posted 01-12-2006 11:44 PM ET (US)        

MERCURY
Four-stroke engines 46 to 60-HP
Four-stroke engines 75 to 115-HP
OptiMax engines 75 to 225-HP
Verado Engines

EVINRUDE:
All E-TEC and Direct-Injection engines

YAMAHA:
Select four-stroke and two-stroke engines

SUZUKI:
All four-stroke engines

posted 01-13-2006 10:20 AM ET (US)            

I think its appropriate to post a response in this thread to a post in the Mercury incentive thread (see continuouswave.com/ubb/Forum8/HTML/002503.html ).

In that post, Larry says : "The only way one can determine any real value of an extended warranty is when they will give cash up front of lieu of same. The $4/horsepower offer of Evinrude tells what it's really worth, for instance, so even for a 250 and 4 extra years, it's only worth $1K." Occasionally we agree on things. The value of the extended protection is basically $1,000 because that is what the consumer can trade for the extended protection. Evinrude doesn't place an MSRP value of the extended protection plan.

Yamaha offers its customers a $1,000 rebate or 3 years of its extended service plan for which they claim has an MSRP value of $2,600 for the 250 HPDI or the F-250. Despite this claim, the value of getting 3 years of additional protection on either the 250 HPDI or F-250 is basically $1,000. Again, its what the consumer can trade to get the extended protection. Still pretty simple to get a handle on the real consumer value. If we applied Yamaha MSRP value accounting methods to the Evinrude deal, it looks like the Evinrude deal providing an additional year of protection beyond the standard warranty would be valued at more than $2,600 MSRP. That includes alot of assumptions that everything else is the same which is never the case but for the fun of this excercise let's make those assumptions.

Suzuki offers its customers a $750 rebate or 3 extra years of protection for the DF250. Suzuki, like Evinrude, does not quantify the MSRP value of the extended protection. Despite not having stated a seemingly arbitrary MSRP value, the value received in the Suzuki deal is pretty simple to understand - trade your $750 rebate for 3 years of additional warranty coverage. Some might take the cash, some might take the warranty. For fun, let's put a Yamaha MSRP value on this incentive deal using Yamaha accounting methods. It would appear that the MSRP of the protection is worth 3/4 of $2,600 or $1,950. In other words, $750 buys $1,950 worth of warranty coverage. Suzuki engines are typically cheaper than Yamaha and everybody else so I think one should expect the incentive value to be less, somewhat proportional to their price.

Honda offers 2 additional years of warranty on top of their standard 3 years. Honda does not offer a cash rebate and does not attempt to place an MSRP value on the extra 2 years of warranty coverage. Since Hondas rarely break according to Honda owners, this incentive should cost Honda next to nothing to offer.

Let's put a Yamaha MSRP value on the Honda plan just for fun. Honda doesn't offer a 250, only a 225. Yamaha's incentive on an F-225 is $750 or 3 years of protection valued at $2,200 MSRP by Yamaha. So using Yamaha accounting methods, it would appear that the Honda offer on a BF 225 has a rebate value of approximately $500 (using a straight line valuation of $250 per year of coverage). Alternatively, the MSRP value of the extended warranty coverage is about $1,500 using Yamaha accounting.

With respect to its Optimax line and the small 40-60 HP 4-stroke line, Mercury's promotion is unique in that it is the only manufacturer that does not offer a cash rebate in lieu of the extended protection but yet claims a specific MSRP value for the 2 year extended protection plan. In the case of the Optimax 225, it values that protection at $2,200, or about $700 more than the calculated value of getting 2 more years of protection on a Honda 225 using Yamaha methods. For that same $2,200 MSRP value claimed by Mercury, Yamaha gives its customers an extra year of protection on the F-225. $2,200 MSRP from one manufacturer is $2,200 MSRP from another, right? ;)

Since the Honda 225 has a very good reputation for reliability over their existence so far and the Optimax 225 does not have such over its entire existence, perhaps placing a higher MSRP value on the extended Optimax protection for 2 years of protection is correct under the reasoning that it would seem that for a 3rd party to sell the same piece of mind for 5 years with respect to out of pocket warranty type repairs, that 3rd party wouldn't be able to charge as much for the Honda plan as than they would be able to for the Optimax plan based on consumer perceptions. In other words, someone buying a Honda is probably less risk adverse for those two after warranty years than an Optimax buyer and since they are less risk adverse, the 3rd can't charge as much for the insurance premium to cover the 2 years.

Even if they are hard to compare to each other, one thing I think everybody can take away from these deals is that now is the time of the year to buy the new outboard of their choice if they are in the market to buy a new outboard.

posted 01-13-2006 01:17 PM ET (US)            

If you look at the warranty offers this way, people who offer warranty OR cash are in effect saying they are willing to sell the warranty OR buy it back at the same price. This is the real value of it.

posted 01-13-2006 02:57 PM ET (US)         

Even worse, as JimH pointed out, it could give some people the idea that their engines typically require that amount service repairs, which is not what a buyer wants to hear at all. You've got to wonder how some of these ad people think, if they do at all!

Further, as the 2 and 4 stroke technologies exist side by side, a problem for one manufacturer's technology hurts the others by association. The apparent excellent reliability of 4-strokes by Honda, an early proponent of this technology, helped all the other brands succeed with theirs, and boosted sales. Conversely, early DFI problems like the Ficht, followed by the lesser, but still there, Optimax problems, really set back the 2-stroke DFI's. Even Yamaha, with it's previous great recond on conventional 2-strokes, couldn't make a big market gain with it's own HPDI's. Buyer were just afraid. Now, it is possible that early problems with big 250/300 HPDI's could be hurting Optimax or E-tec sales.

I think one of the reasons Verado is taking off big is that, in spite of higher cost, it is borrowing on the 4-stroke reliability of the other companies.

posted 01-13-2006 03:30 PM ET (US)            

(1) The fact that Mercury is offering an incentive on the Verado suggests to me that sales are not really "taking off big". If they were "taking off big", there would be no need for incentives. Many experienced folks I've talked to are still gun shy with respect to the combination of an intercooled super charger, 4-stroke outboard and salt water. Most are taking a wait and see approach to the Verado. The additional 3 year warranty should help overcome that perception, right or wrong, for some. Maybe with the extra 3 year warranty sales will take off.

posted 01-13-2006 04:46 PM ET (US)            

The first year of Yamaha warranty covers everything. Engine, rigging components,cosmetic,accsesories(sp) ect. The second year and beyond including YES warranties covers the engine only. There are also a couple of components on the engine that are not covered...one being the trim motor....the other I can't recall of the top of my head.

posted 01-14-2006 01:03 PM ET (US)            

When you mention non declining warranty...... a paticluar engine companies standard warranty and promo or paid for extended warranties coverage is identical through both standard and extended periods?