Need advice on fair pricing for a new production boat

[CbroTheDude]

Originally Posted by kipwrite

As to factory margins, I know the Beneteau Group overall has a target margin of 8-8.5% for 2018. Google it. I’d imagine their Oceanis line has healthier margins due to production volumes.

Rule of thumb for business is the bigger the volume, the smaller the margin. Bigger units like those 62ft yachts make huge margins where small, high volume units make very little margin comparatively.

[hellosailor]

Margins and markups can be a deceptive game, unless you can get a complete explanation from literally an accountant in the business.

For instance, in car sales, many dealers will work on a "$xx over invoice" basis and gladly show you the invoice for a car. Except, the invoice price doesn't tell you that the dealer has also got an added expense, because they pay interest on the purchase price of the car, starting from the day it unloads from the transport truck. (Usually.) And on the other side, the dealer actually pays LESS than the invoice price. There is (usually) a "holdback fee" where the factory holds back a small percent ($400?) per vehicle and then refunds that money to the dealer at the end of the year--requiring it to be spent on dealer group advertising fees. In effect, lowering the price of the car, and ensuring the dealer has an advertising budget at the end of the year. Or, there can be "programs" where the maker is rebating $2500 per vehicle to the dealer, which aren't noted on the invoice, although they may be advertised in some way.
I have no idea what the boat business does, but would be very surprised if there wasn't more than the obvious "cost" number on any boat.

[surf_sail]

Interesting discussion. I know the how the auto world works well and it can get quite complicated and frankly differs by OEM and geographic region. My assumption is that incentive structure for boat dealers is quite a bit less complicated. I have no idea what their margins would be, but 20-30% sounds right.

But it also raises an interesting question. In the US state franchise laws (mostly) prohibit direct sales by the OEM for autos (Tesla of course is testing these laws) . I'm sure there are no similar laws for boats.

So is it ever possible to buy direct from the OEM?

[hellosailor]

Well, the LaVagabonde team made a direct (probably lease-vs-ad value) deal with Outremer, so in at least one case, some type of unconventional deal can be made. In that case the maker could argue it is an advertising program, which it is, and not simply a retail sale.

When a maker sells direct and cuts out their authorized franchises, the franchisees tend to get upset and start looking for pitchforks and torches. In some cases, direct sales (and leases, etc.) may be explicitly banned under the contract terms. You'd have to explore that by making specific offers.

[surf_sail]

Originally Posted by hellosailor

Well, the LaVagabonde team made a direct (probably lease-vs-ad value) deal with Outremer, so in at least one case, some type of unconventional deal can be made. In that case the maker could argue it is an advertising program, which it is, and not simply a retail sale.



When a maker sells direct and cuts out their authorized franchises, the franchisees tend to get upset and start looking for pitchforks and torches. In some cases, direct sales (and leases, etc.) may be explicitly banned under the contract terms. You'd have to explore that by making specific offers.

I might be wrong, but I don't think the small builders like Outremer has a dealer network (I once asked for a price list and got it direct from Matthieu). I guess my question should have clarified that wether for the high volume brands (that have dealers) if going direct is an option.

You're absolutely right though that the dealers would get upset, but then again if you "live" in an area without a local dealer, the dealers can't complain. I suppose the real problem will be that without a dealer you'll have a tough time getting any warranty support.

[hellosailor]

"but then again if you "live" in an area without a local dealer, the dealers can't complain."
Wait, someone can't complain? (G)
You'd have to find out if any of the franchisees were granted, or bought, the rights to sales in your area. Often a franchisee can literally say "I want these three zip codes" or "these four states" or simply "everything within a radius of xxx miles" and that's their exclusive area. Even if it seems to be implausible, sometimes that's what they've bought into.
In theory the dealer is doing some work, some assembly, some prepping, adding extras, performing initial punch list repairs, all stuff the factory doesn't keep staff on hand to do for a retail customer. Someone, literally has to finish the boat and sweep up behind the elephants, and I can't see the major players wanting to compete with their own network on that. Too much trouble, since you've got to buy a boat someplace anyway.

Now what has been done in cars, is that dealers in the big empty spaces have been known to accept low offers for the cars they normally can't get rid of. For many years you couldn't give away a "riceburner" in the Southeast states, and some dealers would advertise them at very low prices--in the NE newspaper classifieds. Underselling NE dealers who couldn't get enough allocation for what stock they had. If you don't mind a long distance game, and maybe doing your shakedown and hanging out somewhere for two weeks after delivery, that could work.

[surf_sail]

Originally Posted by hellosailor

"but then again if you "live" in an area without a local dealer, the dealers can't complain."

Wait, someone can't complain? (G)

You'd have to find out if any of the franchisees were granted, or bought, the rights to sales in your area. Often a franchisee can literally say "I want these three zip codes" or "these four states" or simply "everything within a radius of xxx miles" and that's their exclusive area. Even if it seems to be implausible, sometimes that's what they've bought into.

In theory the dealer is doing some work, some assembly, some prepping, adding extras, performing initial punch list repairs, all stuff the factory doesn't keep staff on hand to do for a retail customer. Someone, literally has to finish the boat and sweep up behind the elephants, and I can't see the major players wanting to compete with their own network on that. Too much trouble, since you've got to buy a boat someplace anyway.



Now what has been done in cars, is that dealers in the big empty spaces have been known to accept low offers for the cars they normally can't get rid of. For many years you couldn't give away a "riceburner" in the Southeast states, and some dealers would advertise them at very low prices--in the NE newspaper classifieds. Underselling NE dealers who couldn't get enough allocation for what stock they had. If you don't mind a long distance game, and maybe doing your shakedown and hanging out somewhere for two weeks after delivery, that could work.

I wonder if the (e.g. Beneteau) dealers really "own" the boats they have in stock like a car dealer does. There must be some provisions to move boats to other dealers or return to factory if they can't sell it. Just having one boat they can't sell would likely wipe out profits for quite a while.

But I guess if you find a prior year model in-stock when the new one is already out (or soon to be), you should be able to negotiate a big discount.

[hellosailor]

I would rashly guess that the maker retains original title ("certificate of origin", etc.) since the mere act of transferring the title to the local dealer would require paying $$ to the state for a title transfer, etc. But that the dealer had ownership interests in one way or another, and was paying something every day the boat was on the lot. Of course that's negotiable too.

It is a mixed choice of accounting, whether to consider that the "carrying charges" on a piece of inventory should be assigned to that piece, or carried as a general business cost. If it costs two bucks a day to keep an unsold car on the lot...That makes it that much harder to sell the car, every day. If you just throw all the carrying charges into a cost of operations, and spread them out equally, then the sales and pricing become easier to deal with. There's often some incentive to move old stock, but I think also some terms that effective reware the dealer for moving stock, and penalize them for not moving it.

You could always contact B and tell them you're interested in a franchise. I'd guess the Mohave Desert region is still available.(G)

[surf_sail]

I'll stick with buying used. Still seems like the better deal.