SIOUX FALLS, S.D. - Spader dealers big and small saw significant jumps in total sales in 2004, compared to 2003, Spader Cos. reported in a recent statement.
For many large dealers, this didn't translate into increased profits, however. And both large and small Spader dealers reported profits as a percentage of sales that were dangerously close to “minimum survival net profit,” leaving little room for error.
The training and consulting company tracks approximately 60 dealers in North America, dividing them into two categories: those doing under $5 million in business at retail and those doing over $5 million.
Units sales increase for small dealers, net profits rebound slightly
Total dealership sales for the average small dealer increased 9.7 percent in 2004, compared to 2003, from $3,559,689 to $3,906,646.
New boat sales jumped 7.1 percent to $2,381,426, while used boat sales grew 5.8 percent to $342,529, according to Spader.
“The good news is that both new and used unit sales increased this year,” said Noel Lais, Spader vice president of operations, in a recent interview. “This is the third year in a row that unit sales have increased. However, new unit inventory levels bumped up slightly and new unit gross margins are down slightly.”
New boat inventory increased 1.2 percent for the average small dealer to $1,055,494, compared to 2003, while used boat inventory grew 16.6 percent to $88,886.
Total gross margin percent was down 1.5 points to 28.5, while total unit margin was down 0.6 points to 18.7 percent.
The average small dealer did a good job of holding down their expenses in 2004, according to Lais.
“They spent 88.9 cents out of every gross margin dollar, compared to 90.4 cents last year,” he explained. “However, one of the areas that is helping them keep their expenses low is floorplan interest costs. If interest rates increase and inventory is up, that could have a negative effect on dealers' margins.”
The average small dealer saw 20.6-percent growth in net profit this past year, compared to 2003, to $123,785. However, despite the increase, small dealers are still in danger.
“Net profit, while up slightly this year at 3.2 percent of sales, is 'minimum survival net profit' so there isn't much room for error,” pointed out Lais.
Sales increase for large dealers but net profits drop
Total dealership sales for the average large dealer grew 5.2 percent in 2004, compared to 2003, from $10,716,585 to $11,276,717.
New boat sales increased 8.8 percent to $7,174,767, while used boat sales grew 9.9 percent to $1,399,140, according to Spader.
New boat inventory also was up. It jumped 7.5 percent for the average large dealer to $3,194,004, compared to 2003, while used boat inventory only increased 0.1 percent to $413,043.
Total gross margin percent was down 0.1 points to 27.5, while total unit margin was down 0.2 points to 17.6 percent.
The average large dealer reported increased expenses in 2004, according to Lais.
“While compared to the other group these dealers reported better expense ratios, they did increase their spending in 2004 when compared in 2003,” he said. “The increase was reflected pretty much across the board in all expense categories.”
The slightly lower margins coupled with an increase in spending caused the net profit to drop slightly in 2004, Lais added.
The average large dealer saw a 3.6-percent decline in net profit this past year to $440,248.
“At 3.9 percent of sales, the net profit ofthis group is a little better than the 3 percent survival net,” Lais concluded.
- For more of the latest news, click here.