We’ve been beating the affordability drum for a while now, but there it was back on the table last night. I was having dinner with a bunch of people, and the talk down at our end of the table inevitably drifted to boats — who was actively looking, who was somewhat looking and who was out of the market for the foreseeable future.
An active discussion ensued on price and the pros and cons of buying used vs. new with both boats and cars.
We’re addressing the affordability question in this month’s Trade Only magazine, with a report from a Boating Writers International panel discussion on the subject at the Miami International Boat Show in February. The four panelists were Brunswick chairman and CEO Dusty McCoy, SunTrust Bank senior vice president Don Parkhurst, Legendary Marine managing partner Fred Pace and Freedom Boat Club CEO John Giglio.
BWI board member Michael Sciulla, who produced the program, and I served as moderators.
To put things in perspective, Pace made an interesting comparison between the cost of a modestly sized outboard and a new car.
The list price of a 150-hp outboard, Pace told the audience, exceeds the list price for a 2014 Kia with air conditioning, automatic transmission and a 100,000-mile warranty.
“Given that information, along with the data indicating that our collective efforts will only result in the sale of approximately 150,000 new boats nationwide, we believe more of our focus should be on retaining our existing customer base and convincing them that boating may not be defined as affordable but rather a ‘great value,’ ” said Pace, who sent me a copy of his remarks.
The recession and Gulf of Mexico oil spill caused Legendary, which has four locations along the northwest Gulf, to make a significant change in its business model.
“While we still strive to capture all possible new and used sales opportunities, our expense coverage from service and parts sales today makes us less dependent upon the income stream generated from the sale of new boats,” said Pace, who in 2013 was Boating Industry’s “dealer of the year” for a second consecutive year. That’s not to suggest, Pace noted, that that makes Legendary any less dependent on the need to make boating attractive to customers.
Although innovations and technology bring an important “wow” factor to the marketplace, Pace said it’s probably unrealistic to think there will be any significant cost savings in propulsion or the cost of building boats from these new technologies.
“With so many manufacturers competing for just 150,000 customers, it doesn’t seem to me that there is enough volume to justify the costs for automation or other processes that might lower the actual production costs,” Pace concluded.
Legendary Marine’s focus has been on making the lifestyle as attractive as possible and creating “opportunities and enhancements” for its customers to use their boats, which reinforces their buying decision.
“We try to help them enjoy the benefits of boating and quality time with their friends and family,” Pace said. “More use means more fuel, service and perhaps a case of 2-feet-itus.”
How does one do that? Legendary Marine’s customer initiatives have varied from the practical, such as seminars and “Boating 101,” to the inventive, which has included fire dancers, an Elvis impersonator, placing a Marquis 42 in its pool and having a local jewelry store bring in millions of dollars’ worth of diamonds for female customers.
“We believe that to make boating attractive, our customers must have the education and confidence to use and operate their boats safely,” Pace said. “And then we must provide them with great service and reasons to get on the water regularly and have fun with friends and their families.”
That’s how a successful dealer helps customers justify their investment.