J&D Acquisitions sues dealer-cost website

Posted on 21 March 2011

J&D Acquisitions said it filed a lawsuit against the SeeDealerCost.com website, alleging that the use of its contractual and proprietary pricing information "will damage our brands and our dealers and we will not stand for it."

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A letter was sent last week to all Larson, Seaswirl, FinCraft and Triumph dealers and sales representatives to inform them of the legal action. J&D Acquisitions also owns Marquis and Carver yachts.

The suit was filed in Hennepin County, Minn.

"Please know that we are fully investigating how this site obtained our contractual and proprietary information," chairman and CEO Irwin Jacobs said in the letter. "Once such source is identified, you can trust that the appropriate actions will be taken to deal with these individuals."

Jacobs stressed the importance of not releasing such information to a third party.

"We are prepared to do everything in our power to protect our brands and our dealers," he said. "These illegal acts will not be tolerated."

The SeeDealerCost.com site, which launched last week, lists many builders by name. Of the J&D Acquisition brands, only Larson has its own link on the site.

A representative of the site did not immediately return calls for comment.

Comments

Seems to me the dealers are the ones doing a lot of crying over nothing. Many people will shop around for a boat before buying. While there are many factors why someone will choose one boat over another, the amount of profit the dealer makes is not going to be the biggest factor.

Human nature is to resist change. The dealers who responded are just echoing they don't want change. They want to continue having a 33% margin (50% markup). This allows them to discount a little making the buyer feel good and yet have enough profit to pay the owner hefty sums of money. By the way, when is the last time you seen an owner of a dealership living in a 2 bedroom apartment. 20-30% gross margin on a $30k boat is fine but is excessive, in my opinion, on a $200k boat. Keep in mind that dealer prep is also profitable and paid seperately by they buyer. What about financing? I'm sure the boating industry makes the equivalent from this as the auto industry. Many car sales people make 25% or more of their income by getting the buyer to finance.

With sales being down for the past several years dealers are trying to keep their margins high and it's hurting them. People are not eager to pay full list price and their boats are sitting costing them money. Sell the boats when a fair offers are made and get them out of inventory. Plenty of 'full list price' dealers have gone away because they turned down offers and sat on boats for a year or two. You can't make much money selling new 2 year old boats when that same boat could have been sold a year sooner for 10-15% more.

There are plenty of people looking to buy boats; just need dealers who want to sell.

Just how many peoples lives has Irwin Jacobs turned into turmoil?

Genmar's bankrupcy filing negatively impacted so many people's livlihoods .... and Big Ir comes out of it unscathed like an industry hero. Something does Not seem fair !!!

I want my dealer to make a fair profit. I want my dealer to be in business if I need something. What are fair percentages for markup, considering overhead, etc. I don't think this site will hurt, as buyers today compare offers from different dealers. Its not as easy as cars. With cars, I can go to dealer X with the invoice cost, and know that I have the knowledge to not get screwed. Its harder in boats, but if a dealer knows he is competing, he will do his best. I want the dealer to make a fair profit. I want the dealer to give me great service and value.

The dealer is there to make money, and that's the way it works.

After reading Larry Russo's comment I will agree that the fixed costs of doing business these days make it difficult and that those costs remain the same and actually increase whether you sell 10 boats per month or 100 boats per month however I really think the real problem is not so much in the mark-up as it is the reputation of Irwin Jacobs and his ability to file bankruptcy and still have the financial resources to buy out and operate other companies and why are we not seeing Skeeter,Basscat and Nitro getting involved?

Apparently Mr.Jacobs is the only one that is afraid of what Consumers will find out!

Just how many people lost their businesses due to Mr.Jacobs?

The bottom line to the Consumer is ..What can I afford? What do I want ? and Who has the best price? As Consumers we may think the mark-up is overboard but we could care less how much the dealer makes as long as we are satified that we are getting the best deal we can find.

If Prices continue Bass Boat sales will continue to slide simply because the younger generation simply cannot afford $50,000 for a new rig and I think we will see foreign manufacturers coming into the market just as they have in automobiles.

I was actually suprised to see that the mark-up on motors was actually small so maybe it will help instead of hurt.

To #40...James P.

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 expenses in my business so I can lower the 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.

I pose this question especially to Mr Russo..If the information is not "creditable" then why is everyone up in arms..especially Jacobs with the threats..Because it's creditable information, someone leaked about boat pricing. Now the common consumer will take that information and use it to get the best deal possible on a boat and outboard. Whats the problem in that? It's done on any other high dollar item on the market. Boats should be no different. Especially the 60-70 grand prices inflated by the industry today is ludicrist.

I can see Russo and others loosing potential customers if they say the information is ludicrist, because it's not. It's there, the numbers are correct for the most part. If it were me and I showed you a printout of pricing for that boat and you said it was ludicrist, I would walk out the door..Get used to it because it's not going to go away, the information is just going to get better .More numbers will continue to come in un-veiling more revealing information. The public will be more educated in their purchase in the marine industry, and the curtain that has been shut off to the public will be revealed. FINALLY!!!! Now Mr Jacob can swallow that..Maybe he can buy the site like he bought back his bankrupt assets..Only in America!!

With all the hub-bub over this topic I went to the web-site and looked at the margins. If my math is correct it looks like 30-35% margin on the boats and another 15-20% on the engines. On top of this are delivery, administrative mark-ups and rigging. Yes, seems excessive but then again a small dealer is not moving that many units monthly and may have a high overhead. On the other hand a large dealer with multiple outlets is probably doing quite well. I now understand why many dealers are unhappy with this new service.

Pull your heads out and look around....People are shopping on the internet. Its not going to go away. Instead of wasting your energy trying to make the boat business different than every other business on the planet, figure out how to use it to your advantage. Consumers dont care about all of your logistic issues of trailers, floorplans, rigging etc. Thats your issue, not mine. I want a fair price on a product and I dont want to spend the time driving from boat lot to boat lot. I dont do it when I buy a car and I dont want to do it when buying a boat. Maybe theres a reason why Tracker and Tahoe have been taking market share away from you for years. As far as this Irwin guy goes...sounds to me like he's just doing some damage control with the boat dealer network. Good plan on his part after all of the hate mail recently. I personally will choose to buy from a more reputable organization.

I don't see long term employment for the 25 "employees"

Wonder if they'd like to share their advertising rates with us?

Many interesting even if non-sensical comments. I particularly like those praising Irwin; how come none from the thousands of consumers, dealers, banks, suppliers, and ex employees who lost their shirts when Genmar decided to fold its tents? Similarly, does noone remember the outcrys when named individual said 'the heck with my dealers' and started pushing his product through Sam's Club?

The opening page of the site starts off with a false statement.

"Now you have the tools you need to negotiate your best deal."

Assuming the costs given are accurate, which seems to be a big question at this point, a consumer only has one tool. Sometimes tools in the hands of those who don't know how to use them are dangerous. There is already the assumption out there that boat dealers don't really pay invoice. They surely have some huge discount to work with, therefore the competent buyer with this "tool" would never pay even the listed invoices. Once buyers find that the dealer isn't able to sell at what they assume is a fair price the buyer will get irritated and either move on or forget about buying a boat. No one in this industry needs to muddy the water any more than it already is.

Another letter from Irwin to his dealers and more threats from him against a common enemy. Many of the "you go Irwin" group on here are the same ones who were slamming him when he went bankrupt and bought back some of his own bankrupt companies.

Go ahead and cheer him on; I still have little trust for the man or the methods. Leopards don't change their spots--but one must admit the dude does know how to make himself seem a hero at all times in the press.

Just more hot air from someone who has exhausted plenty of it over the years for sure.

As to the website; the buying public will see it for what it is and it will go away of its own volition. I, for one, hope I start seeing these phony invoice prices from buyers tomorrow so I can up margins as a result.

Tom, it is not the sites responsibility to faciliate the custmers trust with the dealer. It is the DEALERS responsibility.

All the points you mentioned contributing to the actual and final purchase price are true. But it remains the DEALERS responsibility to point this out to the consumer. A serious and realistic buyer will understand this. This is where the dealer retains his autonomy.

Most the points you mention actually do relate to buying an automobile as well, and Auto dealers have become adept at handling this. Options sheets, trasport/shipping fees/ special discounts and rebates, advertising, regional taxes, etc.....these pertain to auto dealers as well as boats.

This type of website was inevitable sooner or later. It really isn't as horrendous as many are making it out to be in my opinion.

I simply can't see any good coming out of publishing dealer invoice. For one thing there will be so much noise in the numbers. Base invoice by itself doesn't give you an acurate picture of the price of your average boat. For a clearer picture one would also need an option sheet. What about transport fees? A boat shipped from Florida to Washington is going to cost more than the same boat sold in Florida. Make ready costs are not the same dealer-to-dealer. Early season buying discounts included? Price increases during the model year? Floorplan costs? Advertising costs? Regional differences in dealership taxes?

All a boat purchser wants to know is if they are getting a fair deal. This site does nothing to help facilitate trust with the dealer and move the negotiation forward.

Quite simply the site will not be successful if the sponsors of the site are boycotted.

Here's the reality of the internet - Music use to be readily available for FREE on the internet, through peer to peer sharing, not so much any more thanks to Itunes/Apple assisting in funding the music industry's law suites or threats of them to the peer to peer servers.
The prices on this sight or sites like it will be inflated so high as to be meaning less & long term the consumer will be paying more.
Manufacturers will/should copy write their dealer doc.'s and the dealers & potential dealers, will sign a non disclouser to be a dealer or to recieve a manufacturers pricing ( I think this is what Jacobs is basing his coming law suites on), then anyone willing to distribut the info will be prosecuted & will loss. End of story...

Wow. If the boating public hadn't heard about this website before, they sure will now with all this publicity and hysterics going on in our Industry. They probably can't wait to check out the site themselves. This website is getting unprecedented publicity for free. Their aim is to please the consumer, not the dealers. This lawsuit and attendent publicity surrounding it plays right into their hands. Otherwise, most consumers probably wouldn't have given it much thought....just used it as one more negotiating tactic mixed in with dozens of others....which a saavy and confident dealer should be able to handle. But the uncalled for panic the industry is showing elevates the credibility of this site far beyond what they would have been able to accomplish themselves.

I don't see how a lawsuit against this site will prevail. These type sites are common and prevelant on the internet for many industries. You can keep claiming how "special" and "different" the marine industry is, but in the end, it is just another industry.

what needs to come out of this is the astounding actual dealer costs involved in making the dealership work per unit sold and the general failure of the factories to build a more workable economic model....the astounding factory costs to floorplan are very wasteful vs marginal results in most secondary markets....what ever the answer is it will come from more client awareness////not less///michael mayer

Most people do not like change,but the world is changing. Boats are big ticket items and purchased often with DISCRETIONARY money. When the engine is built, it hopefully is just as good as the next one off the production line (sadly,this does not apply to boats).

So any dealer of the brand "X" is selling a similar product/his location to the customer/his product support reputation - (why the CSI surveys are in use), plus his ability to give the potential customer VALUE.

True,his landed cost may be different due to freight or full-load savings, but why should these non-negotiable factors be hidden when the retail sale is negotiated? If the dealership has a limited season, so be it. A true customer, when explained the facts, will make his buying decision. If the dealer cannot make the sale at a fair price,he should not be in this business, as the product lasts several generations in recreational use,so the customer will not be back except for support for a long time, but if he is satisfied, he may get you some good referrals.

Rather than shoot the messenger, be open and build an honest relationship with the potential customer, so both parties will win.

I do not know where they are getting their information, but I would assume that all of the floor plan lenders have invoice pricing on all the inventory they are financing for the dealers. I would think that those lenders and their employees may be a source of information for the website.

Bull's Eye Larry Russo

Individuals like Capt. Harold DeHart are obviously completely ill informed as to how completely different the auto industry and the boat industry are when they draw this comparison. This from somebody who would seem to have been around boats a long time, but probably has never run a business with the kind of overhead involved in the marine business. With that in mind, how can we ever expect a consumer to understand or intelligently decide, what would be considered a "reasonable profit" for a boat dealer to make. I am not going to sit here and try to explain all of those differences First of all there are the differences in hold back. Boat builders rarely hold any real money back, and auto manufacturers do. Then there are the diffences in preparing a car versus a boat for delivery, we all know the cars get driven off of the transporters, versus having to unload a boat, install it on a trailer that has to be adjusted, install batteries, fuel, cables, drives, windsheilds, towers, arches, canvas, etc. Then there is the amount of turns a boat has on floorplan versus a car. As one other writer wrote in a previous article, a car dealer is bringing a car to the auction and turning it into cash if it sits on his lot over thirty days. Try that in the boat biz and see how successful you will be at an auction, you'd be lucky to get 80% of your cost. It goes on and on, but the diffences are enormous and the consumer will not see that, as they have no idea of what it is, or costs to run a business, let alone a boat business.

Capt. Harold DeHart when is the last time you heard of a car dealer selling 10 - 20 units a month. Most good car dealers will do 100 plus units every month. Significant difference in markets with need versus desire.

The current economy has cut deeply into the profit margins most boat dealers make and to cut it even further for the benefit of a few opportunistic individuals at See Dealer Cost that will not even come out from behind the black curtain and show their faces (I am OZ) is going to drive dealers out of business.

We don't sell car's.

Dave Taylor...WOW...used to work with him...not suprised that he would come up with this idea, he was always ahead on ideas..good or bad..

I have informed my staff to not do business with any advertisers supporting this site. We should all band together!

I would not ever want to be a Donzi dealer so mute point. But all you others out there, think about it! The local GMC dealer and the local insurance agent, and the BBQ joint who are all advertising on the site...what are you thinking or are you "partners"? I don't deal with Thunder Marine or the other go fast dealer but certainly will not if ever given the opportunity. Merc & Yamaha & Volvo will hopefully input in their contracts about dealers having to get permission to use their logos on contraversial sites?

This Taylor guy comparing us to the auto industry is absurd. Auto dealers do a lot more turns, a lot more unit volume, have a lot more consistent service base that's brought to their door and a lot less seasonality. Consumers are accustomed to invoice pricing on cars and will never understand a 10 or 20 % margin on a boat....and give me a break, theres a big difference between 10 and 20% that taylor mentions in previous article and demonstrates that he does not know what it takes to stay in this business as I don't think you'll find a boat dealer that will last long term at 10% margin.

As always, thank you Mr. Russo for your common sense approach to reducing emotional and complicated issues to their least common denominator.

Occasionally I am asked to appraise a new or near new vessel.

Do I use the selling price? Absolutly not! Single sales are not representitive of the market value.

It is useful to know the dealer cost and mark ups. These are legitimate considerations in the appraised value. On the other hand, quality and style are also considerations, irresepective of dealer cost. Local market area is also a consideration.

If a significant number of sales at a given price are established, than that may well become the appraised value. Orphan sales are considerably more variable.

Several years ago a certain brand was marketing a 40' cruiser hopefully in the range of $400,000. It was poorly constructed, not to ABYC standards, and had obvious defects in manufacture. With over 40 recommendations the new vessels were appraised at slightly less than $150,000. In this case, I expect based on prior experience the builder had less than $200,000 in the construction. One aspect of the representations was that this was an "offshore" capable vessel. It definitely was not and could not be used in any significant wave action.

Bottom line here is that I don't think that disclosure of dealer cost is really much of a marketing problem to legitimate buyers. It's the tire kickers that waste your time that will try to use it, then walk away.

Dick Obritz

Irwin is right to do this. The information is not factual. This site has no manufacturer sponsors and the others are those they duped into thinking it was more than it is. It's totally different than automotive.

Excuse me, but how is this any different than the many automotive sites that consumers have available regarding manufacturing and dealer pricing?

In this day of slowly climbing economics, one would think that allowing the consumer access to the pricing strategies, would create more interest. As someone else mentioned, "what do they have to hide!"

I, personally, would be looking at manufacturers and dealers that are more open with their pricing. The auto industry hasn't been hurt by these available pricing sites. Everybody understands there has to be a profit margin, but also understands that comparisons can be made between products. Build a better product and they will come!

Wow, shocking stuff.....people out to make money for themselves, Irwin filing lawsuits....

We are all lucky that Brunswick and Irwin are always looking out for our best interests, we can all sleep a little better tonight.

We are a dealer for several of the brands listed. Obviously, I was curios to see what was listed for them. I have no idea how they came up with the prices, but it is actually humorous that they are so far off on some and close on others of the same brand!! I am guessing that they just took a percentage off of list to arrive at their numbers, because there is now way possible for them to be off that much on some and close on other models of the same brand. They do have a disclaimer printed on their site that their prices are not guaranteed accurate........good thing for them!!

An injunction shutting down the site would seem appropriate at this time since the site, disclosing confidential information, has the potential to cause irreparable harm and damage.

The concept, mentioned above, of individuals providing disinformation is actually quite intriguing since it would certainly cause visitors to question the validity of the site. If multiple price lists with different prices were provided which one would they use? Any other creative ideas out there…

Excuse me, but how is this any different than the many automotive sites that consumers have available regarding manufacturing and dealer pricing?

Erwin is certainly the right guy to shut these guys up!

First of all, the law suit is FREE advertising and FREE recognition for the web site, so all the FREE campaigning is working for them.

Second, the only to combat this is a collectively dicrediting the web-site as in accurate information.

Third, if the customer won't allow you to make a fair profit on the product so you can keep the doors open and be there when the customer needs you (this must be explained). After all, not making a profit is bad business, and bad business practices are what we all need to stop doing. We have enough industry pressure now eroding profits. Be smart, take control of your own business.

Fourth, the last time a White Knight came to save the day, the results were not what we all expected.

Is ok..with these published prices we'll just have to get our boats made overseas...then I can worry more about the "vanishing middle class"!

This after how many vendors, dealers, etc Irwin screwed over? Don't get me wrong, I'm completely against seedealercost.com; but, I'd rather see someone else make a stand against them.

Maybe if Edmunds or Kelly Blue Book set up the site it would be different. I predict filing suit will backfire as wary consumers think there must be something to hide. What is J&D afraid people will discover...

At some point, dealers will be contacted about the website. We all need to adopt a response strategy. I sent this memo to our team this morning.

Attached are letters from Sea Ray and Brunswick stating their position on the website “seedealercost.com”. None of the brands we represent are supporting this website in any manner. The site was launched last week and it appears that they lack both credibility and traction, as evidenced by poor content and advertiser support. The primary purpose of this website, as is true with any commercial website, is to make money from subscriptions and/or advertising. The two former industry executives, who have been associated with this site, are only in it for personal, monetary gain. They do not appear to be dedicated to providing a valuable, consumer service. 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.

If anyone finds themselves in conversation with a consumer about this site, you 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!

Larry Russo, Sr.

Russo Marine

Isn't a lawsuit at this point like trying to close the barn-door after the cows got out?

Surprised nobody sought injunctive actions prior to the web-site going live. Certainly some had knowledge of what was going on. Another example of being a day late and dollar short.

If the web-site is defeated another will take its place.

I hope other manufactures would follow. it is appaling Mr. Taylor claims that they are starting their bussiness for the benefits of the public rather than becuse he could not find a job and was fired from the US Marine.

Sam

Way to go Irwin!

You Go, Irwin!!!!

Shut them down and make them walk the plank. I'm sure you will have a lot of other manufacturers behind you.

Does anyone else think the manufacturers are leaking inflated dealer costs to this website, giving their dealers a higher base for negotiation? If the website says Boat X has a dealer price of Y, but really it's Y-$2000, the dealer can sell at "cost" and still make a profit, while the buyer thinks he's driven a hard bargain.

Is it possible SeeDealerCost.com is owned by boat manufacturers, or at least subsidized by them?

Now we're talking!

I didn't think you had it in you Irwin. Way to go. Taylor uses everyone and anyone to further himself, regardless of the consequences.

Gary Dobrindt

The Boat Center

Madison, Ct

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