Taking a page from the playbook of automobile manufacturers, Tiara Yachts launched a certified pre-owned program to capture more of the used-boat market and give the company an edge over its leading competitor — pre-owned models of its own brand.
“It ensures repeat customers, and it ensures more consistent values of certified pre-owned Tiaras,” says Nick Bischoff, vice president of sales and marketing for the Holland, Mich., boatbuilder.
“The dealer will give more value to certified pre-owned boats,” he says.
Tiara dealers are enthusiastic about the new program.
“I was excited about it from Day One,” says Brian Dekkinga, Tiara brand manager for Florida-based Galati Yacht Sales. “I see a lot of benefit [from this program] in selling a new boat. It’s going to keep people in the fold by giving them more value for their trade-ins.”
Rob McCarthy, general manager of Lakeside Marine Group, agrees: “We think it’s going to be a differentiating factor.”
He says a conversation with a fellow passenger on a recent flight to Las Vegas reinforced that view. McCarthy was sitting next to a man who was looking through a car magazine, and he asked the man which car he would buy. Without hesitation, the man pointed to a new Lincoln and said he would buy that in two years as a certified pre-owned car.
“I think it means the certified pre-owned concept is here to stay, and I think it’s great that Tiara has emulated its program after the high-end luxury car market,” says McCarthy.
An industry first
Tiara unveiled the CPO program at the Fort Lauderdale International Boat Show in October. The company is billing it as the marine industry’s first factory sponsored and endorsed certified pre-owned program.
“This is not a service contract like other boatbuilders,” Bischoff explains. “With us, the warranty is included in the price of the boat. Others sell a service contract that’s separate from the price of the boat, and it’s not as comprehensive.”
The Tiara program is for late-model Tiara yachts — less than five years (or seven model years) old — that are taken in trade toward a new model. But not all Tiara yachts may qualify; they first must undergo a 214-point inspection by the dealer’s service manager. The inspection includes safety, engine and mechanical equipment, instrumentation and electronics, exterior and interior components/parts and overall appearance.
The yachts that pass inspection are backed by authorized CPO dealers with an exclusive comprehensive limited warranty that provides an additional one-year warranty on engines, engine components and all major accessories, and also retains the remainder of the original manufacturer’s warranties.
The typical warranty for components on a new boat is one year, and Tiara offers its own five-year structural warranty on its boats. So, Bischoff says, “the sweet spot [for a pre-owned Tiara] is the end of two years to the end of four years.”
He notes, however, that the program does not offer total bow-to-stern warranty protection because it does not cover maintenance items such as batteries.
Only A-team dealers
Getting this program off the ground was no easy task, says Bischoff. Tiara wanted to launch the program a year ago, but couldn’t get the dealers behind it.
“The biggest issue was the warranty,” he says. “Initially, the dealers were going to underwrite the whole program.”
After working with a consultant who had experience setting up CPO programs for the auto industry, Tiara decided to use a third party to insure the warranty for the certified yachts.
“It’s a limited warranty offered by the dealer and underwritten by First Protection Corp.,” says Bischoff.
But not all Tiara dealers are authorized to participate in the CPO program.
“It’s only for the best dealers because it requires due diligence and an excellent service department,” Bischoff says.
To qualify, the dealer must have the Marine Industry Certified Dealer designation and Tiara’s platinum level dealer status. Of the boatbuilder’s 19 domestic dealers, only 10 are authorized CPO dealers.
For those dealers who do qualify, Bischoff says the program will offer a huge advantage.
“It brings people into a Tiara dealer to look at newer models,” he says. “The customer is going to feel more comfortable doing business with a dealer that offers a certified pre-owned program.
“It’s about building image and enhancing the resell value of a Tiara yacht,” says Bischoff. “We wanted a competitive advantage over our No. 1 competitor in the market — and that’s pre-owned Tiaras.”
This article originally appeared in the January 2009 issue.