The market will become efficient
The furore over here about a soon to go live website - seedealercost.com - is indicative of the turmoil the US recreational marine market is in.
According to the press release announcing the forthcoming launch ‘this site is similar to some sites in the automotive market in that it is not a selling site; however it does provide product information, including features (standards, options), specifications, and pricing. The pricing included in the site is both MSRP (Manufacturer Suggested Retail Price) and Invoice.’
The thought that the public can potentially get to see/calculate the profit a boat dealer makes alarmed many of them and resulted in their umbrella organisation, the Marine Retailers Association of America (MRAA) writing to boat manufacturers urging them not to provide that information to the new site.
Part of the MRAA’s argument is that ‘It’s axiomatic that dealer profit margins will shrink to marginal levels as consumers, armed with actual dealer costs, will "low ball" dealers with purchase offers slightly above dealer actual costs.’
Currently dealers only quote MSRP on their websites, which is a way of restricting dealers for the same brand visibly competing with each other on price for a particular model.
Dealers with less efficient and uncompetitive business models are thus nominally protected from dealers whose business models are more efficient. While this may have seemed a good idea a few years ago this is not the case today.
Every boat owner and prospect is aware that right now there are a lot of boats out there, but not many people willing or able to buy them. Selling prices and profit margins will come down until the current glut of boats is sold.
What happens next is the key. Dealers and builders need a new business model for this market climate. Markets will become efficient or they go away.
