Dealer sales, profitability off dramatically

SIOUX FALLS, S.D. – New unit boat sales made by the average dealer tracked by Spader Business Management fell by nearly 28 percent for the first 10 months of 2008, when compared to the same period from a year ago.
New unit sales eclipsed $4.5 million by the end of October of 2008, down from nearly $6.3 million through the same month of 2007. Similarly, pre-owned boat sales fell by more than 21 percent, from $1.2 million through October of last year to just more than $960,000 during the same period this year.
Total dealership sales dropped by 20.4 percent overall, when compared to last year, and the dealerships’ average net profit fell by almost 60 percent. Last year, the average dealer showed a net profit of $455,000, or 4.6 percent of sales, through the end of October, and this year, the average dealer showed a net profit of $187,000, or 2.4 percent of sales.
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.
While the average gross margin percentage on new boats dropped by seven-tenths of a percentage point, to 16.9 percent in the first 10 months of 2008, the total dealership gross margin percentage is up by 1.2 percentage points. As with past reports, however, this is due to a greater percentage of total revenue coming from higher-margin products and services, such as parts and accessories, marina, service department and finance and insurance.
Spending was down for these dealers in all categories, except for fixed expenses, however, Spader points out, “the reduction in spending was not enough to offset the decreased revenue.”
New boat inventory levels dropped by less than one-half of one percent from nearly $3.59 million through the first 10 months of 2007 to just more than $3.57 million during the same period of 2008.

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