posted 06-19-2013 07:27 AM ET (US)            

In the marine engine business that sort of incentive has been used before. See my history of engine incentives from Mercury for their stern drive engines for details at

http://continuouswave.com/whaler/reference/history/brunswick.html

The practice at that time was to offer market share incentives. If a boat builder purchased mostly or all Mercury engines, the discount of the engine price was increased and made more attractive, creating an incentive to use only one brand.

I have heard that with Yamaha outboard there are incentives that make it attractive for a boat builder to use mostly Yamaha engines, say about 75-percent of his purchases.

Yamaha built its reputation for quality and reliability over many years. They did it with a simple approach: make extremely good products. A dealer told me once that an important component, a propeller shaft seal, on a Mercury engine was a $10 part and on a similar Yamaha it was a $90 part, that is, it was a much better seal. That kind of engineering and use of high quality components gave Yamaha its reputation.

posted 06-19-2013 11:29 PM ET (US)         

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jimh - Any boat builder that uses a Yamaha does so because he wants a Yamaha engine on his boat. He has free choice.

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posted 06-20-2013 07:50 PM ET (US)            

There are no "terrible" engines manufacturers... if there were, everyone would be avoiding them.

The bottom line is that (Mercury, Evinrude, Yamaha, Honda) all make great engines. Buy one... enjoy it. Buy one from a dealer that you get along with and who has a reliable service shop.

Happen to be very happy with my Yamaha, and would buy another. I'd be equally happy with a (Evinrude, Mercury, or Honda). It's JUST an engine, it's not a religion.

Dave

posted 06-21-2013 01:14 PM ET (US)         

Engines that boat manufactures put in or outboard boats are based entirely on commercial arrangements with the engine mfgs. since the sale of the engine is in many cases equal to or more than the boat price and is ALWAYS a big percentage of the sale price.

It's why you see the boat mfg's adding "rigging" charges if you try to buy the boat without the mfg adding and profiting by the engine sale. If you can even buy the boat without engines. Often offered in the brochure by the reality is very hard to get a boat without the favored engines from the mfg.

posted 06-21-2013 06:03 PM ET (US)            

The salient point I was making in regard to Yamaha is there is not a mandatory tie-in sale created by joint ownership of the boat builder and engine company by the same entity. That is the case with Brunswick. It is not the case with Yamaha, as far as I know. Yamaha used to own a boat builder, but I heard that they acquired it because the boat builder owned Yamaha so much money that the boat builder just let Yamaha take ownership as a way out of the debt. I think Yamaha sold off that company. In any case, if Yamaha still does own a boat builder, it is an exception to their general business practice, while with Brunswick owning the boat builder is the rule.

People do blame the boat brand if the engine is part of a mandatory tie-in sale. When Brunswick began to enforce this policy with Boston Whaler there were many howls and complaints about having to buy a Mercury.

Grady-White has been finishing with the highest customer satisfaction ratings in the J. D. Power survey every year since the survey began. Whaler has finished as high as second and as low as fifth (as I recall). One of the reasons that Whaler has not received higher customer satisfaction may be inferred to be due to the engine.

As for adding an engine to make more profit, that is obvious, but there are more reasons. I will turn to a former Brunswick CEO to explain it: adding the engine turns the boat and engine into a system under the control of a single company, which can then increase the integration of the engine and boat into a better system, giving the boater a better experience. This is why Brunswick wants to put a Mercury on all their boat transoms: to give the customer a better experience. Oh, yes, they will make more profit, too.

The boat builders that use Yamaha are, in the main, using that brand because they think it will give their customers the best outcome, and, no doubt, give them some profit on the engine sale, too.

posted 06-21-2013 06:14 PM ET (US)         

quote:

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The salient point I was making in regard to Yamaha is there is not a mandatory tie-in sale created by joint ownership of the boat builder and engine company by the same entity. That is the case with Brunswick.

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No more than with Whaler/Brunswick than with Yamaha/Yamaha. Of course company boats will promote company engines.

The salient point is that the reason you see so many Yamaha's is that Yamaha provides a better incentive for boat builders so more boat builders use them. This was especially true as Yamaha first entered the market as US mfg's were struggling with outdated designs, engineering and production.

Yamaha got a market position via incentives and has held on to it. That they had and have a great product makes them tough to dislodge. It was great seeing Mercury hang in as OMC bowed out under the pressure of imports.

Bottom line is that the bottom line drove the Yamaha marketing, not boat builder's doing some kind of quality evaluation on the competing engines.

posted 06-21-2013 08:28 PM ET (US)            

Whenever price is discussed the Mercury brand is always heralded as the least expensive at retail, so it seems reasonable to assume it would also be the least expensive at wholesale. Being the least expensive suggests there is more room for profit taking by the boat builder. Mercury tends to promote its engines on price. Take a look at any post by L H G: he always cites the fact that a Mercury is less expensive. L H G is an expert on outboard engine prices. He has found the least expensive outboard engines on the planet. He always finds Mercury engines at rock bottom prices. How can this be reconciled with the suggestion that Yamaha is popular with boat builders because they are the least expensive? It makes no sense.

Yamaha is usually more expensive at retail than Mercury. I do not recall anyone every saying they bought a Yamaha because it was the least expensive.

posted 06-21-2013 10:10 PM ET (US)         

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jimh - I really cannot see any evidence that Yamaha is so very popular because they are the cheapest.

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Me either but lots of evidence that Yamaha provides profitable discounts to boat builders to make Yamaha the "standard" engine offer on their boats. The engines are a large part of the cost of a boat and boat builders can use the engine mfg.s discount for profit and to lower the cost of their boats.

Yamaha being a big company was able to break into US market by offering deep discounts. Same for Honda. With Mercury owned by competitor boat builder Brunswick, the boat builders had added incentive to go with Yamaha.

posted 06-22-2013 12:25 AM ET (US)            

Based on what I have been told (by people who work for outboard engine manufacturers), Yamaha does not try to push boat builders into exclusive relationships. Yamaha offers discounts to boat builders who buy a majority of their engines from Yamaha.

The notion that there is something different about Yamaha's deal with boat builders in the form of discounts that makes them more popular is completely speculative and supported by no evidence at all.

What makes Yamaha popular with boat builders is their great reputation and the clamor from customers who want Yamaha engines. It might very well be that boat builders have to pay more for Yamaha than other brands, but do so willingly because it helps them sell their boats.

There is a lot of evidence in the archives of this website that show that having a mandatory tie-in sale of a Mercury engine with a Boston Whaler did not help Boston Whaler sell boats, and it had the opposite effect. Boston Whaler was stuck with Mercury. An independent boat builder will select an engine that helps sell his boat to customers. That is why they select Yamaha.

The existence of so many Brunswick boat builders forced into Mercury engines also makes independent boat builders tend to avoid Mercury because they see Mercury as part of their boat building competition. This might help Yamaha to pick up some boat transoms. It is a backlash effect from Brunswick owning competing boat companies.

It is pie-in-the-sky to say boat builders exploit their customers with Yamaha engines because they are the cheapest. That makes no sense. The reason Grady-White keeps beating Boston Whaler in customer satisfaction is probably because Grady-White buyers feel like they have a choice of engines: Yamaha engines of various horsepower!

posted 06-22-2013 01:38 AM ET (US)            

In regards to Boston Whaler vs Grady White. Whaler decided to make drastic changes to there style notably losing there beautiful Desert Tan. Grady made very minor adjustments picking up that beautiful tan color and adding a very popular engine on the rise at the same time.

Martyn

posted 06-22-2013 11:08 AM ET (US)            

The Yamaha F225 four-stroke-cycle outboard was a breakthrough product. It was the first high-power four-stroke-cycle outboard engine. Prior to the F225 most of the four-stroke-cycle engines were low power, and the highest power was perhaps 135-HP.

posted 06-22-2013 11:34 AM ET (US)         

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jimh - Yamaha's two-stroke cycle outboard engines were generally more reliable and need fewer repairs than competitors like Mercury.

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No real evidence of that. When I bought my Whaler Newport in 1980, all my boating buddies had OMC's and gave similar dire warnings about Mercury reliability. Always struck me as a Ford vs. Chevy kind of thing with brand loyalty trumping reality. My 90 HP Merc was used way more than their OMC's and always got me home and had way more hours on it than their OMC's.

People forget that OMC was a boat builder and engine builder so, like Brunswick today, was a competitor for many boat builders. When Yamaha entered the US market in 1984 it allowed boat builders to get away from the OMC's engines. Yamaha's discount program made it a no brainer.

When OMC collapsed in 2000, Yamaha was poised to take over the market for boat mfgs. Mercury being late the game on four cycle (Japanese had to be more fuel efficient so four cycle was the answer, an example of how gov regs, Japanese in this case, on energy efficiency had positive commercial consequences). Had not US regs caught up, a legitimate speculation that Mercury would never have been pushed to go four cycle and would have gone out of business also.

posted 06-22-2013 03:55 PM ET (US)            

The Mercury Marine company had to take back so many engines in the 1990's and early 2000's under warranty that had failed and in which instance they gave their customers new engines in replacement, that Mercury had to start a re-manufacturing plant that repaired these failed engines. Mercury then started a program of re-selling their factory re-built engines to dealers so they could recover some of their warranty costs.

posted 06-22-2013 04:38 PM ET (US)         

quote:

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jimh - The notion put forth here is that Yamaha engines in the recent past are not more reliable than Mercury and their popularity stems only from their lower price is completely wrong.

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But I don't see that anyone has put forth that notion.

The history of Mercury is interesting but it is the history of OMC, not Mercury, that explains Yamaha's rise. OMC dominated the outboard market when Yamaha first started importing engines.

Yamaha was able to make inroads by offering greater profit margins to boat builders and by offering an alternative to OMC which was a competitor for the boat builders since OMC, like Brunswick Corporation, was also a boat mfg.

Yamaha offered big discounts and non-competition and gained market share for those reasons. When OMC collapsed, those advantages made Yamaha the dominant player providing outboards to all non-Brunswick/competitor boat builders.

Honda followed the same strategy when it began marketing a full line of outboards in the US. The marketing and the timing in the OEM boat builder business, not the quality of the engines, nor engineering design is why we see so many Yamaha's vs. Honda's.

posted 06-23-2013 09:56 AM ET (US)            

So far I see nothing provided that supports the notion that Yamaha is offering better deals to boat builders than competitors. This is entirely possible, but there is nothing substantive given here to support the claim. It has been a standard practice for engine manufacturers to offer discounts based on volume. The more you buy, the lower the price. This is not anything particularly unique to outboard engine sales, and I do not see that it gives any special support to Yamaha over competitors in being successful.

Boat builder engine preference is really a split market. Because Brunswick is a competitor boat builder, boat builders may resist buying Brunswick's Mercury-brand engines because they see that as giving business to their competition.

The simplest explanation for the presence of many Yamaha engines is their dealer network. Yamaha has been able to partner with many boat dealers who sell outboard engines. Their dealer representation is much better than other Japanese brands like Honda and Suzuki. This has helped them. According to one dealer that I have known well, Yamaha makes it easy for dealers to do business with them, and those policies have probably helped Yamaha bring more dealers to their outboard engine sales. What is meant by "easy" is the terms and requirements for stocking inventory. Yamaha does not demand too much. A dealer does not have to buy $200,000 in parts and test gear to become a Yamaha reseller.

As noted, perception is reality in marketing, and if boaters think Yamaha has higher reliability, that is a great asset for Yamaha and a problem for competitors to overcome.

posted 06-23-2013 10:45 AM ET (US)         

quote:

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jimh - I was certain that EaglesPDX was putting forth the notion that Yamaha engines are popular because of lower price and their quality is nothing special compared to Mercury.

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Best to simply quote what someone said and then respond to it vs. interpreting what someone said and then arguing with one's own interpretation and end up having a straw man argument with oneself.

Yamaha broke in to US market using discounts to boat mfgs to use their engine. They became dominant when OMC went bankrupt in 2000 leaving Yamaha vs. Mercury with Mercury, like OMC, a competitive boat builder.

The boat builders decision was not based on reliability of the engines but on commercial considerations, cost and competition. It is the sales of new boats with "factory" engines that leads to people "seeing Yamaha's every where".

The OEM factory commercial decision on what engine to use extends well into the life cycle of the boat. If I were to buy a used Grady White with a working Yamaha, I'm not going spend money to replace with Mercury or Honda even if prefer those engines. Likewise a Whaler buyer who has working Mercs even if he prefers Yamaha.

posted 06-23-2013 01:54 PM ET (US)         

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jih49 - Eagles is soundly convinced that quality has nothing to do with customer choices when it comes to outboards.

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Don't see a quote of me saying that and apparently you couldn't find one either.

What I do say is that commercial considerations of volume discount structure, rebates and competition are the deciding factors for what boat mfgs offer as original equipment on boats.

The quality issue devolves to the engine mfgs. No one blames the boat mfg if their is a problem with their outboard engine. Most are covered under warranty first three to five years so not a consideration for most boat buyers either especially if the boat mfg offers them a lower price for the "package" engine vs. ordering an optional engine. And ordering the non-OEM engine is made difficult if not impossible because the boat mfg makes more money selling the boat with an engine.

posted 06-23-2013 08:07 PM ET (US)         

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jlh - Based entirely on commercial arrangements,' leaves no room for quality considerations, or did I lose something in your above statement?

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Yes you did. The point that engine "quality" is not a factor for BOAT MFG'S.

As you can see from from your comment, you tried to generalize to customers vs. boat mfgs.

quote:

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jih49 - Eagles is soundly convinced that quality has nothing to do with customer choices when it comes to outboards.

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A different discussion.

Customers may have perceptions of quality. Based on two mfgs. offering similar boats, one with their preferred engine type, one with brand x, all things being equal the customer would likely choose the boat with their preferred engine.

Some boat mfgs will offer other brands of engine or add a "rigging" charge for their non-OEM engine or roll the lost profit into the cost of a boat without an engine in an attempt regain some of the profits lost by not selling an engine with the boat. The non-OEM engine is typically special order with long delivery time, higher price. If you want one "this year" you'll likely go with the factory OEM choice.

posted 06-24-2013 10:57 AM ET (US)            

Source: Data Collected From Boat Trader 6/24/2013

              Single OB        Twin OB       Triple OB
Yamaha        3010 (44.1)     485  (53.9)     41  (45.1)
Mercury       2287 (33.5)     215  (23.9)     36  (39.6)
Evinrude       497  (7.3)      54    (6.0)       5    (5.5)
Suzuki         349  (5.1)      69    (7.7)       9    (9.9)
Johnson        324  (4.8)      27    (3.0)       0    (0)
Honda          226  (3.3)      41    (4.6)       0    (0)
Force          122  (1.8)        6     (0.6)       0    (0)
Tohatsu          8  (1.0)       2     (0.2)       0    (0)
Total         6823               899                 91

posted 06-24-2013 03:11 PM ET (US)            

Just to re-instate eagles point, yes it is commercially driven that more boat manufacturers use Yamaha motors on their transom than a motor manufactured by one of their competitors, for that reason the must choose a motor that is less expensive to them to put on the boat than other OB manufacturers that manufacture motors of equal quality. (Honda, Suzuki, Tohatsu, Torqeedo, Evenrude, etc.)

OEM parts are commercial driven and an OB becomes a OEM part. It is true that quality is part of the equation but absolutely not the major part. Cost is the major driving force

posted 06-24-2013 04:29 PM ET (US)            

I am not discounting the economic impact of the packaging, only that customer choice (in my humble opinion) is more of the driver for brand selected. Obviously boat manufacturers owning their brand excepted.

posted 06-24-2013 11:17 PM ET (US)         

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Mike Kub I went to the Houston Boat Show at the Reliant Center this weekend and there were several dealers that had Yamahas and another brands yet the Yamahas were 2500 to 3K more for 150hp.engines from the same dealer.

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Retail Prices from Boats.net and Steven Marine.

Yamaha F150 $12,784
Mercury 150 Four Stroke $12,110

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Mike Kub- Explain how incentives could have anything to do with this.

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I think this explains it.

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I also saw the new Merc 150 four stroke.this is one ugly motor.

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posted 06-25-2013 07:32 AM ET (US)            

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Most seem to think reason we see so many Yamahas is due to dealer incentives.

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I think you are misreading the discussion. Only two people think that.

quote:

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I went to the Houston Boat Show at the Reliant Center this weekend and there were several dealers that had Yamahas and another brands yet the Yamahas were 2500 to 3K more for 150hp.engines from the same dealer.

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The higher price for Yamaha sounds typical, in my experience. Mercury is usually the least-expensive. Mercury likes to sell on price. The reason Yamaha outboard sell at higher price yet are still more popular cannot be explained by some mysterious terms like "commercial" and "incentives."

posted 06-25-2013 08:32 AM ET (US)            

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Customer choice is normally influenced by product quality, whether it be perceived and/or real.

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