What is a dealer's mark up on a new boat?

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What is a dealer\'s mark up on a new boat?

See this article:
http://www.metro.co.uk/weird/article.html?in_article_id=11064&in_page_id=2

Now, I realise it's only a newspaper report and so it may not be accurate in the details but can it really be true that a Fairline dealer buys in a Phantom 40 for £220k and sells it on to a customer for £330k? Even allowing for the addition of VAT to the selling price it seems like a huge mark-up to me and quite sufficient to pay a realistic price for a delivery trip.
What does the team think?
 
Re: What is a dealer\'s mark up on a new boat?

No harm in asking full RRP at 330k but I would have thought that mark up would end up a lot less after negotiation.
 
Re: What is a dealer\'s mark up on a new boat?

It's a business run on the same principle as any other. Buy as cheap as you can and sell as dear as "the market will bear" and keep your costs low. Doesn't matter whether you're selling matches on a street corner, nuclear power stations or motor boats.
 
Re: What is a dealer\'s mark up on a new boat?

Seems about right, thats why they don't bother with starter boats around 50-100K if they can make that on one big one.
 
Re: What is a dealer\'s mark up on a new boat?

I don't believe that the margin is anything like 30% for boats of that size as new boat discounts are in the range of 5 - 10%. If the margin was 30% you would see discounts upto 20 - 25%. My guess is the margin is more like 15%. As the saying goes nobody gets rich from making (or selling) boats
As for the value quoted for the P46, the newspapers might have got it wrong and there may have been a salvage value for the wrecked boat. Of course, the other issue is VAT. The selling price quoted probably includes 17.5% VAT whereas VAT would not be included in the purchase price. Deduct VAT from £320k and you've got about 18% gross margin
 
Re: What is a dealer\'s mark up on a new boat?

I also thought some dealerships were obliged to order a minimum number of boats to keep the dealership. So some sales you may a good margin on, others you struggle to get rid of. If so, might be fairer to look at the average, not the headline. But something seems pretty sick in some sectors. Fairline and Sealine making all sorts of managerial and dealership changes; lower down the scale, seem alot of new boats dealers are clearing out,-Crikey Princess almost begged me to take v42 off their hands at the boat show, advertising is now like a carpet sale some places.
I was about to have a survey done, but sale fell through beforehand. Surveyor said, keep negotiating; every time he visits the place, there are even more boats lining up for sale.
Something smells....
 
Re: What is a dealer\'s mark up on a new boat?

Indeed - its not all beer & skittles. Especially in the winter when you are paying your staff and overheads, and not selling a blimmin thing.

Mind you, our local Searay dealer sold 40 brand new boats in Feb alone - and thats before the season! Good thing is, they are really nice guys, and I am happy to put their name on here - Madoc Boat Sales.
 
Re: What is a dealer\'s mark up on a new boat?

I always thought they worked on a percentage over cost that is capped on the larger, more expensive craft? I suppose if they do buy in the stock and take the risk they are entitled to a bigger slice of the pie though (and they have to underwrite the warranty I think)

PS 1000 posts...... /forums/images/graemlins/laugh.gif

Paul
 
Re: What is a dealer\'s mark up on a new boat?

All sounds about right, ex factory will be ex Vat to the dealer but RRP will be vat included, take the vat out and you are left with 18% margin, allow 5% discount and the dealer is left with gross of 13%. Take out 8% for operating costs and the average net net is 5% on a £300K sale or £15K profit (assuming you don't take a trade in, in which case you can wait another few months to see your money out of the sale).

In reality you would be better off sticking your £220K in a good interest bearing scheme and be better off and no risk.

If I remember one of our biggest builders turned in 4% net profit after quite a good year which is paltry compared to other industries. As mentioned before nobody makes a fortune out of the boat business, most are in it for the love and passion of boats, there are much easier ways of making money.
 
Re: What is a dealer\'s mark up on a new boat?

So the dealer pays a couple of local lads £50 each for a jolly to the Channel Islands. They have an accident, and the dealer expects them to pay for the boat!?

Surely if the dealer should either have ensured the boat was adequately covered, or used a professional skipper, or both?

Crikey, I've helped people shift boats for a day out in the past, never realised I was financially responsible just by being there!

Something to think about next time someone wants a favour eh? /forums/images/graemlins/crazy.gif
 
Re: What is a dealer\'s mark up on a new boat?

Quite apart from the dealer mark up - which I believe is more than most are stating here, there was, it seems, a fair bit of bad navigation here. I, and others, remember the incident at the Bridge Buoy. It was clear vis and daylight.

What about the good lookout etc.

The whole story is odd, on what grounds did the insurance co decline to honour the policy?
 
Re: What is a dealer\'s mark up on a new boat?

Actually I think 4% net profit is par for the course in a mature manufacturing industry like boat building but, yes, you're right its a poor return for the risk involved and the capital tied up. In my industry (construction), the large contractors are making that sort of net profit albeit on a huge turnover. The equipment manufacturers do a bit better but its still not mega bucks
Your statement about sticking the £220k in the bank is not quite valid though as the dealer is unlikely to have financed the purchase himself and 4% is whats left after he's taken his salary and expenses
 
Re: What is a dealer\'s mark up on a new boat?

Since it was the manufacturer who lost the boat, cost to them would be the pre-VAT price. Just like we buy new cars from BMW pre VAT so if we loose a new car through damage or theft, the cost to us/BMW is ex-VAT.

The true sale price of the boat to you or I is therefor £320,000 less the VAT - so £272,340. This gives the dealer £49,235.42 as a profit margin. A discount of 10% on the purchase price (don't forget, a 10% true discount could be 5% of the invoice price and 'money back' for your trade in which the dealer will sell on for less than the stand in value) is £32,000 - which leaves the dealer £17,235.42. For stocking £220,000 boats, marketing, staffing boatshows this is not a big margin IMHO.
 
Re: What is a dealer\'s mark up on a new boat?

Agreed, used to be in construction and in a good year 5% net was good but considering the huge sums of money you were turning over and the risk on your land bank some of which would get planing and some would'nt or at least take a few years would give you many sleepless nights.

True most dealers are using either manufacturers stocking finance or their own but its still costing say on a 200K boat £1,100 a month and if you have to take stock early you could be sitting on a boat for months plus insurance, storage and everything else all coming out of your bottom line. I know some dealers have moved stock out at a loss just to stop the finance cost racking up.

I did'nt mean stick £220k in a bank more like short term business finance secured against property or such which on average can return up to 12% (if you want to know how to, PM me!)

I have seen a lot of dealers books over the years before I started my own company with the thought of investing and can honestly say unless you are passionate about being in the business don't bother just buy a boat and enjoy it.
 
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