Mercury Marine plans to introduce a new sterndrive engine next year as the company moves away from sterndrive engine blocks made by General Motors and strives to shift demand back to the segment.
“We’re coming out with a new sterndrive with lots of features no consumer’s ever seen before on a sterndrive,” Brunswick Corp. CEO Dusty McCoy told investors and analysts during a conference call on Thursday to discuss third-quarter earnings. “We think that’s important, as we move away from GM blocks and we own this whole franchise, that we bring something new to the market that the public’s never seen, and we’re confident that we’ll begin to stop the erosion in the sterndrive market.”
At least two boatbuilders have indicated that GM will stop producing the sterndrive blocks used by MerCruiser and Volvo Penta, although engine companies and GM have declined to specifically comment.
Despite the consumer shift away from the segment and the engine company’s focus on sterndrives, McCoy said Mercury and MerCruiser are well positioned for growth because the switch from sterndrive to outboard engines has largely occurred in freshwater markets where Mercury has a higher market share.
It is unlikely that Brunswick’s boat group will “actually achieve positive earnings” in 2013, McCoy said. Additionally, the sterndrive and inboard products are losing a little market share, he said.
“This is according to plan,” McCoy said. “This is why we’re taking down the pipeline. If we look at it in the following way, there’s a lot of small product where we’ve just taken models out because we don’t make that good of money on those and we’ve got a lot of great brands moving into those categories. We’ve made the decision not to put those [23-foot and under] models into the marketplace.”
The boat group has also taken some of the 40-foot range models from the lineup. “We carefully chose those models [that] didn’t have the margins on the models we kept have.
“I would say sitting here today that our modern lineup is not as fresh as we would like and we've acknowledged that, but we're also making enormous investment in boats in that 40- to 65-foot range,” McCoy said.
McCoy also indicated that the Bayliner brand also will continue to expand its value offerings similar to the Element. “The Element is an outboard product versus sterndrive and yes, we think there is room in the market for well-priced product, and we think the Bayliner brand is a good place to bring that in.”
— Reagan Haynes