An “Inconvenient Truth” – Seedealercost.com hurts the industry!

Unfortunately, the Seedealercost.com website is not DOA as thousands of us in this industry had hoped and as I had written in my last blog article. So the question is, how long will it be before it is DOA if they don’t get enough advertising to write Malone and Taylor’s paychecks?

Most comments that I have read or heard since the website went live have been negative towards it. But a few (very few I might add) have commented, “The time has come for this in the marine industry.” Huh?… are they serious?? And some have made comments like, “The buying public deserves to know what something costs.” My response to this is, “Why?”

An “Inconvenient Truth” – We don’t need this site!

As Larry Russo, Russo Marine, Medford, MA said, “To those that say, ‘the time has come for this in the marine industry’”, I say… why hasn’t it come to the furniture industry or the clothing industry or the large appliance industry or the jewelry industry??? Why the hell do we need it in the boating industry?” I agree with Larry. The truth is…we don’t need it in this industry.

Russo also commented this about the SDC site, “The ‘dealer cost’ prices on the site come from unreliable third parties. They are out of date and inaccurate. At this time, no manufacturer is supporting this site with data or with advertising.”

He went on to say, “If anyone finds themselves in conversation with a consumer about this site, they should respectfully let them know that this site is simply not credible at this time. Until a significant number of major manufacturers endorse and support it with both data and advertising, it has no merit and should be labeled what it is… a scheme by two former industry employees trying to make a quick buck!” (I hope they never get that ad support!)

Another “Inconvenient Truth” – The boating industry is not like the car business!

Then there are those, especially Malone and Taylor, who try to compare the marine business to the automotive industry to justify what they claim is the need for marine version of a website like Edmunds.com. That is such faulty thinking, as I have written before. For starters, there are big differences in prepping a new boat that a dealer receives from the builder compared to what is involved in prepping a new car that comes off the delivery truck. As a former Chevy dealer, about all we had to do to prep a new car that was just delivered was wash it, pull the floor mats out of the trunk and put them on the floor in the car, check fluid levels and a few simple things like that. And we got paid a flat rate by GM to do the dealer prep.

Contrast that with what one dealer said about prepping a new boat just delivered to his store: “We have to unload it, get it on a trailer, install the windshield, batteries, engine, and a lot more. That is a lot more than a car dealer has to do to a new car.” He is so right as I wrote above.

And, as I have written before, I paid the same invoice price for a Chevy vehicle as the Mega dealer 15 miles away. We all got a 3% holdback on the sticker price of every new vehicle delivered to us. On a $30,000 sticker priced car or truck, that amounted to $900 profit that I made if I sold the car outright with no trade. But 90% of the vehicles I sold also involved a trade, and in that process, the fact that the consumer knew what my invoice price was completely lost. What I allowed him or her on the trade was what became important. But how many new boats sold by dealers involve a trade? Not anywhere near the 90% in the car business.

Another “Inconvenient Truth”

Another “Inconvenient truth” that Malone and Taylor should know from their years in the industry, and their “secret” employer hopes we will all overlook, is the difference in volume between an average car dealer and an average boat dealer. First the auto business is year-round whereas we all know that boating is seasonal. The auto industry sells millions of new vehicles each year in the United States. New boat sales are in the thousands.

Then there is the floor plan situation. As a new car and truck dealer, GM gave me 60 days free floor plan before I had to floor plan a vehicle with my local bank. So we always worked hard to turn the inventory within 60 days. And the turnover in the car business is so very much greater than in boat retailing. Also car dealers have convenient auction locations where a used car or truck can be sent if it sits on the lot too long. I don’t think I ever lost money on a used vehicle that I sent to the auction, especially if we had it detailed before it went.

It’s a dealer’s market!

For the first time that I can remember in the 50 years I have been involved in the marine industry, it is truly a “dealer’s market.” With an estimated 40% of the dealer population gone, but no real reduction in the number of boat manufacturers, it has become a dealer’s market. Dealers and manufacturers alike must realize this. There are fewer dealers in the arena yet basically the same number of boat builders and engine manufacturers trying to get their products into the showrooms.  My advice to dealers: use this to get the dealer agreements fair to both parties that you have asked for over the years. And insist that the companies that supply you boats and motors do not… I repeat… do not support this crazy Seedealercost.com website. And lastly… do not provide SDC with any dealer cost information.  Because, as Larry Russo said, “What folks will never understand is that we have huge overheads due to discounts and competitive pressures, the uniqueness of our industry, seasonal pressures, regional differences, product disparities, etc., etc. I don’t really care if a consumer knows my invoice cost for a boat. What I do care about is that he/she will never understand, or believe, what my real “costs of doing business” are. And that I need to add 20% to every invoice to make a small profit and service the sale.”

Let’s hope that I can soon do another Seedealercost.com – DOA article and that Jack Malone and Dave Taylor get real jobs that don’t hurt the industry that supported them for many years!

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About Ben H. Sherwood

Ben H. Sherwood is a marine industry veteran and a marketing consultant who operates Sherwood Marine Marketing in Pleasant Prairie, Wis. For more info, click About on the main menu.

5 thoughts on “An “Inconvenient Truth” – Seedealercost.com hurts the industry!

  1. Great article Ben. It will be interesting when the light is finally shining on the company that is behind all of this. It must be a company that would benefit from the entire marine industry tripping and falling on its face. Fortunately, we haven’t had any prospects come in armed with this information yet. I think Larry Russo’s suggestion to question the credibility of the information is a good place to start.

  2. I have no problem with openness, transparency and honesty. Here is the problem, as I see it. If a common consumer came into our dealership with an $80,000 invoice from a website, I would have to convince him that I need to charge him $100,000 for the boat. A boat dealer in the northeast, who basically hibernates for six months of the year, needs to generate a 20% gross margin to cover the “costs of doing business” and make a small, net profit. The challenge becomes convincing this “common consumer” of why we need to make $20 grand! Most consumers are unaware and uneducated about the costs of running a good business and delivering quality support services. I just don’t feel that most consumers will tolerate the concept of paying a dealership $20,000 for the priviledge of selling a boat. It will scare more buyers away than it will attract, leaving the industry with less business, not more. In this fragile economy, I can’t take less business going forward.

    And please don’t make the argument that I need to reduce more expenses in my business so I can live on less margin. Over the past three painful years, we have stripped-out all of the unnecessary costs we possibly could while continuing to retain good people and deliver good service.

  3. If the boat cost $80k and someone walks in the next day and offers $90k, then don’t complain a year or two later that you need 20+% to make go of it. The cost of holding on to it for a year or selling it at a decent price, and perhaps one or two more like it over the next year, is a business decesion. Part of the reason for so many leftovers is that dealerships haven’t adjusted to the fact that many people can not afford to pay 50% over invoice cost. Banks are not willing to finance $120k for a boat that will have a used wholesale price the following year at $64k. Keep in mind that for every boat that is sold by the dealer, there is a good chance the buyer will be getting their boat serviced. At $100/hr of labor, the backend of the business will be profitable.

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