Does ‘Previously Owned’ mean ‘Out of Luck’ to the dealer?

Lordy, I hope not! It’s kind of scary to think we may have lost control of two thirds of our market at this point. I’m convinced that the Grow Boating initiative will have significant results over the next few years, but a lot of the push it generates will result in sales between driveways. Are there some things dealers can do to get a piece of that action? Let’s face it, fiberglass reinforced plastic craft just don’t have the grace to fade away like their wooden former counterparts.

One path that has worked well in the auto industry is the “certified pre-owned” vehicle. Many buyers rightly assume that a unit that has been well cared for, well inspected and then meticulously repaired by a knowledgeable shop, is worth more than the one in a driveway bearing a “For Sail” sign. Several manufacturers are looking into this, and more are interested. Some enterprising and substantial dealers are, too. There is a lot to say for it.

1. Dealers could replace little known, bargain-priced lines with “Certified Pre-owned” units of their primary brands covering the same price points. These would receive benefit from the promotion of the primary line.

2. The effort, and perhaps our whole industry, would receive the accolades of the “green lobby,” which generally doesn’t think too well of our activities.

3. Both the manufacturer and the dealer could improve their profit picture without the risks inherent in dealing with “unknown” boats.

4. If the boat manufacturer ran the program, he could restrict the certification rights to his own, and maybe even just his best dealers equipped for good service. He controls and profits from the sale of line-specific hardware, anyway.

5. It would lessen or bridge the gap between new and used products.

6. This effort might also serve to establish the beginnings of a viable wholesale market, at least for the better-known brands. This would open up opportunities for leasing new product and easier financing of trade-ins. Since no two previously owned boats are identical, margins should improve. Dealers who are offered trades they can’t fix can pass them on to those that can — particularly good boats of lines foreign to them.

MRAA has been looking into the wholesaling venues for used boats. It is a fragmented but seemingly growing idea. Independent auctions are springing up, but new boat dealer attendance is sparse.

Even if Certified Pre-owned Boats are slower than we like in coming, there are a couple of other ideas worth considering:

• One that works for us is graciously offering (at our regular shop rates) to evaluate and report to the buyer our best estimate of the condition of his potential driveway purchase. This way, we don’t completely lose control of the sale. We open up a market for repower, because motor life is short in our warm, salty waters. Bottom paint is good for the same reason. We can offer the latest electronics, and nobody expects us to “throw them in.”

• Another potential income source is consignment or brokerage sales. Ten percent isn’t usually enough margin unless you do some “added value” (equating to added profit) extras. Driveways don’t get the kind of qualified traffic we drive. We can offer to complete the boat for the buyer as outlined above, and it doesn’t clutter up the seller’s drive, which may jeopardize his marriage or his neighbor relations. A lot of boats sold for a pittance in the driveway have what my techs call a “blowed motor.” Our ability to tack on a new powerplant of the latest technology to that otherwise well-cared-for boat makes the sow’s ear back into a silk purse, selling at a much better price. The buyer chooses just what he wants, and we sometimes get rid of a troublesome bargain-priced leftover engine.

I’ve noticed that when we accumulate some really nice trade-ins and go to the trouble of marketing them specifically, the response is far better than when we advertise only new product. People who show up looking for a pre-owned bargain are ripe for upgrade, especially if somebody with some fashion sense accompanies the captain.

In any case, we need to deal better with the old boat problem as an industry. It’s illegal to burn FRP boats most places, without very expensive incinerators. The dumps and landfills don’t want them. The programs for grinding them into marginally usable confetti are labor intensive (to remove the hardware) and the returns are reportedly pretty marginal. The problem won’t go away, so lets deal with it. Any more ideas? Write if you get something that works.