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The dog ate my homework

Last Thursday my Blog may have seemed confusing. It certainly was to Anonymous Bob who commented with the question: “How does the title of your post relate to your actual post?”

Well, Anonymous Bob, thanks for reading and you got me! The title didn’t relate to the post. I’d like to blame it all on the old dog, but in this day of writing on a laptop and e-mailing via an air-card from anywhere, my computer “ate” one title with another blog subject.

So, going back to last Thursday’s title, OUTBOARD MODEL YEAR ELIMINATION STILL UNCOMFORTABLE, you should have been reading my observation that concern about the change by some engine builders isn’t going away with time. Most dealers continue to say they believe it serves the manufacturer’s interests to the possible detriment of dealers and their customers. There has been at least one published report of a consumer, upon learning his new outboard was actually a year old engine, refused the boat and demanded a refund. Moreover, in states where outboards are titled, there may be direct conflict with existing state law (Ohio, for example.)

Equally serious is the concern being expressed in the financial community. The National Marine Bankers Association (NMBA) has given the change a less-than-warm reception. “We have concerns,” says Flagstar Bank’s Jim Coburn who is also president of the National Marine Bankers Association. “I think it can be kind of disruptive to consumers’ easy access to F & I product. We finance units, boats, motors, trailers, based on what the birthdate of the product is. So, particularly on used [product] if we wanted to finance a boat, motor, trailer, and – say it’s three years from now –  and they abolished the model year, we’re not going to really know what to value that outboard at. And when it becomes the biggest part of the financing package, it’s going to make it pretty tough,” he explained.

Specifically, Coburn predicts lenders will struggle with setting collateral values in such cases. He also acknowledges dealers are concerned about what lenders are going to do when all this actually hits. “The lenders,” says Coburn, “haven’t gotten a lot of feedback from the manufacturers, yet, as to why they are doing this. The best answer we got is they were doing it to clear out some inventory.”

The subject is on the agenda and will be discussed at the upcoming NMBA Conference slated for September 30. It is also on  the agenda at the MRAA National Convention in Las Vegas, November 26-28. One thing is certain: the change will not only effect lenders and dealers, but insurers, price guides, consumers and even some state agencies. And, as NMBA and MRAA have indicated, the manufacturers that have eliminated the model year have been laying conspicuously low when it comes to any explanations or feedback!


3 comments on “The dog ate my homework

  1. Blaine Schwarzel

    Once again paint a big BULLSEYE on boat dealers buttocks. With motor companys doing away with model years (all but BRP) makes it hard to trade for these motors. Guy brings in a 2008 boat with a 2006 motor and wants to trade just the motor, and with Ohio being a motor title state, the customer will be mighty upset to find out his new outboard is 2 years old. I’d hate to be the selling dealer on that one! The bottom line is that it favors the motor companys, screws the dealer, and the customer.
    The way I see it is if you don’t like the way engine companys do this, QUIT THE LINE. There comes a point that doing the RIGHT thing over-rides profit. One OH crap kills a hundred “that a boys”. Tell them to pack sand! If we all did this, they would model year the motors again. Thats the way I see it!

  2. Anonymous Bob

    Just lookin’ out for ya, Norm!!

    The way I see the model year elimination is that it is somewhat of a “rock and a hard place” situation. As a consumer, I expect to receive some sort of discount on something that is considered “non-current” or last season’s model. As a business person, I also expect that most successful businesses manage their inventory properly and practice the FIFO principle – First In, First Out. It only makes sense to move out the oldest inventory to reduce interest expense or other inventory costs. I think the difficulties we are seeing, and those you reference, relate to dealers, builders, engine manufacturers, etc. not managing their warehouses effectively. I, too, have heard stories of upset customers, but I find that most customers in ALL industries become upset because their salesperson was not totally up-front wiwth them during the sales process. I know I would be.
    As to financing, trade-in, and resale issues down the road, I can definitely see this as a big issue. Most of the lenders rely on a model year as stated in guides like NADA and others. I don’t know what the engine manufacturers have planned to address that, but it will take some serious selling to convince the bankers, insurance companies, and others to change their systems.
    This will be an “interesting” dance to watch. I don’t envy the engine people.

  3. Lee

    I have been concerned about this since realizing our sales staff was assuming year model of engine was equal to year model of boat. We have since corrected this “problem” internally and are dealing with it to make sure all of our documents reflect the “year” of the engine. They have eliminated the year model but the finance institutuions and some dealers have not. Any current finance contract I know of in our industry still requires a printed “year” for the outboard motor. I have presented this delima to several banks, they don’t know what to do or don’t think it is a big enough issue to worry about (I guess because if it becomes an issue, the dealer will be left responsible for the error per agreement with bank).

    It is going to get real interesting to see the fall out when consumers start selling/trading their boats and realize at that time he has a 2004 motor, not a 2005. If the original selling dealer wrote 2005 on any piece of paper (especially the finance contract), not only is he going to be upset, he is also going to be due some type of allowance for “error” from the original selling dealer. What that allowance is remains to be seen but if a year is wrote down wrong on a finance contract, it could be bad.

    The engine manufacturers should have done a better job of helping their dealers understand this consequence of the elimination of model year but at this point it is too late for them to communicate this problem as it will add to their obligation to participate in a solution to all the outboards sold for the last 4 years. That’s why they are laying low!

    Moving forward, a warning to all dealer: Check the paperwork in your sales jackets/finance packages and make sure you are accurately disclosing to the buyer what he is buying. I know there are still some dealers out there whose paperwork says they are currently selling 2008 Yamaha’s and Merc’s and as you know they don’t exist yet!

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