An opportunity and how to capitalize on it.
The pre-owned boat market, according to the 2006 NMMA Recreational Boating Abstract, represents a 1-million unit, $9-billion segment of the marine industry. In 2006, 72 percent of all boats and nearly 74 percent of all traditional powerboats sold were pre-owned, up from 62 percent of all boats in 1999.
Year after year, the pre-owned boat market offers an incredibly predictable opportunity for the marine industry, yet very few businesses understand the keys to success in the market enough to capitalize on it. Much of that $9 billion never sees a cash register and merely jumps from one pocket to the next as consumer-to-consumer driveway sales make up the majority of the total transactions. What makes the situation worse is that any hope to ensure the new owner’s satisfaction — and eventually move them into a new boat — is left up to their ability to find a dealer they circumvented to get into boating in the first place.
But it takes a change of mentality on the part of dealers to begin to capitalize on this opportunity. In a recent survey conducted by Irwin Broh & Associates Inc., for Boating Industry magazine, more than 40 percent of dealers reported that they don’t even encourage trade-ins or view them as an additional revenue source. And only 10 percent of the dealers actively seek pre-owned boats.
Figure in that 68 percent of the dealers said they make the same or lower margins on those new units, and it’s no wonder that dealer sales of new boats outpace pre-owned boats by a measure of 3:1, although the total transactions in the industry are the opposite: pre-owned boats make up twice as many sales as new units.
An innovative approach to pursuing pre-owned units came across my desk recently when a car dealer, whom I’ve never purchased a vehicle from, sent me a letter, asking me to “take the 18-minute proposal.” The dealer said he was in “urgent need of” pre-owned units, and he wanted 18 minutes of my time to make me an offer on mine. After the 18 minutes, I could take the cash, trade for a new or quality pre-owned vehicle, or walk away. No pressure, no hassles and no obligation, of course, said the letter. The cool thing was, the dealer created a personalized Web page — with my name in it — to promote it. The page included an animated sales rep explaining the opportunity and a hot link to schedule a visit.