By Bob McCann, Lead MICD Program Consultant
When I made the walk from the automotive industry to the marine industry in 1999, two areas of concern jumped out at me.
- The lack of any effort dealers gave to go after customer-pay service.
- The lack of a true used boat sales operation at dealerships.
A Missed Opportunity: Neglecting Customer-Pay Service
The observation of a missed opportunity in service was mostly my ignorance of the enormity of the dealer’s role in the PDI (pre-delivery inspection) process and the lack of resources to provide service to customers who bought their boats elsewhere. However, when boat sales all but stopped during The Great Recession, dealers pivoted and survived on providing customer pay service. Regrettably, the additional customer-pay workorders dried up again when boats sales returned and are made worse in recent years with the sales boom that the pandemic blessed us with.
Enough about customer pay opportunities for now.
When Riding the Inventory Roller Coaster, Don’t Forget Pre-Owned Boats
Opportunities in the used boat market have reared their ugly head, and I say “ugly” because I’ve found over the years that most dealers have worked hard to dodge the used boat sale more than they’ve worked to embrace it. This is where we find bad habits and poor processes pulling down what could be a lucrative profit center for the dealership.
Reality is, a proper used boat sales operation can’t be developed or adopted based upon market conditions when a used boat is traded in one day and sold the next. Especially when they sell for thousands of dollars over market value with promises to make it right later. Who can argue with wins like that? Why would you want to put anything in the way of record-breaking margins with policies and procedures when the demand far exceeds supply and customers have no other choices?
I’ve been on this roller coaster ride for only a short time compared to dealers who have boat sales experience measured in generations. But, during my times I’ve seen the tides come and go with boat sales and as I expected the tide is turning and boat buyers have choices again. Are your slam-dunk sales methods going to stand up to customers with multiple options when selecting their next boat? I think not!
It’s time to examine this used boat market for what it is — a market more than three-times the size of the new boat market and certainly one that should NOT be forgotten, even when new boat manufacturers are back to full production. This is about the time that the OEMs reading this turn the page and look for something more supportive of their efforts or look for the author to throw darts. I think you want to read on …
Ford vs. GM vs. Marine Industry
In an earlier part of my career, I helped Ford dealers sell more cars. During that stint, I was frequently reminded about how Ford lost leadership to General Motors because Henry was set in his ways and too focused on low-cost, mass production and missed a number of opportunities to sell his customers new cars. Frankly, there wasn’t any reason for a Ford owner to buy a new Ford because the new ones looked the same as the one they were already driving, down to the color!
After Ford taught the world to build cars, a guy named Alfred P. Sloan, president of another large car builder introduced reasons for customers to buy a new car — namely, the annual model change, and the idea of a car “for every purse and purpose.” GM started them off in a Chevy and moved them along to other brands until they drove them to their grave in a Cadillac!
Well, the marine industry has been doing well to adopt GM’s marketing philosophies except for one of Sloan’s principles: “He who owns the used car market will own the new car market.”
You see, Sloan understood that new models and colors weren’t going to be all that’s needed to obtain leadership. He knew that the dealership needed to make it easy for customers to drive in with their old car, leave it there and drive out with a new one. So, GM “invented” the used car trade-in and helped its dealers set-up used car operations that maximized the resale value of the used car. That made “The Rational Walk” between the used and new car affordable, and the transaction was an easy one. Therefore, I spent as much of my time with a dealer helping them sell used cars as I did sell new cars.
It has been refreshing to see the efforts of some dealers who’ve recently turned the corner on their pre-owned boat sales. However, I believe it was not for reasons we just wrote about — it appears that it was only a band aid till their new boat inventories reappeared. And now that new inventory levels are in surplus, it appears the focus shifts back to moving new units and forgetting about the true potential of the used market.
No More Missed Opportunities
It would be dreadful if this scenario becomes a sequel to the post-recession, customer pay-service business, and we return to the days of missed opportunities with pre-owned boats. But we are certain to return to those missed opportunities unless we learn to better market pre-owned boats. And that begins with trading for or acquiring more of them.
This doesn’t necessarily mean that you must inventory more of pre-owned boats, but you do need to know where you can liquidate them in order to offer full value to your new boat buyer and capture more of those deals.
For the ones you keep to retail, you can’t allow pre-owned boats to be shown to potential boat buyers before the boat is perfectly prepared and ready to fetch top dollar without your sales representative needing to make excuses and promises to fix or detail the obvious. Every excuse or promise your sales team is forced to make devalues the boat in the customer’s mind and either results in a no sale or a reduced margin.
So, these efforts to better sell used boats due to a shortage of new boats have been a good lesson on what could be as well as what needs to continue for dealers and manufacturers to sell more new boats. Curing these ills and embracing industry resources will give your dealership the tools needed to set yourself apart in the high-volume market (an estimated 1.15 million used units were sold in 2021 alone!) for pre-owned vessels, maintain high values and make it easier for new boat buyers to make “The Rational Walk” to a new boat.
Pre-Owned Boat Market Strategies & Tactics
Need more insights and best practices for greater pre-owned boat market success at your dealership? MRAA Members can download the “MRAA Ultimate Guide to The Pre-Owned Boat Market.”
Not an MRAA Member, but want access to the guide? Contact MRAA Membership Manager Sherri Cuvala, 763-333-2420.
Get even more pre-owned content on the MRAA Spotlight page “Drive Success in Your Pre-Owned Boat Business.”