My May blog, “It’s a dealer’s market now, especially with 2010 dealer agreements,” generated several responses, mostly from dealers but a few from boat reps. I think it is also a “dealer’s market” when it comes to placing orders for 2010 boats. But it is equally important that we make sure the whole process is a “two-way street.”
As one boat rep wrote in response to my article, “Certainly in today’s environment it is important for dealers and manufacturers to work as a team to promote the brand of boat represented. Manufacturers must participate in inventory management not only on a dealer-by-dealer basis but nationwide. It is harmful to the industry as a whole for one dealer to have all new product, while another dealer in another state is sitting on old inventory being sold at rock bottom prices.”
He went on to say, “Perhaps manufacturers need to cooperate with floor plan companies on moving old product (on a consignment basis) from a stagnant market to a dealer with low inventory that is located in a market with more demand. Chain stores for retail consumer goods do this all the time. If a dealer can sell some boats while preventing the manufacturer from a buy-back situation and prevent another dealer from drowning in old product, everyone will win.
”We have all worked hard for many years to build our businesses and reputations. Dealers selling the same brands need to cooperate along with the manufacturers to manage inventory according to demand. Supply and demand is very simple, folks!
Another boat rep wrote, “Manufacturers dictate terms, inventory, related programs, and kickbacks in the form of rebates for dealers who perform to the level they want. If you don’t play the game, you can’t be competitive; if you do play the game, you risk losing it all in a down economy because you’re stuffed full of non-current inventory and paying insane floor plan costs.
“Also, builders get desperate because one dealer has been stagnant for a little while and they jump ship on him or stack him with another dealer. These are examples of the ‘bad apples’ on both sides of the business, and they will be gone. I have also quit builders that treat my dealers like crap, and the dealer agrees he cannot take it anymore from the builder, and then over $200 per boat, that same dealer out of greed stays and takes the abuse. If the dealers would quit buying from the crooked builders out there, and the builders would quit selling to price-cutting, in-one-day and out-the-next-day dealers, we can purge this business and get it healthy again so that we can all make money. But now is the time to come together and have some type of fairness. Remember, check the builder out, know your rep, do your due diligence. Relationship, Relationship, Relationship!”
The bottom line is this: Manufacturers need to sell boats to stay in business. And they need to keep production as level as possible throughout the year. However, they should not try to accomplish this by going down the same old one-way street. They cannot and should not insist on dealers buying a quantity of boats that they do not need, especially in this economy, with so many dealers still sitting on a lot of non-current inventory. And most certainly builders should not–I repeat–should not try to muscle dealers by threatening cancellation if they don’t place big orders for 2010 product!
A two-way street
So the two-way street should first involve manufacturers working more closely with each of their dealers to help them move old inventory. They [manufacturers] should ask them to order only the quantity of new boats that their businesses can support in the current economy. And to the extent that they can, manufacturers need to help dealers with getting decent floor plan arrangements and perhaps even consigning some boats for a short period of time. Or perhaps set up some regional warehouses so dealers could draw from that inventory.
The dealers’ part of the two-way street should involve working closely with their major boatbuilders and trying to order as many new 2010 units as they can without stocking so much they harm their businesses.
In summary, one of the dealers who replied to my May blog made the point very well that I want to make in this article. He wrote, “I define winning this way: all parties involved must gain adequate value having their needs met or you really did not win…at least not long term. Suppliers must win, manufacturers must win, dealers must win, employees must win, customers must win and anyone involved with the process, yes…all must win.”
He added, “We all must be concerned that everyone in our chain of business is having their needs met. Dealers must be able to win if manufacturers have any hope of winning; hopefully the manufacturers that violate this concept will understand this going forward.”
As I pointed out in my May blog, I think we are currently in what I would call a “dealers market,” especially with regards to dealer agreements. This also applies to orders for 2010 product. It needs to be a two-way street, with both dealers and manufacturers winning by working together and understanding each others’ problems.