Engine makers are offering some of the most aggressive, comprehensive retail promotions in recent memory to address three key factors hurting the marine industry: excess inventory, a tight credit market and consumers fearful of committing to big-ticket purchases.
“The retail environment is very tough right now,” says Dale Barnes, marketing division manager for Yamaha Marine Group. “The promotions were created to help our dealers give consumers the extra [justification] some of them may need to buy.”
The fact that the National Marine Manufacturers Association is relaxing its boat show policy and allowing exhibitors to include up to 50 percent of older model product in their displays is a clear sign there’s a lot of excess inventory on the market, says Michael Rickey, national sales manager for Honda Marine.
“With financial institutions tightening up credit or pulling out [of the marine space], a lot of dealer floor plan has retracted,” Rickey explains. Also, “The credit crunch is affecting consumers who can’t purchase product. And the overall job situation is shaky, so a lot of people are nervous about making big purchases.”
Suzuki Marine’s Larry Vandiver says boatbuilders, manufacturers and dealers are all playing it really close to the vest right now, because credit is so hard to come by.
“Until we can get things to relax a bit in terms of financing, things are going to be tight,” says the Suzuki marketing director.
Still a market
That’s not to say the market has dried up completely. “Despite the current economic conditions, there is still a segment of the population that will continue to go boating,” says Jim Morgenthaler, general manager of Tohatsu America Corp. “Preliminary reports from the early boat shows indicate that while the traffic is down, the people attending them are not just window shopping. They’re in the market and are looking for the best deal out there.”
That’s where the promotions come in. The engine makers are each taking a different approach — from extended warranties to cash rebates to low financing options. But regardless of the specifics, each program has the same goal.
“By offering a strong incentive at the shows, we can capture buyers in the ‘shopping mode’ and convince them to buy now,” says Chris Berg, director of marketing for BRP, the maker of Evinrude outboards. “This in turn will set the pace for our sales activity leading into spring/summer, as well as provide the added support to our dealers in moving inventory.”
The following is a snapshot of the retail programs outboard makers are offering to try and jump-start consumer demand.
As part of its Evinrude 100th anniversary sales event, BRP is offering a 5-year warranty (3-year BRP factory warranty, plus an additional 2-year BRP extended service coverage) and low-interest financing for consumers who buy any Evinrude E-TEC outboard between Jan. 1 and April 15. The special financing applies to E-TECs packaged with boats or loose engines purchased for repower.
In addition, consumers who buy an eligible loose engine to repower a boat during the program may select one of two additional options: an I-Command Digital package with a retail value of $1,186, or a down payment rebate up to $300.
“We’ve designed our retail promotions to reduce the cost of ownership,” says Berg.
“Consumers have always looked for added peace of mind in an outboard engine,” he continues. “They want to spend more time on the water and not worry about the maintenance of their engine. Our extended protection plans provide that peace of mind.”
Honda is offering repower financing rates as low as 4.99 percent throughout the spring boat show season.
The program, offered by Honda Financial Services, is available to boaters re-powering with new, unregistered Honda outboards (2-hp to 225-hp) between Jan. 6 and March 2. Buyers have the additional option of deferring payments for 90 days with zero interest for the first 60 days. Customers looking to finance complete boat, motor, and trailer packages (including accessories) can do so at rates starting at 6.99 percent.
Each purchase includes Honda’s standard True 5-year, factory-backed, non-declining limited warranty.
Rickey says the financing deals provide more “pull-through” compared to the typical rates of 8- to 9 percent offered by most banks.
“We understand dealers are sitting on product,” says Rickey. “This is a way to provide pull-through for dealers by offering financing.
“The idea is to get those Honda-powered boats out on the market and make it easier for people who want to buy them,” he adds.
Mercury Marine is again offering its 5 & Drive sales event.
“With the success of last year’s promotion, we elected to offer the same [program] for 2009, but have extended the length of the promotion,” says Randy Caruara, vice president of sales for Mercury.
Consumers who purchase any qualifying Mercury outboard through April 15 from a participating Mercury dealer will receive an extended limited factory-backed, nondeclining warranty for free. A buyer could save up to $2,420 on select models, according to the manufacturer.
The 5-year warranty promotion includes: all 25-hp to 300-hp 4-strokes, including Verado and Jet Outboards; all OptiMax engines, including Pro XS and Jet Outboards; and all OptiMax Jet Drive engines.
The extra warranty extends to four years for all 150-hp 2-stroke engines, and three years for all 50-hp to 90-hp 2-stroke engines, including Jet Outboards.
“We have a great deal of confidence in the durability of our OptiMax and Verado products, and feel that this promotion allows our dealers an opportunity to offer their customers an attractive incentive to purchase,” says Caruara. “At the same time, this offers the consumer peace of mind for five full years.”
Suzuki Marine has launched its Gimme 6! promotion to support dealer efforts during the boat-show selling season.
A consumer buying a new Suzuki 4-stroke from 40-hp to 300-hp, between Jan. 1 and March 31 will get Suzuki’s standard 3-year limited warranty, plus three years of Suzuki Extended Protection at no extra charge, or they can choose a cash rebate of up to $500. The extended warranty offer applies to repower and new boat purchases (for non-commercial use only).
“At Suzuki we’ve always focused on retail sales, and Gimme 6! is a proven tool to get a person to buy now,” says Vandiver. “It’s a limited time offer, but one with long-term benefits. It gives our customers confidence, provides extra value, plus it represents a sizeable savings. The 3-Year Suzuki Extended Protection Plan on a 300-horse outboard is worth over $1,500.”
Tohatsu America Corp. is offering a 5-year factory-backed warranty on its 25-hp to 115-hp models. The company also announced a new 2-year warranty on its Hi-Lex HC49 series control cables that are distributed exclusively through Tohatsu America Corp.
“These incentives were established to increase sales, keep up with the current competitive trends, and to offer an incentive to consumers as well as a way to support our dealer network,” says Morgenthaler.
He is convinced the downturn is cyclical and the market will improve in the near future.
“The question is not if the market will turn around, but when,” he says. “Unfortunately, nobody can accurately predict when it will happen. The positives are the incentive and warranty programs … and an overall focus on providing good customer service, which ultimately benefits the manufacturers, dealers and consumers.
“From a consumer standpoint, this is a great time to get into a new boat, because there are some great deals available and extra incentives such as extended warranties being offered,” Morgenthaler adds.
Yamaha Marine Group is launching two retail promotions.
The first, Repower Now, offers two consumer options. The first is a credit that can be used toward Yamaha rigging components and/or dealer installation services available at the authorized dealership that sold the engine.
The second option is Zero Zero financing. On approved credit, customers will be eligible for no finance charges and no payments until Jan. 1, 2010, when purchasing select outboards sold for repower by authorized dealers.
The second retail promotion, Two Ways to Save, offers either a 36-month Yamaha Extended Service contract or a consumer credit toward the purchase of goods and/or services at the dealership that sold the engine.
Both promotions run Jan. 1 to March 31.
“These promotions are the most comprehensive we have ever offered, and they provide more options for the consumer than ever before,” says Barnes.
He says both promotions apply to a longer list of eligible outboard models — from 2.5 hp to 350 hp. He says Repower Now is unique because it offers no interest and no payments for 12 months.
“Yamaha has never before offered a program like it,” he says.
“We want to help the dealer retail as many outboards and boats as possible,” Barnes says. “This is part of a comprehensive program we began back in December when we announced the Yamaha interest deferral program intended to help dealers with cash flow. Between interest deferral and retail support, we hope to help our partners through these difficult times.”
This article originally appeared in the March 2009 issue.