“The manufacturer’s giving $5,000 on this boat? Not happening, not anymore.”
Which leads us again to the tags on the boats you see. Most bear discounts that are a combination of dealer and manufacturer incentives. Some can be as juicy as $5,000 to $10,000 before negotiating.
“The manufacturer might be giving the dealer $1,000,” Jack suggests, “but he’s finding $4,000 to take off his list price, compressing his margin a little bit.”
I then receive an education in just how much that dealer can compress. It’s not as much as you might think. Jack says a typical manufacturer’s suggested retail price is about 35 to 38 percent higher than dealer cost. Good dealers fight to maintain a 20 percent gross margin. The eye-opener? That might be just a 3 to 4 percent net after overhead.
“There’s not a lot for them to play with. When you go in and try to negotiate with a dealer, he’s already taking a very thin margin.”
“It’s amazing how many of these deals are good only at the show!”
Jack next tackles perhaps the oldest cliché in the book — that a deal is only good for the duration of the show.
“That’s a gimme!” he exclaims. “Creating a sense of urgency is always present at the show.”
But is it real? Conventional wisdom says no. Dealers need to sell boats, and if you show up in their dealerships a week later ready to sign on the bottom line and fork over the cash, it would be a rare dealer who would turn you away.
Still, we learned from one industry insider last year that some manufacturers are cutting deals with dealers to move products at certain shows, and unless paperwork is signed by closing, all bets are off. Call it a manufacturer’s own way of creating a sense of urgency — in their dealers.
“You have to understand, these people spend a lot of money to go to the show, so they have a lot of incentive to sell. And the fact that you’re there, you probably will get your best deal. But you still have to negotiate. You have to get behind the desk and get your best deal.”
“The deal about pre-build order deals”
While he’s on a roll, Jack suggests asking a dealer how buying a boat out of stock — versus ordering one — would affect the price. “Dealers need to show turnover to keep the floor-plan companies happy,” he says. “Ask them the pricing advantages of taking one out of their stock versus having one built. You might be surprised at the difference.”
Should you insist on ordering, be aware that some manufacturers are requesting substantial down payments, up to 50 percent to start building and 100 percent on completion. Consider setting up an inexpensive, simple escrow with an attorney or trust company to protect your investment while the build is in progress.
“Negotiating things that don’t cost the dealer what you’re paying is always a good thing.”
Other ways to sweeten a deal? “Get creative,” Jack suggests. “The cost of owning a boat is not just what you’re paying up front, but its operational costs. I would raise the question ‘What is this boat going to cost me going forward, and can I negotiate that as a part of my deal?’”
Try to bargain for things that don’t cost the dealer additional cash to provide but would cost you at retail, like basic maintenance. The dealer already has overhead costs that include keeping some service staff, whether they are servicing boats or not. Offering you three years of basic service for oil and fluid changes is much easier than trying to absorb the cost of an expensive tower or hardtop.
Several manufacturers and dealers have already jumped on this bandwagon, including Tigé and MarineMax.
“Don’t be afraid to walk away.”
As we begin to make our way out of the show, Jack offers one last piece of advice. “Look around you,” he says, motioning to aisle after aisle of shoppers. “Most of these people are just window-shopping, but the few serious ones are agonizing over this decision right now. They get caught up in the moment, caught up in the idea they’ll lose out if they hesitate, and often make a deal they might regret.
“Unless it’s an absolute, obvious killer deal, don’t be afraid to walk away. In this economy, that boat and that deal will probably still be there tomorrow.”