Mercury seeks sterndrive revival with plan to build engine blocks - Trade Only Today

Mercury seeks sterndrive revival with plan to build engine blocks

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Mercury Marine hopes to revitalize the sterndrive market with decisions the company has made about “taking control” by building its own sterndrive engine blocks instead of receiving them from the automotive industry as it is doing now.

“We have made the decision that we will shift away from an automotive supply for our gas sterndrive product. For one reason, there are lots of things going on in automotive today with [Corporate Average Fuel Economy] requirements that may make sense for automotive, but aren’t necessarily adding value for marine applications,” Mercury president Mark Schwabero told investors and analysts during a meeting this week at the New York Stock Exchange.

“We’ll have more control over that product,” Schawbero said. “There is no change in the fundamental and core aspects of Mercury. Sure, it’s a new product program, and with any new product program there’s always a bit of risk. But we believe in the fact that we’ve already done this with our sterndrive engine in 2012, and we think having control and having purpose-built product for marine makes sense. We believe we have an opportunity to revitalize the sterndrive market, and decisions we’ve made about taking control, I think will be helpful.”

Schwabero said an “aggressive competitive environment” in the outboard space was attributable to a “small but growing influence of low-cost, two-stroke outboards.”

“We are still seeing some influence from some entry-level 2-strokes, particularly from the Chinese, that are coming in at a lower level,” he said. “Our service and distribution bring notable advantages to us in that market.”

Schwabero noted that outboards make up 43 percent of Mercury Marine sales, sterndrives make up 14 percent, and parts and accessories account for another 43 percent.

— Reagan Haynes

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