Dealer losses grow 476 percent
SIOUX FALLS, S.D. – Spader Business Management-tracked dealers struggled through a difficult first four months of the year, posting a 476.3 percent increase in net losses through April 2008, compared to the year before, according to Spader.
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.
Typically, September through January are low cash flow and, therefore, low profitability months. From 1997 through 2006, Spader dealers averaged more than $50,000 in net profit by April. Last year through April, the dealers posted nearly $20,000 in net profit. This year, tracked dealers averaged a $74,000 net loss for the first four months of the year.
New unit sales are off 31.0 percent for the first four months of the year compared to 2007 and used unit sales were down 22.2 percent compared to the same period of the previous year. However, one small bright spot was that dealer new unit inventories decreased 1.9 percent.
Total dealership sales were down 24.2 percent compared to the first four months of 2007. Earnings from all departments took a hit during the period, except other unit sales, which rose 30.3 percent to $255,000 for the average dealer.
New boat gross margin percentages were 0.6 percent below the 2007 gross margin percentages. Marina gross margin percentages were one bright spot, up 3.5 percent for the year through April. Gross margins in the F&I department saw the steepest decline, down 3.2 percent compared to the first four months of the previous year. The total dealership gross margin was nearly level with the total dealership gross margin percentage from a year ago.
Dealers are bringing spending in line with lower cash flow. The average marine dealer continued to report significantly lower spending in all expense categories. However, as a percentage of gross margin, spending is up 12.2 percent.
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