Dealer profit hardest hit

SIOUX FALLS, S.D. – New boat sales made by the average dealer tracked by Spader Business Management fell by just over 25 percent for the first 11 months of 2008, when compared to the same period from a year ago.

However, the most significant blow seems to have been to dealership profitability. The average net profit of dealerships tracked by Spader fell by 56.2 percent. Last year, the average dealer showed a net profit of $447,795, or 4.6 percent of sales, through the end of November, and this year, the average dealer showed a net profit of $195,915, or 2.5 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.

New boat sales eclipsed $4.5 million by the end of November, down from more than $6 million through the same month of 2007. Similarly, pre-owned boat sales fell by 18.6 percent, from more than $1.2 million through October of last year to $995,779 during the same period this year.

Total dealership sales dropped by 19.7 percent, when compared to last year.

While the average units gross margin percentage dropped by seven-tenths of a percentage point, to 17.1 percent in the first 11 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, however, Spader pointed out, “the reduction in spending was not enough to offset the decreased revenue.”

New boat inventory levels dropped by 0.2 percent from nearly $3.27 million through the first 11 months of 2007 to just more than $3.26 million during the same period of 2008.

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