Boat Pricing: A Tough Question

Steve Potts is quick to admit that he’s a car nut. Of course, the Scout Boats CEO can also talk about boats all day, every day, but he freely acknowledges that he spends a good chunk of his personal time on CarGurus. It’s one of the most-visited automotive shopping sites, and he’s often clicking around to see what’s available.

“You can go nationwide and pick a car,” Potts says. “The dealerships, their margins are getting so slim because people buy cars from any dealer in the country. You can get a car shipped for $500 or $600. That has really changed the dynamic of how people shop for automobiles.”

That kind of shopping experience sets a baseline expectation in a lot of consumers’ minds, similar to the way Amazon set expectations for customers to use one-click buying and have all kinds of products delivered to their homes. And that upgraded level of customer expectation, in turn, translates into how people want to shop for pretty much everything, including boats. However, not all industries are ready to interact with consumers in this lightning-fast, friction-free way. The marine industry isn’t positioned to offer the same kind of consumer experience when it comes to buying boats. According to numerous industry experts, it’s not even close.

“The boating industry has always lagged behind the automotive industry in terms of trends, including going digital,” Potts says. “I think the boating industry needs to catch up in the way the boats are marketed.”

Many industry experts share that opinion and then some, based on a well-attended panel discussion, “The Future of Boating Retail,” at the recent Dealer Week conference organized by the Marine Retailers Association of the Americas. Stephen Heese, president of Chris-Craft, interviewed Eddie Russell of Viage Group, Jerry Brouwer of Action Water Sports, Kim Sweers of FB Marine Group and Darren Plymale of Galati Yachts. Topics ranged from transparency in pricing to whether boat shows are still a good value proposition for dealers, given the way an increasing number of people are choosing to shop.

The panelists openly discussed how boats are marketed and sold — often by using longstanding techniques that clash with the kind of transparency and ease that shoppers are seeking. Brouwer pulled no punches when he repeated, then built on, something that a speaker at Dealer Week had said. “Marcus Sheridan says ‘call for price’ is giving the middle finger to our customer,” Brouwer said. “It’s harsh, but I totally agree that’s what it is. And I think MSRP is second to that.”

Harder Than It Seems

The challenge these panelists described involves a combination of factors that most consumers may not realize even exists behind the scenes. As an increasing number of shoppers wonder why there’s not more transparency in boat pricing, manufacturers and dealers know the reasons all too well.

First, there’s the manufacturer’s suggested retail price. That can be significantly different from the dealer’s net price, a spread that the panel discussed as being 35% to 45% wide. Built into that spread is room for the dealer to work with trade-ins, whose valuations also present challenges. That’s because there’s no single, go-to resource for marine like the Kelley Blue Book, which automobile owners and used-car dealers alike can consult to determine the value of vehicles.

With boats, a person trying to do a trade-in usually can see only the retail prices that dealers are listing similar boats for online. And again, that price and the actual cash value of the used boat can be quite different. Then the banks get involved if the consumer needs a loan. The people writing the loan documents have their own charts, tables and thoughts about the value of each boat, too.

All of this leads to frustrated customers, who end up confused and suspicious about boat pricing — at the same time they can comparison-shop for a car, select the one they want and have it delivered from a site like CarMax through a simple series of clicks. The fact that buying a boat is so much more complicated can leave them exasperated and turning away from the sport altogether.

The industry is well aware of this problem, says MRAA president Matt Gruhn. However, he adds, achieving that kind of simpler, easier customer experience for boat shoppers is going to take a lot of work.

“I know that both dealers and manufacturers realize we need to make the evolution toward transparency in boat pricing,” Gruhn says. “We also know that there’s a complicated infrastructure that exists in our industry today that makes it more complex than just snapping our fingers and moving to transparent pricing. There are challenges related to the strategies that different manufacturers use with their MSRPs. There are challenges related to the actual cash value of trade-in boats. There’s a lack of understanding related to wholesale pricing on preowned products. There are limitations with loans for consumers buying preowned products. It’s a complicated web that we need to address as an industry, to understand how we can meet our customers where they are and provide the transparency that they’re demanding from us.”

At the same time, he says, ignoring the problem won’t make it vanish. Other industries are going to keep improving the ways they interact with customers, and those customers will continue to expect similar treatment from the boating industry. “We all know that ‘call for price’ does not work any longer,” Gruhn says. “Today’s consumer is demanding it. There’s transparent pricing everywhere today, except for the boating industry. We need to figure out how we evolve there.”

Potts says the marine industry, quite simply, has challenges that the auto industry didn’t have to overcome with this kind of evolution in the customer experience. For instance, far fewer boats than cars are sold each year. And a much bigger percentage of the boats are customized. Volume and product complexity complicate everything.

“I have a good friend with a car dealership, and he competes with CarMax. They sell 400 or 500 automobiles a month, and it’s all used,” Potts says. “His number-one source is Facebook. It’s reaching out to a customer who wants something. But that customer knows which brand and model they want, and it’s for a place that they can ship it to. I don’t think that works with boats.”

On top of that, Potts says, customers have learned to expect that cars come as baseline models, sometimes without a lot of options. With boats, the trendline is going the other way. “Boats are more semicustom,” he says, “even if they’re small, entry-level-size boats. We build everything from a 17-foot to a 67-foot. It shocks me, the amount of customization and options to choose from, and the amount of things that people will request in a 17- or 18-foot boat, whereas an entry-level automobile is a more vanilla type of offering.”

Frustrated Customers

Viage Group’s Russell, at Dealer Week, also said boats are far more variable as products than cars, presenting a bigger challenge for the industry in terms of achieving pricing transparency. Still, he added, it’s important for the marine industry to take on that challenge. “Transparency today is so important,” he said. “And now we’re going to have computers and bots tell us what transparency should be.”

As an example, he cited consumers being able to shop for RVs by using artificial intelligence to determine what time of year was best to get a good deal on a Class A motorhome. “That’s just out there in the world,” Russell said. “Definitely, it’s an opportunity.”

Plymale, of Galati Yacht Sales, added that affordability issues are simply part of the world today, leading consumers to take a more aggressive approach toward insisting on transparency in pricing. When people feel as if prices for everything are up, they’re more inclined to try and make sure they’re getting the best possible deal.

“We’re still dealing with a sticker-shock syndrome, where people come up and they’re looking at a boat that was a third of the price less, and they thought they could still get it at that price, and it’s out of their budget,” he said. The result is an unhappy shopper who may decide that he can’t afford a boat, or that trying to buy one isn’t worth the aggravation.

Trying Multiple Routes

Some boatbuilders and dealers are taking steps to meet consumers where they are. The Dealer Week panel mentioned Tracker Boats several times. The Springfield, Mo.-based builder offers no-haggle pricing. Consumers can “buy it now,” just like they would buy most anything online. However, what’s possible for Tracker isn’t necessarily possible for a lot of other brands. Tracker builds small aluminum fishing boats, with numerous models less than 20 feet, creating a simpler buy-it-now option than larger boats with more options in other segments.

The Scout 670 LXS is the largest outboard boat in the world. And Potts says his team is making a dedicated effort to come out with more affordable models, to give today’s consumers what they want in other ways while cultivating a customer base for the future. “We have the 188 that’s going to be sub-$50,000, but it’s more modern-looking,” he says. “I think that as consumers are exposed to this digital world, things change. People expect feature-rich boats, even if they’re small.”

Sweers, at Dealer Week, said FB Marine is testing a strategy of marketing boats with a “starting at” price. Brouwer said his team at Action Water Sports is also doing what they can, but they run into frustrations when the customer likes a dealer and a specific boat better — yet the dealer is still $10,000 off on price from another boat the customer has seen elsewhere. “Typically it’s an unscrupulous dealer with a practice that’s going to lead them out of business at some point,” he said. 

Plymale said that from his perspective at Galati, he would like to see more industry resources involving trade-ins. With the automotive and housing industries, he said, a lot of information can be culled and organized with the help of AI, giving everyone involved more data to work with in trying to resolve these issues. 

“We should have the same foresight in marine to allow that information on trades that are being sold on the open market,” Plymale says. “I think there’s something there in the future. Obviously, someone needs to spearhead it to get us there.”

MRAA Task Force

At the MRAA, there’s now a task force attempting to do precisely that in terms of leadership. In December, the Dealership of the Future Task Force launched, with 20 industry experts thinking about ways to move forward on pricing transparency and more. Ultimately, Gruhn says, meeting the expectations that today’s consumers already have is going to require changes in the way manufacturers and dealers do business. The question is how these changes are going to happen, not whether they need to happen.

“At the end of the day, boating is about the customer experience,” Gruhn says. “That means the sales experience and the ownership experience. It’s about what happens leading up to the purchase, too. And if they don’t feel like they can trust us — because you get an MSRP, a boat-show price, an open-house price, a nationally advertised price, and a negotiated price based on your trade-in — that is not transparent, and it has the potential of compromising the trust that we need to build in our customers.”

That kind of trust with consumers is also something that dealers want to keep over time, he adds. Which, yet again, adds another wrinkle to how industry leaders are thinking about these issues overall. “We might not be able to get to a point-and-click and you’ve bought the boat and it shows up in your driveway, and I don’t know that we want to get there,” Gruhn says. “We want to have a relationship with the customer.”