The New Boat Buyers Resource!
Background
I would like to start by talking about myself a little. It sure is nice to know if someone has the experiences needed to offer such information.
I have an extremely diversified background with the 34 different jobs I have held over the last twenty years.
Many of these jobs were in sales positions. This website is dedicated to just two of these jobs: selling cars and selling boats.
I have a Bachelor in Accounting and a Masters in Applied Information Technology.
I currently work at a large insurance company in the Service Operations Information Technology department.
My role is Data Automation and Analysis.
In short I really know my numbers!
I worked six months at a boat dealership a few years back. I also have worked two boat shows for two different dealers covering four different brands.
Given my "numbers" background I asked many questions about the costs involved with running a boat business.
They had no problem telling me things like...
- Boat Sales drives Service which drives Parts
- Must hold at least 12% markup on new boats in order to stay in business
- The parts profit barely pays for the person working the parts counter.
- Service is a money maker as long as you don't have too much warranty work.
I was amazed that the owners refused to divulge the actual dealer cost of the boats.
I scanned the Internet looking for markup percentages on the brands of boats I was selling and my competitors.
I couldn't believe that I could not find any information.
I wasn't going to be denied so I waited for the perfect time to sneak-a-peek at the books.
The dealership didn't have their books on computer so it was just a matter of looking at three books.
One for Cobalt, Four Winns, and Cruiser Yachts.
These books had all the wonderful percentages I longed for.
MARKUP:
Cobalt - 40%
Four Winns - 35%
Cruisers Yachts - 35%
On many of the boats I saw that the dealer paid less than these percentages.
I saw where they bought a three-year old single engine 28-29ft Cobalt for way less than 40%.....like 50% or more.
(This boat sat on Cobalt's back lot for years because someone cancelled their order and no dealer wanted to purchase a boat where 99% of buyers demand twins)
On one of the brands they bought at an additional 2% under because they are a "Five Star" dealer for that brand.
This additional percentage off the normal dealer cost was for July-Aug orders only.
July-Aug is when most dealers order the "boat show" or next season's inventory.
These boats are usually delivered in Nov-Dec-Jan just before most boat shows begin.
This is when the vast majority of a manufactures see the orders for an entire year.
They certainly want to maximize there orders so they give an extra 1% to 2% off for slow moving models or the dealers with better CSI (Customer Service Index) scores.
For instance....very few people buy cuddies in the south, so manufacturers would give a southern dealership a better deal on that model then a northern dealership.
I was speaking to a Formula sales person at the boat show this year. He was trying to sell me last year's model for 20% off MSRP. I said, "This is last year's model. Since this thing is marked up 40%, you should be selling this thing for 38% off and pocket the $3600 profit....then order a current model". His jaw dropped and he went totally silent. I don't believe this salesperson knew the markup on this own product....which certainly doesn't surprise me.
I am going to list the percentages I know for a fact and some assumptions that are not fact.
I would love for anyone to email me with markup percentages for other brands.
I will keep your information totally confidential...which means that I will not disclose the source of the information.
Please send markups that you know to be fact!
100% FACT:
Cobalt - 40%
Four Winns - 35%
Cruisers Yachts - 35%
Chaparral - 35%
Very Good Assumptions that I believe are 90% correct:
SeaRay - 40%
Boston Whaler - 40%
Grady White - 40%
Formula - 40%
Good Assumption:
I my opinion all boats are marked up a minimum 35%.
BOAT SHOWS:
You can save a little money at a boat show...but not much.
I have heard where people thought they got a killer deal at the boat show. This is simply not true.
Many manufacturers advertise cash incentives, power train warranties, and special financing.
While these sound good...there is really not much there.
For instance, if you hit the Chaparral website right now you can pull up their 2007 Cash Back - Power Forward promotion.
http://chaparralboats.com/Chap_PromoInfo_07.pdf
It says that you can save $1000 on a new 220 SSI sport boat and you get an additional 4 years extended warranty when you buy at "this boat show".
What you don't know is:
1) The $1000 is a dealer match. This means that Chaparral will pay $500 and the dealer will pay $500.
2) The extended warranty is a dealer bought third-party add-on. Chaparral simply puts their buying power to work and gets a really good standardized price for the national promotion.
3) "At this boat show only" is a lie. Anyone can get this deal at any boat show if they buy the new boat between January 1st and March 31st.
Special financing us almost always a rate buy-down.
This year I went to the boat show and Formula was offering no payment for 6 month, 0% for a year and half after that, and 3.9% for the remainder of the loan.
Sound too good to be true...right? I asked the salesperson if this was a buy down and he said no. I believed him because they usually don't lie when you ask them point-blank.
The catch is that the bank wants 20% down on purchase.
Boat Shows are for comparing features…..NOT COMPARING PRICE!!!
Don’t go to the show, drink a beer, become overcome by passion, and buy at the show!
If you buy with your heart, you will lose in your wallet.
BOAT SERVICE
Shop rates are from $55 to $125 an hour in this country.
Most dealers are in the $75 to $85 range if they want to make a little money in service.
Do your own basic boat service!
Pay the shop rate for warranty issues, difficult troubleshooting, and winterization.
You want to pay for winterization because your insurance will not cover your mistake!
The dealer’s insurance company WILL cover their mistake!
This is a small price to pay as compared to cracking your block and/or manifolds.
Most boat manufacturers do not pay the dealers normal shop rate.
When a dealer does warranty work they are usually breaking even or (more often) losing money.
Boat dealers offset this loss with the original selling margin, and selling you parts, service, accessories and storage.
I remember when this guy showed up with a one-year old Four Winns for some warranty work. This boat owner lived just 10 miles from our dealership. The owner sent him packing and refused to work on the boat. I was new and didn’t understand what just happened. I found out that this guy bought this boat from a dealer two hours north of our dealership. We had not sold him the boat, any parts, service, accessories or storage. We would have lost money working on some other dealer’s customer. This guy had a couple four-hour round trips in his future. Boy, what a hassle for him.
BEWARE…there could be heavy inconveniences when buying outside your normal area!!!
So...what is the best way to get a killer deal on a boat?
1) Become very good friends with the dealer you want to do business with.
2) Get an MSRP price sheet (from the dealer or manufacturer) on your model of boat.
3) Decide on a “good” price and let them order the boat during their usual July-Aug period as a non-sold unit.
4) Have an understanding that is not in writing that the dealer will “deliver” the boat to you when the Boat Show promotion begins….say January 1st. The key is that the manufacturer can’t know that the unit is actually a “sold” unit.
5) Discuss the actual cost of the extended warranty. You may think that it is a good deal for four more years.
What is a “good” price?
This depends on many factors!
I know that all dealers must average between 12% -15% of MSRP to stay in business.
I also know that there are some people that buy boats at the normal 18%-20% boat show prices.
So if the average is 12%-15% and the high is 18%-20% then the low must be 6%-10%...right!
I want to be one of the few that get the low percentage deal….don’t you?
I believe that you too could buy at the low side if you’re nice, consistent, slightly aggressive, no-nosense, and you use some of the advice above.
Good luck!
Please email your comments on any blatant inaccuracies you find on this site!
Please email your confidential markup percentages!
iwanna@insightbb.com