Dealer Outlook

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One brand makes palms sweat

The push by some manufacturers for dealers to carry only one brand of boats received a major setback recently. The announcement by Brunswick Corp. that it will stop producing 4 boat lines brings into sharp focus whether it’s in the best interest of dealers to embrace a one brand business model.

Brunswick recently notified its dealers there will be no 2009 models of its fishing brands — Sea Pro, Sea Boss, Palmetto and Laguna. Production will permanently end by July 1. The announcement came as a pretty big surprise. After all, we’re not talking about some relatively small builders. Most observers would likely assume such a thing wouldn’t happen at Brunswick, the industry leader. But it sure makes the concern for being a one brand dealer even more compelling.

Certainly from a manufacturer’s prospective, having a one brand dealer offers advantages. Among them, the builder gets 100 percent of the dealer’s available credit; complete attention to selling that single line and, theoretically, a stronger dealer relationship.

For the dealer, one brand has benefits, too. For example, it means less models to deal with, not as many parts to stock, less time away from the store for training and meetings, better warranty handling (maybe), among others. But is putting all the eggs in one basket worth the risk? Certainly the Brunswick action dramatically emphasizes the fact that at any time a manufacturer, even one this big, can unilaterally opt to close up shop, leaving the dealer hanging.

The risk to dealers is even more obvious when we consider that Dealer Agreements essentially allow the manufacturer to do anything he chooses; there’s no  reasonable long-term advance notification requirement and no provisions for compensation or assistance for the dealer. With Agreements like that, it’s not rocket science to understand why dealers are not warm to the idea of investing in single brands.

In fairness, it has been reported Brunswick is providing the effected dealers with sales incentives (rebates) to help move their inventories. It seems to me, that is the least they can do. Hopefully, they’re also considering the repurchasing of boats left in inventory after July 1, along with parts, signs and special tools, if any.

That said, however, the fact that even the industry-recommended 3-year Dealer Agreements do not provide any protection or help for dealers under such circumstances should give sweaty palms to any dealer pondering a one brand deal.

Comments

3 comments on “One brand makes palms sweat

  1. Michael Joyce

    If you’re going to take on boat lines from publicly traded companies then you should grow up and stop whining about what they do or don’t do for your dealership.

    Publicly traded companies don’t work for you. They sure don’t work for the customer. Hell, they don’t even work for themselves. They work for Wall Street and The Street has no patience with any of this stuff going on in the economy. If your supplier can’t drive his numbers up on double digit levels every year they will pound them into the ground. Therefore it is important that you only carry one brand so when they have to dump boats to meet their projection you won’t come up with some feeble excuse about having to balance your inventory.

    For over 50 years General Electric has been the number one brand of appliances in the United States. Now, Jeffery Immelt the CEO is going to have to dump GE Appliances becasue he can’t make his numbers on Wall Street. Folks when you made the decision to represent a boat brand
    from a publicly traded company you made the decision to work for The Street.

    If you look brack over the past 50 year period suits and boats don’t mix. Having been a dealer for over 40 years I can honestly say I’ve seen them come and I’ve seen them go. Years ago IBM used to put a sign on executives desks that read THINK. Years later Volkswagon used that IBM concept it in an ad that read THINK SMALL. If manufacturers have any interest in surviving over the long term they should put a sign on every executives desk that reads THINK RETAIL.

    I have a great way to reduce management staff at the manufacturing level. Send them all out to a dealership and tell them don’t come back until you have sold a boat at retail. We all know they would starve to death if they had to make their living on the floor.

  2. dave boso

    Here I go; Back in the 80’s I told the reps when they were talking about this package stuff; You guys would love to elomanate the small dealer and have nothing but super dealers. Well if during a down time you loose 20 of 2000 small dealers you’ll still be ok. However if you loose 20 of 200 dealers not only will they be in trouble, but so will you.

  3. Boatman

    Well, you should ask Formula Boats how the one brand, mega dealer philosophy worked for them. That is what they had been trying to do over the last couple of years. They were dropping all the mom and pop long term dealers who built up their Formula brand over many, many years because they had the temerity to carry other brands as well. All for the Hot Shot Formula Mega Dealer, Passport Marine.
    They put all their eggs in that one basket. Only problem was, that basket of eggs began to rot. Now Formula Boats is scrambling to find ANY dealer to carry their boat line. Here in Florida, they are even begging third rate dealers to take them on. They had one of the best dealer networks at one time. Now its in shambles. The market is flooded with repossessed Formulas that can be purchased for 50 cents on the dollar. How many new dealers would want to take on a costly floor plan with this going on? Customers who purchased Formulas from that “Mega Dealer” are left holding the bag and scrambling for service. This is a very risky business plan for the individual dealer, as well as the manufacturer.

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