Thursday, July 25, 2013
WE SEE A TREND
Brunswick the largest producer of US non custom production boats reported that it’s second quarter marine related results were mixed. The Mercury Marine Group saw net sales of $631 million up from 7% from the same period last year, and operating earnings of $119 million. In contrast their 15 boats brands (excluding Hatteras & Cabo yachts which are in the process of being sold off) generated $310 million ... a 1% increase over 2012 same period sales. The small increase reflects an increase in outboard boats while fiberglass inboard boats were on a steep decline.
There is a trend emerging over the last year or so that bigger boats are going outboard. Even Sea Ray has joined the parade on some of their bigger boats and some manufacturers are cowling the outboards so they look a lot like inboard boats. What’s going on? Why the move to big outboards?
There are a number of reasons:
- manufacturers are building cost efficiency into bigger 4 stroke engines all the time up into the 350 HP range
- these new outboard engines are ultra low emission and can achieve very good fuel efficiency
- the outboard engines can be built at a lower cost than comparable horsepower inboards and they attain a higher profit margin
- outboards are flexible and they can be coupled in single, duo, triple or quad configurations covering a large variety of boat types and sizes
- outboards don’t take up interior boat space and consumers want this
- outboards are easy to service and require less tearing the boat apart in the event of major engine work
- outboards are high performance and offer higher top speeds on comparable boat weights and they still deliver on range
- using less in boat space means some of that space on an outboard boat can be dedicated to extra tankage further enhancing range
- four stroke outboards run very quiet and some so much so, that the water pump jet of water is the loudest engine noise at idle on the boat
- outboards make for ease of docking
- there is better resale and generally speaking they are more sought after
So here are a lot of reasons why this is happening including three big ones – the manufacturers make more money and have more flexibility ... and the consumers want the product. Surprisingly manufacturers are putting quad 300 HP on boats approaching 50 feet and this is becoming common place. This is the segment of the market that is profitable and your going to see a lot more boats in the 25 - 40 foot range going outboard moving forward. Inboards aren’t going away any time soon but the outboard trend may be here to stay.