Dealers welcome later 2010 rollouts

Author:
Publish date:

With factories running on low, many builders are opting for fall launches

34_2010_01

As the industry continues to struggle through the worst economy in decades, a number of manufacturers are pushing back the 2010 model-year rollout to allow dealers more time to clear older inventory out of their showrooms.

"I think it's wonderful," says Phil Keeter, president of the Marine Retailers Association of America. "Moving that model year back is the right thing to do."

In recent years, manufacturers have generally been rolling out the new model-year products in June, July or August. However, with many struggling to move 2009 models (and some even older), more boatbuilders are recognizing the importance of giving dealers more time to sell.

"A dealer's prime selling season is late March to the Fourth of July, and he should be concentrating on selling that year's product," Keeter explains. "All of a sudden, new product comes out right in the middle of the selling season, and it destroys the dealer's ability to sell the merchandise he has on the floor."

Early survey results

The MRAA is surveying manufacturers to gauge their rollout plans, and early results show some intend to wait until early fall.

The survey was sent to 350 boatbuilders, Keeter says. Results from 25 manufacturers - received only a few days after the survey was mailed - indicate 17 plan to introduce their 2010s in September or October.

Those who say they are pushing back the rollout include Brunswick (which previously announced 10 brands were moving back) and Everglades Boats, along with Cobia, GillGetter, Hewes, Maverick, Pathfinder, Qwest and Southland.

Sea Ray has delayed its rollout to September, and other Brunswick brands will likely follow, says Brunswick spokesman Dan Kubera.

Those planning summer introductions, according to the survey results, include Aspen Power Catamarans, Avalon Pontoon Boats, possibly Centurian, Formula, Gekko, Manitou Pontoon Boats, Splendor Boats and Tahoe Pontoon Boats.

Other boatbuilders confirming summer rollouts to Soundings Trade Only include Genmar's boat lines and Correct Craft.

Nautic Global Group, maker of the Godfrey and Rinker lines, says it is among those offering dealers flexible model-year introductions, which will vary from dealer to dealer.

Wasted effort

"[Manufacturers] can't get dealers to buy product right now, so there's no point in introducing that product in June or July," says Keeter. "That's spending a bunch of money and a bunch of effort for something that they're not going to get much back on."

Years ago, Keeter says all new models were introduced in the fall, but when the old IMTEC trade show was discontinued, manufacturers began to push up the dates to get dealer orders as early as possible. Some, he says, were rolling out new models as early as May.

35_2010_02

"We've been pleading with the manufacturers for a decade or more to please move that [date] back where we can have the selling season and sell the present model year, but they have not done that," Keeter says. "All of a sudden, manufacturing plants are producing probably 50 percent less - and some of them as much as 70 percent - than they were a year ago, so this isn't going to hurt them right now."

Keeter continued: "Now's a perfect time for us to get back on the right schedule, and hopefully that will allow the dealer to make a little bit of money on the 2009 boats that he has to sell."

Thom Dammrich, president of the National Marine Manufacturers Association, says most dealers in the past would stop ordering current model-year boats as they got into the summer months if they had inventory on hand. So introducing new model-year boats in the summer allowed manufacturers to keep production flowing and begin shipping new-model-year boats before the end of summer.

The boats would then, generally, sit in dealer showrooms until the boat show season began.

On-demand production

"Much of the rationale and much of the impediment to change dealt with smooth production schedules and keeping factories running," Dammrich explains. "Fast forward to 2008 and 2009, [and] manufacturer production rates are down anywhere between 50 and 75 percent, which means the factories are not running and there is no smooth production.

"Factories are closing for extended periods of time and working shortened weeks and months," he continues. "This likely makes it easier to move the model year to later this year."

Also, Dammrich says, some manufacturers believe the business model has changed, and they are moving away from a strategy based on smooth production and storing unsold product at dealerships until the boat show season arrives to a more flexible model that produces on demand.

"I think each manufacturer needs to decide what is best for their business," Dammrich says. "The great thing about this industry is that there are many business models that can be successful."

Brunswick decision

"Given market conditions, dealer inventory levels and changing credit requirements, 2010 model-year products will be made available in September of 2009," stated Jay Povlin, senior vice president of sales for Brunswick's US Marine and Outboard Boats, in a letter to dealers explaining the decision to push back the rollout.

This Brunswick division includes Bayliner, Crestliner, Cypress Cay, Harris, Kayot, Lowe, Lund, Maxum, Triton and Trophy.

Rolling back the model year allows dealers to continue liquidating inventory in the heart of the selling season, helps retain the value of a dealer's current inventory, reduces the risk of retail lenders lowering available credit on existing inventory, and will not confuse the retail customer with a new model year during the selling season, Povlin says.

"We believe that continued focus on selling the existing inventory through the summer months is the wisest path for all of us," he wrote.

Everglades cited similar reasons when it announced in March it was pushing back the rollout of some 2010 models. However, the company says its newest models still will be introduced in June.

"We are analyzing every facet of our business, from manufacturing to engineering, looking for ways to help our dealer organization survive a challenging market and be prepared to prosper when the market begins to recover," says company president Stephen Dougherty.

Why some aren't

Other boatbuilders say they have no plans to push back the model year, citing inventory levels that are under control, as well as a desire to get new product into showrooms.

"Based on our current Nautique field inventory, which overall is in good shape, we plan to begin delivering 2010 boats in early July," says Correct Craft president/CEO Bill Yeargin. "Besides the impact on our field inventory, we also have new product that we are anxious to introduce."

Genmar chairman Irwin Jacobs, who has been a proponent of an industry-wide pushback of new model-year introductions, says he has no plans to make changes this year.

"The reason we have not done it is because ... there are dealers out there that are going to need to be supplied with new product [to] bring people into the showrooms," he says.

"Every one of our factories is running right now, and while nowhere near what we're normally used to running, we just can't go in and stop and start with model-year changes. It's got to be planned. Everything was planned four or five months ago."

However, he says, each of Genmar's 14 boat lines has its own launch date - there is no uniform time for all to launch.

"I'm supportive of the program as an industry-wide thing," he says. "I'd like to see something done that is done not for the reasons of this year alone, but done as an industry-wide thing and done in an orderly and organized fashion."

Dealer by dealer

Steven Tadd, director of marketing at Nautic Global Group, says rather than pick one specific date for launch, NGG this year is allowing dealers to place orders as needed.

"We are structuring our program [so] that a prolonged wholesale model-year rollout will occur, which will provide our dealers with timing options that work for them," he says. "There will not be a penalty if dealers are not ready to take delivery immediately following our dealer meeting, and we will work with them on an individual basis to identify the right timing for their dealerships, model by model, brand by brand."

Tadd says NGG will hold off on a retail rollout of new model-year boats until a majority of its dealers have taken the new product - presumably late in the year.

"Our programs in the past made it so that dealers who did not place an order right away upon introduction could not take advantage of the most generous dealer incentives," he says. "We are structuring something that is much more flexible this year."

This article originally appeared in the June 2009 issue.

Related