Dealer Outlook

Trade Only Dealer Outlook Blog

Did we miss the boat, too?

Just about every newspaper and newscast these days has a story about the potentially disastrous situation facing GM, Ford and Chrysler. And, certainly the possible demise of any of these giants would have terrible repercussions for an estimated 100,000 or more jobs for openers.

Critics have pointed out that Detroitís big three really lost focus in the 90s when they opted to put their emphasis on Americaís love affair with SUVs and light trucks. Sure, that brought them billions in profits but they were also allowing Honda and Toyota to take over the small and mid-size car market. Today, the price of gas has all but doomed their SUVs and pickups, and maybe even them!

All this has got me wondering if there is some parallel in it for our industry? It seems just as the big three looked to bigger vehicles, the boating industry appears to have been following suite. Boat builders put their resources and promotion behind consistently bigger, more profitable models, too. And, this turned in good profits, too, until fuel prices skyrocketed, the economy started to sour and the boat buyers began disappearing.

Return with me to yesteryear! Itís not hard to recall the time in our industry when Brunswick was the leader for the growth of boating by bringing to market complete rigs (boat, motor and trailer) for an amazing $7,995 or $9,995. The boats were ideal models for first-time buyers and, particularly important, well within the financial reach of millions of families — in other words very affordable. The result was these boats sold well. They drew many new boaters into the sport to begin their eventual trek up the ladder to progressively larger models.

Now, Iím not an auto expert so I donít know exactly what the big three should do. But, it occurs to me that itís time for some boat manufacturers to take a cue from past sucess and bring back to market a package rig for an entry-level price virtually anyone could afford. Perhaps these units wouldnít produce great profits, but they would be a needed stimulus for our industry and go a long way to seeding the future of boating.

Comments

26 comments on “Did we miss the boat, too?

  1. Scott Carpenter

    I grew up on a 32′ wooden cabin cruiser, and subsequently a 34′ sailboat. Both had pump toilets and cold water pumped to the galley and head sinks. Both had shore power, but still used 12v lighting and ice for refrigeration. The boats were simple, but the fun was no less wonderful.

    I believe that simple vessels of elegant design (think Bill Lee, J-Boats) are the best compromise between fun, purchase price, and maintenance. Easily driven hulls with mimimalist amenities are the future. If you’re interested in having wine chillers, 500 watt stereos, multiple ice-makers, twin 500hp turbo diesels, and 50kw generators, buy an apartment.

  2. Doug Reimel

    Well Norm you bring up a very good point. I have been talking to my manufactures about this same item. I used to sell a 16″ GS160 with a 90 h.p. Johnson for $8995 plus freight, prep, tax and title. The price just kept going up until the same boat 4 years latter was $12,500 plus, plus. The bean counters always say the same phrase, ” we sold to many of them for the price we were charging and had to increase out margin in order to be profitable.” Translation: we wanted bigger profits in return for less units so bigger boats could be developed moving the company out of the entry level market.

    Nobody is in the entry level market any more. I am quite certain the tooling is already available and there is plenty of production capicity available for a dealer owned brand to be supported in the market place. Sounds familiar, what is old is new again.

    Education with out experience is not worth much at all. That is how we arrived at this jucture

    Have a great day

    Doug Reimel

  3. Peter Brown

    In my opinion the mfg’s should have kept at least one of these boats in their line the entire time. It’s very hard to forecast the future, but it’s easy to stimulate growth in your brand of products and introduce those families to a model they can afford. Once they own the affordable model they can plan, dream and develop a relationship with that dealer to move up the ladder of the bigger more expensive model.

  4. Stephen A Hulslzer

    The same theory goes for outboard engines as well. I had a small Evinrude some years ago that was difficult to operate and poorly supported by the dealer. Meanwhile, Evinrude/Johnson kept pushing and improving the large engines. Soured me on OMC forever. Must have soured some others, too. OMC is long gone.

  5. Scott Aston

    Yes and Yes, to big and to fuel thirsty, I have a 1959 Custom Chris Craft Sea Skiff with a Greymarine model 109 and it does very well on 10 gallons of gas, But only goes 18 mph running around antique boat shows here in Michigan.

    My next boat that I am trying to build will have an electric hybrid gas engine like the ones that GM uses on its large trucks, with possiblity of a V6 surface drive, on a cat hull and with twins in a perfect world.
    I think of going green, not cheap is the answer.

  6. Arch

    FINALLY, I’m hearing some common sense and reason! I’ve been preaching this on your forum for months. YES, Norm, this makes sense. Now, let me be realistic here. I don’t see too many of the current boaters downsizing. It’s hard to go back to a dodge when you’ve been driving a BMW, Lexus, or Benz. I think some will, but where this strategy WILL pay dividends is with NEW boat buyers. They will be PAYMENT buyers and will like the idea of a 20′ runabout for 17,995 instead of a Sea Ray for $29,900.
    This is good stuff though and I appreciate you writing about it. I started in this industry in the late 80’s when Bayliner had boats starting at $4995 and on up to $9995. If Brunswick was smart, they would go back to that. Remember what it did back then. Yes, those boats were POS, but it put people in boats that couldn’t otherwise afford it. We are back to that point again. This time though, they can build the boats much better and still have a great price point.
    Who is going to step up to the plate?

  7. Mercules

    How else are people supposed to get 2-foot itis if they don’t start small? We keep preaching “Discover Boating”, yet the boating we want people to discover starts at $30,000. The manufacturers that get new boaters into their 18-19 footers have them for life if their product line and dealer network do a good job. Just like Ford is finding out with their profit-cow F150, the manufacturers that bank on cruiser margin will soon be disappointed. Many of the boatbuilders ignore the new boater at their peril.

  8. Ted Fagerburg

    A couple ideas from Europe banking off of Norm’s thoughts:

    1. Consider diesel for smaller craft. Yes the initial cost is a bit more, but the savings in fuel Vs a gas engine can be tremendous. Sterndrive diesel packages are available from the major engine suppliers (CMD, Volvo, Volkswagen Marine…) down to below 130 hp. They can bring extra salable value to small boats. Not to mention performance improvements, especially in terms of acceleration. We’ve certainly discovered the advantages on this side of the pond.

    2. Consider RIBs. Lightweight, easily driven, easy to tow with a smaller car, low cost, inherently safe, compact to store and a heck of a lot of fun. The US has not come close to realizing the potential of this class of boat. It ought to send a strong signal to the industry that Zodiac has just announced that they are expanding their US RIB plant.

    3. Consider bringing back basic sailboats which can be car-topped or pulled on a tiny trailer. Remember the Sunfish, Sailfish and Snark? They must have brought thousands of new boaters into the market (self included – I started on a Sunfish in 1969).

    4. Consider “new” materials. Hooray for Genmar’s Triumph line of roto molded boats. (Mercury used the same type of material with the Rhino Rider Rib a few years earlier.) The Hobie 10 (looked like a shrunken Laser) was made of themomolded ABS and was a good sailing and really tough little boat. I sailed one, my kids sailed it and now I’m saving it for the next generation. Terhi in Finland builds a whole range of small powerboats from the same material. And aluminum isn’t being exploited as much as it can be. If a US builder of small boats wants some real inspiration, look at the lines and construction methods of Linder in Sweden. Genmar may be right again with their plans for a new aluminum brand. Let’s see if they are “me too” or can find an interesting new twist.

    5. Dare to be different. Bringing out a displacement or semi-displacement boat with a straight shaft to and a small diesel engine to simplify things can lead to wonderfully surprising results. I’ve had experience with a couple of brands which have done this and seen them and their dealers laugh all the way to the bank. And the retail customer was laughing too because the boats were fun, economical to operate and got them onto the water without breaking the bank.

    Just like in Washington, it’s time for Change.

    Ted Fagerburg
    http://www.fagerburg.com

  9. Rick

    Brunswick should get out of the boat business and go back to their mainstay,Mercury and Mercruiser. Every time the economy gets on a roll,they have to start spreading themselves out too thin by buying up boat companies. Then they crash back down when the economy goes south. Hopefully,they won’t become the NEXT OMC……..

  10. Nyla Deputy

    Norm;
    You are on the right track.
    Smaller boats will come with smaller prices that more people can afford. And another thing that can be done to bring prices down is to reduce engine size even in boats in the 30ft to 40 ft range. Why does everyone need a boat that will do 50 to 70 Mph? They just use more fuel and then buyers complain that they can’t afford to use them because it costs $200 to $400 a day for fuel to use it. If people would change their boating lifestyle, it wouldn’t cost them so much and we wouldn’t have so many people throwing in the towel and giving it up.

  11. Jack Mackinnon,

    Mr Schultz is right on the mark! However, his, and most of the remainder of the comments concern power boats. The sailboat industry has also missed the mark by ignoring the “starter” cabin boat. In the late 1960s and 1970s. every sailboat builder built a small cuddy cabin boat in the 20 to 25 foot range. Do any of you remember the Cal 20 and 24, Columbia 22, Ranger 23, Islander 24′ “Bahama,” Pearson “Electra” and the boats from lesser known builders? Now, Hunter is the only sailboat builder with a small starter boat, and that is too expensive.

    Let’s get back to the basics!

    Jack Mackinnon, AMSģ-SMS
    (Senior Marine Surveyor)

  12. dave boso

    Dosen’t make any diffrence if it’s $ 30,000.00 or $ 3995.00, most people are going to finance it for the longest time possible and be upside down in it, and want to trade it in two years. so where are we….. Full circle.

  13. Gerald T. Odom

    Dear Norm,
    I’m a retired real estate developer/builder. Bought my first new boat in 1985 in England. Total cost, $116,000 delivered at my dock. A literally comparable boat from the same manufacturer today starts at almost $400,000. This price escalation has been going on for 20 years without end until now. There are great parallels between the boating industry and the real estate industry. Greed, unrealistic loan underwriting and sub-prime lending have all contributed to ruin an industry. Just attended the Ft. Lauderdale show and was told by more than one insider that they believe 30 – 40% of boat manufacturers will be out of business within 2 years. Building lower priced boats of all kinds will be the salvation of the industry.

  14. Brad

    I’ve been saying this for years. The industry has priced new boaters out of the market. When you see a 15′ aluminum fishing boat with a 40 hp Mercury for $15,995.00 there’s something wrong. You can’t expect the price of a starter boat to be that of the 80’s but they need to be realalistic. My first boat was a new $300 dollar 14′ fishing boat with a $740 15hp Evinrude, but that was 1977. How times have changed. I keep hearing people call this a “Rich Man’s Sport”. I don’t think that’s the case yet.

  15. Joe Broker

    Norm, Manufacturers missed the mark years ago when it did nothing to move to more efficient power plants such as diesel electric. Huge gas V-8 power plants don’t make sense in most applications. The four stroke outboards were sellng very well recently as they offered reliability, very high efficiency and light weight relative to horsepower. New and smaller models with diesel or four stroke outboards would be a welcome relief. Manufacturers, particularly Brunswick, also need to reduce their margins overall to provide better value to Joe Average so he can afford a boat in the first place.

  16. Arch

    DAVE BOSO, your comment is off base. Being upside down in a $5,000 boat is WAY DIFFERENT from being upsdie down in a $30,000 boat. Depreciation is way different too. And, as is proven with the statistics of the used boat market, RESALE VALUE is better on less expensive boats. ONe situation is MANAGEABLE, the other is UNWISE. Big difference.

  17. AnonymousBob

    Excellent!

    The question is, are there any boat and/or motor manufacturing big-wigs reading this blog that can/will make the decision to create the entry level package we need?

    Customers, regardless of their purchasing power, want value for their hard earned money. I do, and you should, also. With the quality of materials today, the reliability of powerplants today, and the economies of scale by the likes of Genmar and Brunswick, there is no reason the industry can’t have 14-16′ boat, motor, trailer packages that are in the $12-15k range as entry level packages. Kudos to Genmar for their recent announcement about their new aluminum line. Do it on the fiberglass side and capture even more buyers.

    Boating is a lifestyle. There is no reason that lifestyle can’t be enjoyed by “Joe Six Pack” as well as “Mr. Yacht”.

    Even in this economy, “If you build it, they will come.”

  18. DOUG SMITH

    WELL NORM, YOU STIRRED UP A HORNETS NEST. MOST PEOPLE FORGET THAT MATERIALS, GEL COAT RESIN, FIBERGLASS, WOOD, ALUMINUM, S.STEEL, CARPET, VINYL, WINDSHIELDS, HAVE INCREASED 6-10 TIMES WHAT THEY COST JUST A FEW AGOS. AND WHAT ABOUT LA BOR, PEOPLE WON’T WORK FOR $5.OO AN HR. ENGINES ARE ALSO UP AT LEAST 50-75%. THE COAST GUARD REQUIREMENTS ARE MORE STRINGENT, ALL THIS COMES AT A PRICE. WE STILL BUILD A 16′ OUTBOARD AND WITH A 50HP MOTOR WILL RUN 45 MPH AND YOU CAN SKI WITH IT AND IT’S COOL. THE MOTOR MFGS. PRICE ON 50 HP IS MORE THAT $5,000.00. SO WHERE DOES THIS LEAVE US. BUY A GREAT USED BOAT AND HAVE FUN, IF YOU CAN’T AFFORD A NEW ONE.

  19. David Smyth

    Low cost to purchase is of course important.

    But low cost to own and operate is just as crucial. For a long time now, most boats just sit in their slips because the cost to operate is so high. Boating is fun, but is it $400 worth of fun to go to Catalina for lunch? Is it $600 per month worth of fun to tie it up in a marina?

    Fuel costs and the inability to easily trailer boats has reduced boating fun and affordability.

    1) Simpler boats are cheaper to buy — make them simpler!
    2) 8.5 feet wide can be trailered — make them narrow again!
    3) Light and narrow and 12015 knots

  20. Larry Keeter

    Despite all this keeter-russo-schultz hype, what does the customer want?

    Oh, I’m sorry, I forgot, what customer?

  21. Joe

    Dealers buy the same materials that you buy Doug, not as much of it though so we probably pay more than you on a per item basis. We repair boats with the same pieces and parts that you build them with. Our new boat buyers have effectively said “NO” to the price of new boats—maybe that is what you should say to your suppliers? Or, do like most dealers have had to do—cut your margin. I don’t remember hearing about very many rebate programs lately, nor any plan from our builders as to how we are to move their products; although it seems in good times they always have the answers eh?
    And with regards to used boats; we are actively buying and trading them in as possible and as available. Until new boats become more affordable for us and the consumers, there seems to be little choice.

  22. Bob Adkins

    This is non sense, the cheaper boat builders are in just as much trouble as the higher end boat builders are. Evidenced by Sea Fox and Polar. In fact the higher end boats have held up better than the cheaper boats evidenced by Grady, Pursuit, Everglades. You, as others have pointed out, forgot to mention the rapidly increasing cost of boat building materials. Some of the largest increases have come as a result of the new technology engines, and the demand for them. Four Stroke engines are carrying at least a 30% higher cost than equal two strokes. We will not be going back to two strokes but the fact remains that they are a big part of the escalating price of boats. This industry is in trouble because of the housing industry, and too many boat builders. Finger pointing inside of this industry and denial of the slow down have exagerated the problem.

  23. arch

    BOB ADKINS, you are right, to an extent. I would agree that the housing industry is the #1 reason for the decrease in boat sales. But sales have been decreasing for years, even during the years that home prices and the stock market were going up double digit annually. Now that there has been a correction in the home and stock market, we are seeing a BIG CORRECTION in the marine industry since it was the appreciating home values and the stock market that provided the the SUPERFICIAL SUPPORT of our industry for much of the past 5 years.
    So there is obviously an underlying problem and it’s not new.
    You are right that the premium brands such as Sea Ray, Grady, and Everglades have done well during that period. But that is because boaters UPGRADED during this time of EXCESS and people were obviously not price shoppers as evidenced by the real estate market.
    Here is the problem. The boaters that moved up during this time were not entirely replaced by a new group of boaters, despite it being a good time to buy a boat and a time of record high consumer confidence. Now look at what’s happening.
    Many of those boaters who bought the premium boats are regretting it, as they are getting hit with massive DEPRECIATION and a stagnant market. Repo’s are going up, cost of materials too….contributing to the deterioration of the market place.
    It’s obvious that the problem goes beyond the housing market.
    Making boating more affordable and desirable should be our goal. That’s the easy part, doing it is another matter entirely.

  24. rich

    I think one of the most important variables being missed in this discussion is the environmentalists butchering of our industry. I believe in being a good steward of earth, however the mandates that have been enforced on both the engine and boat manufacturers have caused the $7995 boat to be pushed to well over $12,000. With the lower emission standards, new technology was forced upon the manufacturers; as a result R/D costs are now being felt by both the dealer and the consumer with a detrimental outcome. Couple that with the cost of resins due to the lack of home-based oil drilling, and BAM you have a double whammy! Being from Florida the third but most definitely not the last is the motoring restrictions placed not only on public waterways, but also private waterways (Boat lifts). If you are lucky enough to be granted a building permit for a lift, you are very restricted as to were you can use your boat, and how fast you may operate it.
    Ironically, boaters, sportsman, fisherman, etc. are amongst the most conservation minded people out there. Be it through actions of their own, or pumping money into the tax coffers. However, these same people are the ones being hurt the most by environmentalists. If you are wealthy enough to purchase a boat, have a place to store it (land or water), or have the time to use it….then consider yourself the next target. Instead of our industry enjoying a trickle down effect both with the environment and the economy, we have these people wanting to ruin our industry from their Birkenstocks up!

Leave a Reply

Your email address will not be published. Required fields are marked *

Comments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Comments Policy.