We have clunkers too

Liz WalzI was recently forwarded an e-mail discussion between two dealers, both of which said that the government's Cash for Clunkers program was hurting their marine sales. One suggested marine manufacturers look into a similar program that would lure boaters into upgrading to newer models.

The marine industry has been working hard to take advantage of stimulus programs originally intended for the auto industry, from GE's participation in TALF and many dealers' attempts to secure floorplan financing through the new SBA program to dealers' adoption of promotions similar to Hyundai Assurance. It remains to be seen, however, whether any of them will benefit our industry the way we'd like them to. Will investors buy up GE's government backed securities? Will banks be convinced to take a risk on the SBA's marine floorplan program? Will nervous consumers be sufficiently reassured by the marine dealer version of Assurance?

I don't know the answers to these questions. But I do know we must keep working to find new ways to overcome today's market conditions, whether we borrow ideas from other industries or come up with our own.

The marine industry has its fair share of clunkers too. And the industry's most savvy dealers have been enticing boat owners to turn in their old boats and consider new ones for quite a while. But whether your dealership has been focused on the pre-owned boat market all along or is taking a serious look for the first time, this is one of the best opportunities to retain decent margins now and for the foreseeable future. That means it's also a ripe opportunity for those manufacturers with a long-term outlook who are searching for innovative and effective ways to help their dealers and themselves.

What strategies have been successful for your business in overcoming today's market conditions? Share your story by commenting below.

7 comments

  1. Liz,

    Good points; but a major hurdle in the current scenario is that virtually all powerboats are "clunkers." That is, fuel guzzlers.

    The recreational marine industry has for the most part ignored the writing on the wall. Where are the lightweight boats that are more power and, consequently, more fuel-efficient? Where is the new product development of resistance-efficient hull forms? Where is the marketing push to educate consumers to the fact that it's time on the water that relaxes and produces pleasure, not distance covered in an hour (which distance is mostly run back and forth or in a circle)?

    If the recreational marine industry is to come out of this dark time, we're going to have to suck it up and invest in new product development, and in long-term marketing strategies. Granted, that's much, much easier said than done, when your up to your butt in financial alligators.

    Perhaps the answer is to convince the Feds to lend or guarantee loans (not give)for funding development of green product.

  2. Liz,
    You bring up a great point as I think that there needs to be a piece of legislation that allows boats to be considered in the cash for clunkers.
    The program has proven that it works and that it not only stimulates the economy, but it reduces dealer inventory. With today’s pipeline filled with non current inventory, this would be a great way to move older models and for boat builders to do what they do best, build boats and re-fill the pipeline with current inventory that a dealer can sell.
    With the marine industry constantly being pressured to meet environmental requirements; the EPA would have to be a fan of getting rid of 2-stroke motors for a new 4-stroke motors or getting rid of older less fuel efficient carbureted engines for ones that have an EFI or DFI systems.
    The program may even help out the landscape and encourage people who have their old boat in the back that they are using as a planter to trade it in on a new boat, thus getting them back into boating.
    The catch would be the amount that the government would give for each boat. The current CARS program has a cap value of $50,000. The second issue would be fuel economy, as the new vehicle that is purchased must be X amount of fuel economy better than the one you are trading in. The program would have to be developed to allow complete boat turn ins, or just engine turn ins.
    Think about what engine trade ins alone would do for our industry. It would stimulate boat sales if the customer received a credit towards a new boat, thus reducing inventory. It would also stimulate service departments for those customers who choose to re-power rather than purchased a new boat.
    However, don’t think for a moment that we are the only industry trying to get in on the cash for clunkers program. The MIC (Motorcycle Industry Council) has been pushing for motorcycles to be considered in the cash for clunkers program.
    Please see the article and links below.
    The additional funding legislation will enable the program to continue into September. If there is consideration of a new program after that, MIC will work to get motorcycles included. There are two stand-alone clunker bills pending:
    1. Sponsored by Sen. Carey (D-PA) includes motorcycles selling between $7,000 and $20,000 (MIC advocates inclusion of motorcycles selling for less than $7,000 as well).
    2. Bill sponsored by Sen. Feinstein (D-CA) does NOT include motorcycles.
    When the clunkers program was originally discussed, Congressional staff involved with the legislation told MIC staff that they would not consider motorcycles because they were having enough difficulty getting support for the car program. However, now that the car program has proven so popular, perhaps there will be a push for continuation. If so, it will provide an additional opportunity to advocate for motorcycle inclusion.
    http://www.motorcycle.com/news/mic-include-bikes-in-cash-for-clunkers-88648.html

    http://www.examiner.com/x-1197-Boomer-Biker-Examiner~y2009m8d7-Cash-for-Clunkers-update--Are-motorcycles-included

  3. Liz, I found this link, which, while light-hearted (“Bush League Productions”?), seems to suggest that there is, indeed, opportunity out there for those of us in the recreational industries to attract buyers through a “cash for clunkers-like” program. Check out the link: http://www.genuinescooters.com/feat/cash4clunkers.html.

  4. Hi Liz, I would like to invite you to the Marine Industry Open Mind Club. Unfortunatly it is a very small club. We as an industry seem to be asking the gov. for help or riding some other industry coattails. I have yet to see a national committee started to address our industry's issue's. You and I know there is alot of smart people in this industry that may not sit on a board but are willing to find new ways to overcome our problems.

    Yes the "Cars for Cash" was and is a great program that gave a BIG push to a industry that was crashing. If you take the politics out the program it sold over 600,000 cars. Auto dealers reduced inventory's. Automakers ramped up production and everyone that works in that industry started to feel just a little bit better.

    What if the Marine Industry had a "Bucks for Boats" program? It would be nice to see a program that reduced the dealer inventory's but that is not going to get everyone back to work. Dealers are not going to stock boat like they did in the past. I could go on and on about a "Bucks for Boats" program but and at the end of the day our leaders will say "how is it going to be funded" and nothing will done.

    I will be the first one to put in $100. into the hat to get something off the ground. Anybody with me? NMMA, engine and boat builders, dealers, NMBA, regional trade association, retailers, insurance companies, marina's. Anyone? Hello...

  5. Liz,
    Everyone needs to drop the entitlement "bail me out" mentality. C4C, terrible idea, in the end accomplished nothing but a brief influx of business for auto dealers (manufacturers). It would do the same for boat dealers. These gimmick programs are like a drug, brief high, and then the crash.
    Dealers need to focus on the areas that generate revenue for their dealership. That revenue is what will sustain them. The problem with the marine industry is that you have an industry that is behind, and has an old way of doing things. Two years ago your top 100 dealer issue has dealers talking about how they've added an F&I person. They've realized that they can generate additional revenue by having one. That's been happening in the auto industry for many, many years. There's auto dealers that make little or nothing on the front end, and make their profits all on the f&I end. It is clear after watching the marine industry for the last few years, where the problems are, and as long as you have the same "players" in the industry doing things the same, the industry will continue to be in a unbalanced state. What everyone needs to realize is that change is being forced on the industry, and it is coming from the customers.

  6. So David solution for boosting the marine industry and our nations economy is for dealers to get update to date and that will solve everyone's problems. David what would this country look like if the gov. did not bail out the banks, AGI and others that got help from the bailout. What if the gov. stopped the second home tax credit? What would the marine industry look like? You see david bailouts have been helping our economy for years.

  7. Since I wrote this blog, we've heard from two dealerships that have launched initiatives similar to "Cash for Clunkers." Missouri boat dealership Surdyke Yamaha is offering anyone with an old boat — going back to 1975 — the opportunity to drop it off for a $4,000 credit off a new more fuel-efficient model. The dealership plans to fix up the old boats and sell them next summer. For more about this, read the news story on our home page, http://www.boating-industry.com

    I also heard from Matt Breese, general manager of Canon Marine. His business has unveiled a "Cash for Sinkers" program through which it is offering anyone with a trade a minimum of $4500 toward any in-stock new boat.

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