business by lumping it all in as part of their "Marine" business, including all the Sea Doo stuff. They are currently claiming a 10% market share, which if correct, is pretty good, and already moved them past Suzuki and Honda. I am suspecting the 10% included all of the "dumped" OMC inventories also, which they technically owned.
triblet posted 10-31-2002 08:26 PM ET (US)
I just got back from three weeks boating in
Fiji (120' Motor-sailer, somebody doing the
crewing). It was 80% Yammies, 20% Mercs.
NOTHING else, and I was watching.
Chuck
jimh posted 11-01-2002 08:24 AM ET (US)
Another indictor of relative market share is the number of dealers. In the U.S., Mercury has over 5,000 dealers selling their engines. Honda recently announced it has grown to 850 dealers in the U.S.
jbtaz posted 11-01-2002 12:14 PM ET (US)
Johnrude will never again be a major player. Merc and Yammie own it all.
jimh posted 11-08-2002 09:10 AM ET (US)
Bombardier announced recently that it has 2,250 dealers.
Mercury says it has "over 5,000".
Honda says is has about 850 dealers.
Yamaha dealers are harder to count because they often list motorcycle shops and snow machine dealers as outboard sales/service. Anyone have a figure for Yamaha?
Kelly posted 11-08-2002 01:36 PM ET (US)
If Mercury has over 5000 dealers in the United States, that means they have on average one dealer every 707 sqaure miles. In other words, if you laid out squares measuring 27 miles on a side over the entire country, on average, there would be a Mercury dealer in each square if my math is correct(3,537,441 square miles divided by 5,000 dealers equals 707 square miles per dealer, the square root of 707 is roughly 27). Since we know there are many many "squares" in Alaska, North Dakota, Nebraska, and other states that will not have a Mercury dealer, there will be other squares in Florida and other coastal and big lake states that should have many more than one per "square".
I am not disputing the claim. However, I can see why other manufacturers may not see the need to have as many dealers as Mercury.
In my opinion, market share is not an assurance of highest quality.
Kelly
lhg posted 11-08-2002 03:25 PM ET (US)
The #1 selling Honda Accord people would disagree with you, Kelly!
Regarding Yamaha dealers, I'm guessing there are a lot. Many, many of the Mercury and J/E dealers also have Yamaha, so I would guess their numbers somewhere between Bombardier and Mercury. I just read that Yamaha is trying to improve delivery time on their parts availability to Dealers, and is now using the Mercury system of 1 day (UPS overnight) to a dealer.
In spite of all the dealers, I'm still guessing that Bombardier is going to have trouble manufacturing enough engines to capture major market share. They only have one plant producing all sizes of engines. I think Mercury and Yamaha each have many plants putting out engines.
jimh posted 11-08-2002 03:57 PM ET (US)
I spoke with Customer Relations at Yamaha this afternoon. They did not have a precise number, but they stated they have "over 2,000 [outboard engine] dealers."
JFM posted 11-08-2002 04:48 PM ET (US)
Very interesting Jim.
Another thought would be if Johnson/Evenrude/ Bombardier includes Suzuki 4 strokes in their numbers.
Locally there are no Suzuki dealers with-in 100 miles of Cincinnati, however there are several Johnson/ Evenrude. If you ask them about 4 stroke Johnson/ Evenrudes they say �What the Hell You Talking about Man�.
Kelly posted 11-08-2002 05:04 PM ET (US)
ihg,

Honda makes a fine product and I guess they are the #1 selling vehicle in that class, but I think there were years that the Taurus has out sold the Accord, and I don't think that makes the Taurus a better quality car in those years.
Microsoft dominates market share of several software product categories, and in my opinion, their products are inferior to the other offerings.

All I am saying is that just because a company sells the most, it does not mean that their products are the best. Look at boats, did Boston Whaler ever own the market for fiberglass boats in terms of number of units? I don't know, but I doubt it.
And by the way, Honda would not disagree with me, because they have other vehicles that are not the #1 selling vehicles in their class, and I am sure that Honda believes that those products are also the highest quality vehicles in their respective classes even though they do not have the highest market share.
Kelly
Dick posted 11-08-2002 10:06 PM ET (US)
ihg & all
We are a Seattle area Mercruiser/Mercury/Johnson/Evinrude/OMC/Volvoshop.
Most Mercruiser parts are available from a contractor warehouse 20 miles from here and are next day on their truck. No shipping charge as they are also a mega accessory wholesaler and thats how they get my business.
Mercury parts come out of Fresno CA, 3 days UPS ground. Yes next day is available if you are willing to pay the emergency order charge and the UPS Red charge.
OMC/J&E parts again come from a warehouse 20 miles away, second day by UPS.
Volvo parts are shipped second day FedEx. No charge for shipping, but at the price of their parts they can afford it.
I ordered a bunch of outboard parts from Mercury in Fresno (my default warehouse) last week. One part, a $.50 item, was not in stock so that item was transferred to Fon du Lac. The part came in today, shipping charges $3.84.
Dont't how the others charge their freight but it's going to be built in somewhere.
JCL posted 11-10-2002 10:59 PM ET (US)
To confuse the issue further, I'm told by a shop in town that Mercury requires that a facility sell a specified number of motors to be an authorized warranty center and that some shops sell the bare minimum just to do this which might account for the high numbers of dealers. Also in town are 2 Merc dealers, one of which handles only high hp motors while the other handles small and midrange????
lhg posted 11-11-2002 04:42 PM ET (US)
I'm sure parts availability is related to where your Dealer is relative to the parts distribution centers.
I use Mercury dealers in Chicago and Ft Lauderdale, and both get parts next day via UPS. Chicago probably gets parts from the factories, relatively nearby in Fond du Lac WI, and there is probably a major distribution location in SE Florida. Mercury outboards and Mercruisers are all over the place in that market, so parts would be nearby.
I just read that Mercury announced that Optimax 225's set five new world speed records on bass boats.
Dick posted 11-11-2002 08:37 PM ET (US)
JCL
Mercury does not require a dealer to sell engines to be warranty center, only certified technicians and any special tools required.
We have never stocked nor sold a motor.
Bombardier is the strangest, only selling dealers can get parts for Ficht and 4 stroke motors. Looks like we are going to bite the bullet and stock some J & Es.

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Author	Topic: Mercury Outboard Market Share
jimh	posted 10-25-2002 11:09 PM ET (US) According to Brunswick CEO George Buckley, Mercury's share of the domestic outboard market remained static at about 40-percent. He cited the large amount of inventory dumped by OMC into the market at "fire sale" prices as one major factor in preventing market share growth for Mercury. Outboard product mix was also mentioned as about 40% low-emission engines. Low-emission engines (four stroke and direct-injection two strokes), are also lower margin products. Brunswick hopes to improve margins on these engines as the manufacturing technology for producing them becomes more mature. Noticeably absent was any mention of the new line of Mercury engineered and manufactured 4-stroke high-power outboards. We'll have to look to other sources for information on those new products. Buckley's remarks were web-cast live this morning at 11 a.m. EDST via a link at their corporate website.
jimh	posted 10-28-2002 12:04 PM ET (US) Looking forward to 2006 when conventional outboard 2-stroke engines will be legislated out of existance, Brunswick CEO George Buckley predicted that the market mix will by then have turned to 80-percent four-stroke engines, the remaining 20-percent being low-emission 2-stroke (such as Optimax, Ficht, or HPDI). This will be in the domestic U.S. market, only. Sales (in terms of of total number) of Mercury outboards outside of the U.S. already exceeds the domestic market numbers. That is, the U.S. market is no longer bigger than the rest of the global market for Mercury.
lhg	posted 10-28-2002 03:58 PM ET (US) So that means 60% of the outboards sold in the US are now foreign made. Scary. Not for me, thank you. I don't buy German or Japanese cars either, since I like to keep the corporate profits in the US stock market.
PMUCCIOLO	posted 10-29-2002 05:29 AM ET (US) Unfortunately, the only individuals who have enjoyed profits from the US stock market are the CEO's and executives. Scary describes their accounting practices.
Peter	posted 10-29-2002 07:54 AM ET (US) Interesting that Buckley sees an 80/20 mix of 4 stroke to 2 stroke in 2006. I wonder how the mix will look in the various horsepower segments. I can see a high weighting, perhaps 100 percent, towards 4 stroke below about 90hp but at 150hp and above, I'm guessing that the mix might end up being closer to 60/40 or 50/50.
jimh	posted 10-29-2002 09:23 AM ET (US) Peter, that is an excellent point. I think your estimate of 4-stroke and 2-stroke percentages versus horsepower range is quite good. Re Paul's comment about the stock market: In his presentation Buckley reminded the Wall Street boys that his company makes real products that are bought by real people. It's not some nebulous trading firm moving paper assets around.
PMUCCIOLO	posted 10-30-2002 01:34 PM ET (US) I'll bet that Mr. Buckley's income is REAL high, too!
hauptjm	posted 10-30-2002 01:56 PM ET (US) There are tens-of-thousands of publicly traded corporations in the U.S. Just because a very few have run afoul, doesn't mean the entire batch is bad. In fact, the exact opposite is the case. Fortunately, we live in one of the few really free market societies in the history of mankind. Mercury's ascension in the ranks of their peers is justification for whatever Buckley earns. The second it isn't justified, he's out of a job. Whether it's medicine, manufacturing or candlestick making, I'd rather have the market determine who or what something is worth than the government: which is the only other alternative.
SuburbanBoy	posted 10-30-2002 03:01 PM ET (US) Unless he is the chairman of one well optical company... sub
jimh	posted 10-30-2002 04:09 PM ET (US) Mercury's recent rebate program makes it quite clear who makes what engines. The $5/horsepower rebate applies only to certain models, apparently the ones made by Mercury themselves, not ones rebadged from Yamaha.
rb	posted 10-30-2002 04:30 PM ET (US) I just returned from vacation in Mexico, a small island 7 miles from Cancun and noticed that 95% of the local Panga fishing fleet(about 30 boats) run 50>80 hp Yamahas. I saw one old worn out Johnson and a newer rig with twin Suzukis, not one single Mercury. Seems funny to me being Mercury and Yamaha are nearly the same engine? rb
lhg	posted 10-30-2002 06:18 PM ET (US) Certain manufucaturers have large market share in various foreign markets. I know Yamaha is big, and cheaply priced, in Mexico and the Islands. Mercury is huge in Canada. On a recent trip to the BC coast, there were Mercs everywhere, all sizes. Surprisingly, considering they are Canadian now, hardly any J/E's. Guess it's taking some time to get the Bombardier J/E's back on the market in volume.
jimh	posted 10-30-2002 11:31 PM ET (US) Another aspect of Brunswick/Mercury that I like is the fact they are a publicly traded American company. As a result, every three months the chief executives meet publicly with Wall Street analysts to present their business results and face questions. These sessions are broadcast live on the internet, then archived and made available for replay. I don't think there is anything like this for Japanese companies in the marine business. Can you point your web browser and find a recording of a Q and A session with the head of Yamaha? Of Honda? I don't think so. Companies who compete in global manufacturing businesses face totally different conditions than American firms in service based industries. As Lee Iacocca explained many years ago, most Americans don't send their dry-cleaning to Tokyo (but they think nothing of buying a car made in Japan). I think Brunswick is doing the right thing by having these public sessions and taking it one better by having them available on the internet.
lhg	posted 10-31-2002 07:44 PM ET (US) Bombardier is carefully disguising how they are doing in the outboard business by lumping it all in as part of their "Marine" business, including all the Sea Doo stuff. They are currently claiming a 10% market share, which if correct, is pretty good, and already moved them past Suzuki and Honda. I am suspecting the 10% included all of the "dumped" OMC inventories also, which they technically owned.
triblet	posted 10-31-2002 08:26 PM ET (US) I just got back from three weeks boating in Fiji (120' Motor-sailer, somebody doing the crewing). It was 80% Yammies, 20% Mercs. NOTHING else, and I was watching. Chuck
jimh	posted 11-01-2002 08:24 AM ET (US) Another indictor of relative market share is the number of dealers. In the U.S., Mercury has over 5,000 dealers selling their engines. Honda recently announced it has grown to 850 dealers in the U.S.
jbtaz	posted 11-01-2002 12:14 PM ET (US) Johnrude will never again be a major player. Merc and Yammie own it all.
jimh	posted 11-08-2002 09:10 AM ET (US) Bombardier announced recently that it has 2,250 dealers. Mercury says it has "over 5,000". Honda says is has about 850 dealers. Yamaha dealers are harder to count because they often list motorcycle shops and snow machine dealers as outboard sales/service. Anyone have a figure for Yamaha?
Kelly	posted 11-08-2002 01:36 PM ET (US) If Mercury has over 5000 dealers in the United States, that means they have on average one dealer every 707 sqaure miles. In other words, if you laid out squares measuring 27 miles on a side over the entire country, on average, there would be a Mercury dealer in each square if my math is correct(3,537,441 square miles divided by 5,000 dealers equals 707 square miles per dealer, the square root of 707 is roughly 27). Since we know there are many many "squares" in Alaska, North Dakota, Nebraska, and other states that will not have a Mercury dealer, there will be other squares in Florida and other coastal and big lake states that should have many more than one per "square". I am not disputing the claim. However, I can see why other manufacturers may not see the need to have as many dealers as Mercury. In my opinion, market share is not an assurance of highest quality. Kelly
lhg	posted 11-08-2002 03:25 PM ET (US) The #1 selling Honda Accord people would disagree with you, Kelly! Regarding Yamaha dealers, I'm guessing there are a lot. Many, many of the Mercury and J/E dealers also have Yamaha, so I would guess their numbers somewhere between Bombardier and Mercury. I just read that Yamaha is trying to improve delivery time on their parts availability to Dealers, and is now using the Mercury system of 1 day (UPS overnight) to a dealer. In spite of all the dealers, I'm still guessing that Bombardier is going to have trouble manufacturing enough engines to capture major market share. They only have one plant producing all sizes of engines. I think Mercury and Yamaha each have many plants putting out engines.
jimh	posted 11-08-2002 03:57 PM ET (US) I spoke with Customer Relations at Yamaha this afternoon. They did not have a precise number, but they stated they have "over 2,000 [outboard engine] dealers."
JFM	posted 11-08-2002 04:48 PM ET (US) Very interesting Jim. Another thought would be if Johnson/Evenrude/ Bombardier includes Suzuki 4 strokes in their numbers. Locally there are no Suzuki dealers with-in 100 miles of Cincinnati, however there are several Johnson/ Evenrude. If you ask them about 4 stroke Johnson/ Evenrudes they say �What the Hell You Talking about Man�.
Kelly	posted 11-08-2002 05:04 PM ET (US) ihg, Honda makes a fine product and I guess they are the #1 selling vehicle in that class, but I think there were years that the Taurus has out sold the Accord, and I don't think that makes the Taurus a better quality car in those years. Microsoft dominates market share of several software product categories, and in my opinion, their products are inferior to the other offerings. All I am saying is that just because a company sells the most, it does not mean that their products are the best. Look at boats, did Boston Whaler ever own the market for fiberglass boats in terms of number of units? I don't know, but I doubt it. And by the way, Honda would not disagree with me, because they have other vehicles that are not the #1 selling vehicles in their class, and I am sure that Honda believes that those products are also the highest quality vehicles in their respective classes even though they do not have the highest market share. Kelly
Dick	posted 11-08-2002 10:06 PM ET (US) ihg & all We are a Seattle area Mercruiser/Mercury/Johnson/Evinrude/OMC/Volvoshop. Most Mercruiser parts are available from a contractor warehouse 20 miles from here and are next day on their truck. No shipping charge as they are also a mega accessory wholesaler and thats how they get my business. Mercury parts come out of Fresno CA, 3 days UPS ground. Yes next day is available if you are willing to pay the emergency order charge and the UPS Red charge. OMC/J&E parts again come from a warehouse 20 miles away, second day by UPS. Volvo parts are shipped second day FedEx. No charge for shipping, but at the price of their parts they can afford it. I ordered a bunch of outboard parts from Mercury in Fresno (my default warehouse) last week. One part, a $.50 item, was not in stock so that item was transferred to Fon du Lac. The part came in today, shipping charges $3.84. Dont't how the others charge their freight but it's going to be built in somewhere.
JCL	posted 11-10-2002 10:59 PM ET (US) To confuse the issue further, I'm told by a shop in town that Mercury requires that a facility sell a specified number of motors to be an authorized warranty center and that some shops sell the bare minimum just to do this which might account for the high numbers of dealers. Also in town are 2 Merc dealers, one of which handles only high hp motors while the other handles small and midrange????
lhg	posted 11-11-2002 04:42 PM ET (US) I'm sure parts availability is related to where your Dealer is relative to the parts distribution centers. I use Mercury dealers in Chicago and Ft Lauderdale, and both get parts next day via UPS. Chicago probably gets parts from the factories, relatively nearby in Fond du Lac WI, and there is probably a major distribution location in SE Florida. Mercury outboards and Mercruisers are all over the place in that market, so parts would be nearby. I just read that Mercury announced that Optimax 225's set five new world speed records on bass boats.
Dick	posted 11-11-2002 08:37 PM ET (US) JCL Mercury does not require a dealer to sell engines to be warranty center, only certified technicians and any special tools required. We have never stocked nor sold a motor. Bombardier is the strangest, only selling dealers can get parts for Ficht and 4 stroke motors. Looks like we are going to bite the bullet and stock some J & Es.