I bought a new 228 Seafarer 2 years ago.Boat show special price was around $87,000 I went to the boat show yesterday and the asking price for this boat was $92,000. :jaw Price are getting out of hand. What do you think is the profit off of new boats are at these day?
Profits on new Gradys
- Thread starter Grady 228
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I don't know if it is profit as much as it could be inflation. The simple fact of the matter the Federal Reserve is deflating the dollar everytime they print more for all the out of control spending by the Fed govt. I tend to belive you are seeing the chickens of Obama's fiscal policies coming home......to roost and not necessarily greed on Grady or the dealer's side.
I got a price increase of 17% on our cocoa used in our chocolate business. I can assure you any prices I may raise are just to keep up with my costs and will not be extra profit.
I got a price increase of 17% on our cocoa used in our chocolate business. I can assure you any prices I may raise are just to keep up with my costs and will not be extra profit.
Net or gross?
This is a guess based on my experience in construction and machinery manufacturing. I hope others that have direct experience in the business will chime in. Please keep in mind the definition of gross profit varies.
On a gross basis I would not be surprised if GW is pulling in 50%. On a net basis, GW, I would hope are getting 2-3% after taxes.
Remember that out of gross has to come all of their non manufacturing expenses. I.e., customer service the non-manufacturing elements of the facility, indirect labor, taxes, and more taxes, insurance, workers comp, lawyer’s fees, accounting fees, air & water permit fees, government compliance and did I mention taxes.
On the dealer side you need at least a 15% gross profit to run a business like a dealer, that would leave them with a net of probably 2 or 3% after taxes. The boats probably start with a GM on them at the dealer of at 20 or 22% leaving room for discounts.
Don't blame GW or the dealer for the prices, blame ourselves. We as a nation have created the China monster and now the monster is consuming us. To make my point, steel on a project that I have has had TWO increases in price since the beginning of the year totaling out at around a 20% increase. Why, CHINA is buying everything in sight to manufacture and supply the crap that they send back to us. Go try and buy copper, a 3” Victaulic 90 degree elbow costs $150 each, we now have to pipe new buildings with black iron because we can’t afford copper and if there is no alternative, guess what , you pay!!!!! Scrap copper in Boston is going for over $4/lb. Why CHINA.
I am not saying that if we stop buying from China prices would go down but I am sure as hell saying is that if we did stop and started supported our own manufacturing there would be a lot more wealth in the USA and that goes from the factory owner all the way down the line to the factory worker and the people that service the business. By way of example an unskilled factory worker will make 20 % more than a Wal-Mart or McDonald’s worker. Skilled workers will make much much more. But if we have no factories for the workers what’s the option ----Wal-Mart becomes a good job. Sad.
Sorry for the soap box speech, but people need to realize that their proclivity towards cheep imported junk has an indirect price tag that we are now realizing in the loss in wealth in our country.
Buy American.
This is a guess based on my experience in construction and machinery manufacturing. I hope others that have direct experience in the business will chime in. Please keep in mind the definition of gross profit varies.
On a gross basis I would not be surprised if GW is pulling in 50%. On a net basis, GW, I would hope are getting 2-3% after taxes.
Remember that out of gross has to come all of their non manufacturing expenses. I.e., customer service the non-manufacturing elements of the facility, indirect labor, taxes, and more taxes, insurance, workers comp, lawyer’s fees, accounting fees, air & water permit fees, government compliance and did I mention taxes.
On the dealer side you need at least a 15% gross profit to run a business like a dealer, that would leave them with a net of probably 2 or 3% after taxes. The boats probably start with a GM on them at the dealer of at 20 or 22% leaving room for discounts.
Don't blame GW or the dealer for the prices, blame ourselves. We as a nation have created the China monster and now the monster is consuming us. To make my point, steel on a project that I have has had TWO increases in price since the beginning of the year totaling out at around a 20% increase. Why, CHINA is buying everything in sight to manufacture and supply the crap that they send back to us. Go try and buy copper, a 3” Victaulic 90 degree elbow costs $150 each, we now have to pipe new buildings with black iron because we can’t afford copper and if there is no alternative, guess what , you pay!!!!! Scrap copper in Boston is going for over $4/lb. Why CHINA.
I am not saying that if we stop buying from China prices would go down but I am sure as hell saying is that if we did stop and started supported our own manufacturing there would be a lot more wealth in the USA and that goes from the factory owner all the way down the line to the factory worker and the people that service the business. By way of example an unskilled factory worker will make 20 % more than a Wal-Mart or McDonald’s worker. Skilled workers will make much much more. But if we have no factories for the workers what’s the option ----Wal-Mart becomes a good job. Sad.
Sorry for the soap box speech, but people need to realize that their proclivity towards cheep imported junk has an indirect price tag that we are now realizing in the loss in wealth in our country.
Buy American.
We need not blame China. We need to blame the Federal Government and Unions. American companies like Mattel Toys for instance use to make stuff in North America, but they don't any more. Why?
Our corporate taxing policies are insane. We tax corporations higher than any other nation from actual income to the equipment used in manufacturing to the profits and capital gains. America is safe environment for business yet our govt is hostile to it.
Unions and the extemely high pension costs also harmed businesses ability to compete in the global market place. I m not talking about the working man, but the leadership of the unions. These two forces killed our steal industry, bankrupted GM, our white goods industry and on and on.
It is interesting to observe all the union controlled states unemployment rates are higher than right to work states. Grady, Yammaha, Toyota, BMW, Mercedes, VW, Subaru, and many many more manufacturers are located where here in the US....the south and southwest. Why? No union head aches. Taxes are lower in southern states too. American workers can build great products and these companies build them and we own a few of these.
So while we import stuff from China, our American companies have little reason to come home. Until we address our fiscal problems and create a positve business climate this is not going to change.
Our corporate taxing policies are insane. We tax corporations higher than any other nation from actual income to the equipment used in manufacturing to the profits and capital gains. America is safe environment for business yet our govt is hostile to it.
Unions and the extemely high pension costs also harmed businesses ability to compete in the global market place. I m not talking about the working man, but the leadership of the unions. These two forces killed our steal industry, bankrupted GM, our white goods industry and on and on.
It is interesting to observe all the union controlled states unemployment rates are higher than right to work states. Grady, Yammaha, Toyota, BMW, Mercedes, VW, Subaru, and many many more manufacturers are located where here in the US....the south and southwest. Why? No union head aches. Taxes are lower in southern states too. American workers can build great products and these companies build them and we own a few of these.
So while we import stuff from China, our American companies have little reason to come home. Until we address our fiscal problems and create a positve business climate this is not going to change.
Hi Tashmoo: Your comment We as a nation have created the China monster and now the monster is consuming us.
Don’t blame us.
I don’t recall ever being asked to vote for moving our manufacturing plants to other countries. It started a long time ago and has never stopped. It started in the Reagan years with the idea of NAFTA, finally ratified in 1992, and soon spread away from North America to China and other countries during the next 20+ years; Bush, Clinton, Bush and Obama.
America now has the most unequal distribution of income in the developing world. Real wages for middle class workers are lower today than they were in 1973. To try to keep up with living standards Americans turn to cheaper products and these products are being made by the companies that we have promoted overseas.
My 2 cents
Don’t blame us.
I don’t recall ever being asked to vote for moving our manufacturing plants to other countries. It started a long time ago and has never stopped. It started in the Reagan years with the idea of NAFTA, finally ratified in 1992, and soon spread away from North America to China and other countries during the next 20+ years; Bush, Clinton, Bush and Obama.
America now has the most unequal distribution of income in the developing world. Real wages for middle class workers are lower today than they were in 1973. To try to keep up with living standards Americans turn to cheaper products and these products are being made by the companies that we have promoted overseas.
My 2 cents
Price of resins used in hull is directly related to price of oil.. Prices will probably continue higher.
To all,
Great points from everyone; free trade zones open the door for manufactures to more production off shore to avoid high taxes and union pressures, the value of the dollar diminishes and our earnings and savings are worth less. Clearly the problem is multifaceted. One common thread that I see is that until we as a nation stop crapping on manufacturing our quality of life and wealth will continue to diminish.
Great points from everyone; free trade zones open the door for manufactures to more production off shore to avoid high taxes and union pressures, the value of the dollar diminishes and our earnings and savings are worth less. Clearly the problem is multifaceted. One common thread that I see is that until we as a nation stop crapping on manufacturing our quality of life and wealth will continue to diminish.
Price are getting out of hand.
I take it you didn't buy. Since 5.5% in two years appears to be too much, what would be a 'fair' price? :uhm
I take it you didn't buy. Since 5.5% in two years appears to be too much, what would be a 'fair' price? :uhm
If it has one of the new V Max Sho Yamahas on it, the retail is about 4000 higher than the previous models.
I believe the dealers have a 30-40% markup built into their retail prices. Anyone think otherwise?
Dealer cost is 40% off MSRP (a 66.666% markup). There are additional discounts for early seasons orders which peak at somewhere around 7% of the invoice. IIRC the motors are not included in the additional discounts.
So for a 100K MSRP, invoice would be 60K. Another 7% off invoice (minus the motors) for early order. Freight and rigging is also added to the invoice price. Of course floor plan financing, overhead, salaries, etc. must be paid out of the profit. Since volumes are no where near the auto industry, such a price structure is necessary to sustain a dealer. Also bear in mind boats rarely sell for MSRP.
So for a 100K MSRP, invoice would be 60K. Another 7% off invoice (minus the motors) for early order. Freight and rigging is also added to the invoice price. Of course floor plan financing, overhead, salaries, etc. must be paid out of the profit. Since volumes are no where near the auto industry, such a price structure is necessary to sustain a dealer. Also bear in mind boats rarely sell for MSRP.
Guys:
Purchase prices are indeed out of sight. When gas reaches $5 p/g the squeeze will really be on! I expect the oil companies to exploit the mid-east turmoil to up gas prices as much as they can. The boating industry may be in for some hard times not unlike 35 years ago when the geniuses in Congress added the big luxury tax on boats and many good boat manufacturers went out of business.
Purchase prices are indeed out of sight. When gas reaches $5 p/g the squeeze will really be on! I expect the oil companies to exploit the mid-east turmoil to up gas prices as much as they can. The boating industry may be in for some hard times not unlike 35 years ago when the geniuses in Congress added the big luxury tax on boats and many good boat manufacturers went out of business.
It gives enough margin to sell a boat 20% off MSRP and still make a profit. Beware of dealer add ons as they can be high profit and poor values. One example is a CG compliance package. You can typically get all of this much cheaper at West Marine.
Also watch for inflated freight, rigging, etc charges. OTD price is what you really pay for a boat.
The biggest leverage for price negotiation in this market is the wealth of clean used boats. As for soaring prices, cost of materials have gone up significantly over the past few years. Boat builders hate to raise prices in a soft market but they must generate enough profit to pay the bills. It is a tough business to be in these days.
Also watch for inflated freight, rigging, etc charges. OTD price is what you really pay for a boat.
The biggest leverage for price negotiation in this market is the wealth of clean used boats. As for soaring prices, cost of materials have gone up significantly over the past few years. Boat builders hate to raise prices in a soft market but they must generate enough profit to pay the bills. It is a tough business to be in these days.
Megabytes markup information is incorrect. The markup is not as high as he states. Not trying to start an arguement but it's important that information should be correct before taken as factual.
Aside from my memory about how the engines are handled, the facts are indeed correct. The additional invoice discount may not apply to options (only boat and motors). I can't recall some of the details.
Unless there has been a recent change, dealer invoice is 60% of MSRP.
Unless there has been a recent change, dealer invoice is 60% of MSRP.
Fishtales
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Hi,
I think Mega is closer than people think. I'm not sure it is as high as 40%, but certainly north of 30% and I understand that as an incentive for the dealers to get their orders in for the next model year (they must commit to take the boats they order) there is an additional discount off invoice (so 7% off invoice is 3-4% off List) to help GW plan their production runs and optimize the factory. My guess is that the number is close to 36% all-in (a WAG).
Additional add ons and profit opportunities can be:
Dealer Prep, Bottom Paint, Freight, Electronics and Installation, CG packages and other things.
So, as stated look at the total out the door price to see what your true discount really is.
In the best days, Grady's best dealers didn't sell near 200 boats a year I was told - the dealer laughed when I tossed out the 200 number. I never got a hard number but suspect most are in the 75 range. If we assume $150K average boat price and an average discount of 18%, we're looking at 18 points of dealer margin, $27K per boat, $2M profit from boat sales. Sounds like a lot, but you have to pay to run the operation from this. Other revenue opportunities are add on margins from above, service, storage, fuel, dockage etc.
I think Mega is closer than people think. I'm not sure it is as high as 40%, but certainly north of 30% and I understand that as an incentive for the dealers to get their orders in for the next model year (they must commit to take the boats they order) there is an additional discount off invoice (so 7% off invoice is 3-4% off List) to help GW plan their production runs and optimize the factory. My guess is that the number is close to 36% all-in (a WAG).
Additional add ons and profit opportunities can be:
Dealer Prep, Bottom Paint, Freight, Electronics and Installation, CG packages and other things.
So, as stated look at the total out the door price to see what your true discount really is.
In the best days, Grady's best dealers didn't sell near 200 boats a year I was told - the dealer laughed when I tossed out the 200 number. I never got a hard number but suspect most are in the 75 range. If we assume $150K average boat price and an average discount of 18%, we're looking at 18 points of dealer margin, $27K per boat, $2M profit from boat sales. Sounds like a lot, but you have to pay to run the operation from this. Other revenue opportunities are add on margins from above, service, storage, fuel, dockage etc.
Danny,
I haven't seen any volume numbers but here are some points to consider.
o at normal production in average years GW builds 1000 - 1200 boats. Peak probably around 1500
o 150K average is probably high as many sales are the 19-22 models
o the 7% early order discount has to be offset by cash flow and floor plan interest
o service brings in revenue but has it's own set of expenses
o the high profit items are the add-ons you mentioned just like pricey cables at Best Buy
If dealers had volumes like the auto industry the margins would be more similar. As it is, the margins are really needed to give the illusion of discount and to also sustain the dealership (MSRP for boats is as much nonsense as it is for autos).
So take a boat with 100K MSRP
dealer pays 60K (ignoring discount)
buyer pays 80K (20% off)
Out of that 20K must come interest, fixed cost contribution, commission/salary, and variable costs related to sale. Add several hundred to a grand for profit on dealer prep and such.
Selling an optimistic 100 boats a year results in 2m gross sales revenue. That is not a lot for running a coastal business with large space requirements and coastal insurance rates. It isn't hard to understand the profit in dealer prep and parts. I would guess this is a tough business in all but boom years and scary in recent years.
I haven't seen any volume numbers but here are some points to consider.
o at normal production in average years GW builds 1000 - 1200 boats. Peak probably around 1500
o 150K average is probably high as many sales are the 19-22 models
o the 7% early order discount has to be offset by cash flow and floor plan interest
o service brings in revenue but has it's own set of expenses
o the high profit items are the add-ons you mentioned just like pricey cables at Best Buy
If dealers had volumes like the auto industry the margins would be more similar. As it is, the margins are really needed to give the illusion of discount and to also sustain the dealership (MSRP for boats is as much nonsense as it is for autos).
So take a boat with 100K MSRP
dealer pays 60K (ignoring discount)
buyer pays 80K (20% off)
Out of that 20K must come interest, fixed cost contribution, commission/salary, and variable costs related to sale. Add several hundred to a grand for profit on dealer prep and such.
Selling an optimistic 100 boats a year results in 2m gross sales revenue. That is not a lot for running a coastal business with large space requirements and coastal insurance rates. It isn't hard to understand the profit in dealer prep and parts. I would guess this is a tough business in all but boom years and scary in recent years.
Fishtales
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I recall being told the yearly production being in the 2K range. Not sure how many dealers they have at this time.
I agree the margins appear high to people, but the first 15% is pretty easy to clip off in all but banner years. It is a very expensive business. Think of the insurance and waterfront maintenance in additon to all the prime land consumed. It must be pretty brutal these days.
I agree the margins appear high to people, but the first 15% is pretty easy to clip off in all but banner years. It is a very expensive business. Think of the insurance and waterfront maintenance in additon to all the prime land consumed. It must be pretty brutal these days.
I have been told by an insider that Grady sold 1800-1900 boats a year in normal times. The numbers for 2009 were around 450 and 2010 was about the same. I'm sure everyone involved in the process has felt a lot of pain. I am pretty sure that Whaler's cost was 67% of MSRP back in 2002. Not sure about that now, but I assume Grady's cost structure is similar. What the dealer makes is really none of our business unless we own part of his business. The only thing we should care about is what we end up paying. It's not fair to try to dictate any business owner's profit margin. That dealer is taking the risk, providing jobs, and hopefully will remain in business to help us after the sale. Just shop around and do what's best for you. Don't try to manage your dealer's business for him. Every dealer's costs of doing business is unique to their particular situation and unless you have some of your own money at risk in their operation, you have no right to tell them how to run their business. Just my opinion, but let's try to be fair to everyone.