posted 06-13-2015 09:24 AM ET (US)            

He said Yamaha made it very easy for their dealership to sell Yamaha outboard engines. They offered very modest requirements about order volume, stocking inventory, stocking parts, and other mandatory arrangements of being an authorized dealer.

At the time this dealer took on Yamaha, the Mercury line was not very attractive for them. They did not like the two-cycle Orbital Combustion Process engines now called ProXS engines but at that time were called OptiMax engines due to the lingering bad reputation those engines had. (Maybe this name change reflects those lingering doubts.) You might remember that Mercury, at one point, went to the extreme of stopping all manufacturing of the OptiMax because they could not get the bugs out of the product. This dealer more or less stopped selling OptiMax. At this same time, Mercury did not have any four-cycle engines of its own. It was using engine blocks made by Yamaha or whole engines made by Yamaha or Tohatsu. And Mercury had just come out with the Verado, which was a terrible fit with this dealer's customers. The dealership sells a lot of 16 to 19-foot fishing boats and pontoon boats. The Verado was much too large, much too heavy, and much too expensive for those customers. On top of few prospects to sell Verado, Mercury demanded all sorts of special qualifications to be allowed to sell Verado. The dealer had to get their technicians trained and certified, had to buy specialized service equipment, and had to become certified to install and service. So Verado was out for them.

The sale of old-technology two-cycle engines was ending, due to EPA regulations. The entire Mercury line for this dealer was thus reduced to selling Yamaha engines painted black. I think the dealership realized that Yamaha, as a brand, had a much better reputation than Mercury, and if you were going to sell Yamaha engines, why not just sell them painted blue-gray under the Yamaha brand instead of selling them re-painted black and called Mercury. So they took on Yamaha.

posted 06-13-2015 03:13 PM ET (US)            

I don't know the whole story and perhaps there is a written allowance but If I was the owner of say Yamaha (I am clearly not) and I found out my engines sent out to a respected dealer to be sold as Yamaha product were painted black I don't think that would sit to well." There must be some copyright law issues in there somewhere. If Mercury was behind this that is some serious cheekiness going on.

posted 06-13-2015 04:42 PM ET (US)            

There is a lot of history between Yamaha and Mercury involving engines getting made in Japan by Yamaha and shipped over here to be sold by Mercury. When the partnership broke down, it was like an ugly divorce. Mercury had to take Yamaha to court to force them to keep selling engines to Mercury at one point. It was nasty stuff.

posted 06-14-2015 11:05 AM ET (US)            

Evinrude apparently could not scale down their E-TEC direct-injection technology in an economically practical way for them to manufacture really low-power outboard engines below 15-HP. About two years ago Evinrude entered into an agreement with Tohatsu to buy the nice Tohatsu-designed, Tohatsu-built small four-cycle outboard in the 3.5, 4, 6, 9.8, and 15-HP models. Evinrude now offers those four-cycle engines under the Evinrude brand, with Evinrude dealer support, for their Evinrude loyal customers. I think they took this step just to be able to offer customers an Evinrude-branded engine in the low-power segment, rather than send those customers away to competitors for those engines.

Tohatsu also makes direct-injection two-cycle engines using (what appears to be) the Orbital Combustion Process. Tohatsu calls these engines their TLDI series, for Two stroke Low pressure Direct Injection. These engines cover the horsepower range from 25 to 115-HP. Apparently, Tohatsu, like Evinrude, could not scale-down their two-cycle direct-injection technology to really small horsepower engines.

Tohatsu also developed and received a prestigious award for the first electronic fuel injection four-cycle engine that could be pull-started or rope-started and run without depending on a battery, as I recall.

As a further example of all the interconnected relationships among outboard engine manufacturers, Tohatsu recently entered into an agreement with Honda to buy Honda large horsepower four-cycle outboard engines and market them under the Tohatsu brand. Now you can buy a Tohatsu-made-by-Honda in the 115-HP to 250-HP range.

The summary might be: only Yamaha and Suzuki remain as brands that make all their own engines and don't sell any of their product to other competitors to be sold under the competitors' brands. Both used to sell OEM product to competitors, but I don't think they do now.

Honda and Tohatsu seem content to sell their own brand and to sell some OEM product to competitors for rebranding.

After its ugly and rather public divorce with Yamaha, Mercury got into bed with Tohatsu, but came up with some sort of long-term agreement so they wouldn't get caught with supplier problems as they did when Yamaha stopped selling to them. They explain this to their investors with the nebulous term "joint-venture." Some die-hard Mercury fans have invented all sorts of meanings for this term, imputed all kinds of terms of the agreement, and insist on holding on to these inventions in spite of direct, first-hand accounts given by former and current employees of Tohatsu and the clear statements from Tohatsu itself that completely contradict these invented arrangements of the Mercury fans.

Evinrude makes all its own stuff and doesn't sell it to competitors, except as noted above in the very low-power range for which they buy Tohatsu engines.