Boat margin and a gentlemans bet

[spitfisher]

Does anyone know what typically would be considered good margin on a new boat in the 25 to 30K range By our definition ( cost of boat, deliverd, comissioned VERSUS eventual selling price of the boat- less options, installs etc)- this is not to be confused with wholesale before any promotions and programs and Manufacture suggested retail price.

A buddy of mine says it's less than 5% on a $25-$30,000 boat, he claims that additional profit margin is gained by freight, comissioning, installs and purchased options. I find this hard to believe.

I disagreed with him in that I think it's closer to 15%+ on a new boat and rather than perform the install work, they put owness on the manufacture provide the boat standard options AND the top 5 options that are typically requested by the customer for that size/style of boat. In other words the boats have preinstalled options at the factory.

He also said the markup on a trade in can be anywhere from 20-35% on trade value and asking price.....Is this right too? The Bet isn't on this portion

There is $100 riding on this....... Thoughts, experiences and opinions are always accepted. We won't ask you to prove it

[Gadabout Guinea]

A business selling large items at low volume on a 5% margin wouldn't be sustainable! Maybe a dealer will chime in here with hard facts, but your friend is nuts!

[spitfisher]

A business selling large items at low volume on a 5% margin wouldn't be sustainable! Maybe a dealer will chime in here with hard facts, but your friend is nuts!

That is my arguement as well- low margin at low volume = no way.

What is your take on trade in margins- boats owned by the dealer- not consignment boats i.e. brokerage

[Seacows]

I own a small custom boat company here in Mass. Our dealers work off a base 10% on the boat from the factory. They then can make 10%-38% on options added on by the buyer. They then can make points or 1-8% points on engine installs and electronics installs. When it is all said and done 10-15% is the norm in our custom industy. In some cases in order to get a deal done you can go less. Some higher volume dealers with cheaper boat lines work off smaller margins. This counts for all the Sea Ox, Proline, etc lines of second tier boats. The exception is Grady and Boston Whaler. Their boats are built with the same quality as those cheaper lines but stand on reputation and warranty and there for can increasse their margins to 15-20% Hope this helps. Also remember that the larger the boat the bigger the margin.

[spitfisher]

I own a small custom boat company here in Mass. Our dealers work off a base 10% on the boat from the factory. They then can make 10%-38% on options added on by the buyer. They then can make points or 1-8% points on engine installs and electronics installs. When it is all said and done 10-15% is the norm in our custom industy. In some cases in order to get a deal done you can go less. Some higher volume dealers with cheaper boat lines work off smaller margins. This counts for all the Sea Ox, Proline, etc lines of second tier boats. The exception is Grady and Boston Whaler. Their boats are built with the same quality as those cheaper lines but stand on reputation and warranty and there for can increasse their margins to 15-20% Hope this helps. Also remember that the larger the boat the bigger the margin.

Thanks seacow for the explanation and clarification, I believe you have determined that I have won this bet- unless others chime in. because trade in can also impact final margin of the "sell" price- what safeguard margin does a dealer work with in regard to trade for the 2nd tier boats? Do they still look for 10% like the new boats? other than alower price point why would anyone take a trade in if the margin is the same as new? it must be higher- in all likelyhood there wouldn't be the additional points made with accessories and installs, chances are the boat may already have these right?

[Seacows]

Used boats are a funny buisness. In most cases dealers look at trades and used boats as a different buisness transaction. They look at the boat and the market to determin if it is something they can make money on or turn around quickly. In most cases if you have been a customer of a dealer for some time and have purchased a boat from them in the past they can be more forgiving on a trade. They can give you a little more for you boat than if you were going to a new dealer altogether. They are really just looking for you to upgrade boats, your loan, and service buisness. If you are starting with a new dealer expect to get cut short on your trade because they may in turn dump it off to a wholesale guy. So % on used boats can range greatly based on these two ways of looking at trade in. In some cases a trade in with quick turnaruond can go for 5% margin or if the dealer gets you unload something with some value they could make 20%. Samething gos for trade-ins bigger boat bigger margin.