Dealers cut ad spending

SIOUX FALLS, S.D. – While most marketing experts recommend companies spent more on marketing and advertising during a downturn, few in the marine industry seem to be heeding that advice.

All expenses for the average dealer tracked by Spader Cos. during the six-month period ended June 30 were up, compared to the same time last year, with the exception of advertising, the company reported in a recent statement. It had declined from $92,312 last year to $84,722 or 4.9 percent of gross margin, a decline of 0.5 percentage points.

The training and consulting firm tracks North American boat dealers, both large and small, to compile an average profile, then compares year-over-year trends in a number of different categories.

New boat sales were down 2.1 percent, compared to the same period of 2006, having decreased to $4,328,814. Used boat sales were up 15 percent to $730,160.

Total dealership sales were up 0.7 percent to $6,523,905 for the average dealer during the first six months of the year, compared to the same period of 2006, reported Spader.

New boat inventories, which were up in 2006, continue to run higher in 2007. For the six-month period ended June 30, they were up 6.9 percent to $4,099,142, compared to the same period of the previous year, as were the average dealer’s used boat inventories, which have jumped 9.2 percent to $427,258.

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Spending was up both in terms of dollars and as a percentage of gross margin, having increased by 2.5 percentage points to 83.3 percent. Personnel, floor plan interest, semi-fixed and fixed expenses all were up, according to Spader.

The unit gross margin percentage was down 0.5 points to 17.4 percent, while total company gross margin percentage was down 0.2 points to 26.4 percent.

Net profits were down 12.9 percent during the six-month period ended June 30, compared to the same period of 2006.

The average dealer earned a net profit of 4.4 percent of sales or $288,358, compared to a net profit of 5.1 percent of sales or $330,919 during the same period of 2006.

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