Dealer profits down 6 percent

Sioux Falls, S.D. – News unit sales for the average dealer tracked by Spader Business Management are down by 1.5 percent for the eight-month period ended August 31, compared to the same period last year, while net profits are down by about 6 percent.

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.

The profitability of these dealers has been hurt primarily by the downturn in new unit sales, coupled with rising inventory levels and increased spending. New unit inventory levels, which were up in 2006, have risen an additional 6.7 percent to $3.8 million, while gross margins on new boat sales are down by one half of a percent to 17.6 percent, compared to the same period last year.

At the same time, the spending by these dealers, both in terms of total dollars spent and as a percentage of gross margin, is higher than it was last year. Total dollars spent have risen by nearly 4 percent to $1.96 million, while the total expenses as a percentage of gross margin has climbed by 1.5 percentage points to 81.5 percent. Every category of expenses was higher, year-over-year, except for advertising expenses.

The bright spot in the news is that pre-owned boat sales have climbed by 10.9 percent year-over-year, helping to increase total dealership sales by 1.5 percent to just more than $9 million.

The total net profit for the average dealer dropped from 5.3 percent of sales in 2006 to 4.9 percent in 2007.

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