Service? Anyone?

[NG572]

This weekend I was riding in friends brand new 2019 140K boat from a well known brand name in the industry. He had told me the steering was an issue so I asked if it was still causing him problems, he nodded yes in agreement. After my turn surfing behind this beast, he asked if I would drive, I happily accepted... eager to see what this thing felt like. To my shock, it took both arms to turn the wheel, imagine a car without power steering, that's how it felt. Or better yet, a tractor without power steering, about broke my wrists trying to turn back, at idle, to return to get the surfer. I told them this WAS NOT normal, something was really wrong with the steering, like I wouldn't use it wrong. It was horrible. They immediately reached out to the dealer who suggested this was normal for the steering to be more difficult, and that there probably wasn't anything wrong with it. Which brings me to the point of this little post...

THESE ARE 150 THOUSAND DOLLAR BOATS! To put that in prospective, you can get a nice Maserati for about 1/2 that amount. So why does the level of service on these boats represent something you would get buying a used 4 wheeler from Jim's outdoor sports store? I am not picking on any particular dealership here, in fact I have had good service from our current dealer. But in general, it is my opinion that the service centers have not kept up with the price and complexity of these new floating money guzzlers.

Here is an idea... How about when a customer calls- the dealer says - no problem Mr./Mrs. customer, we will send out a representative right away to see what concerns you have, and if possible... fix it on the spot or tow it back into our customer service care center for additional work that needs to be preformed onsite. We apologize for the inconvenience and look forward to having you as a customer for the life of this boat and beyond. Why is it always incumbent upon me the customer, to haul the boat sometimes hours away, to have the dealership look at it, take it to another lake to water test it, then bring it back to the dealership, call me, have me come get it, just to haul it another 2 hours back to my place.

There is a fantastic business opportunity for someone here to figure out how to contract with the dealership to provide on-site service to these very expensive machines. You could get certified as a mechanic to work on the motor or just be a general fix it guy for ballast and electrical problems. Think about this - I own a Chevy truck, when I had a flat tire a flatbed truck came in 2 hours, loaded up my truck, fixed the tire, and 4 hours later I was back on the road. That was for a 40K truck!

I look forward to someone developing this business model and selling it to the dealerships, if they provided this level of service, it would be very hard for me to consider switching to another brand down the road! IE... they would sell more boats!

NG572

[Bamer]

I agree. I’ve consider this as a potential market out there. In general dealerships have sales guys and service guys. Once you take delivery, sales guy is out of the equation and the service guys are normally just drowning in work. Seems like every dealer could have 1 middleman that closes the gap. This guy could join you for a day at the lake for a couple trips to get you up to speed on how to use the boat, what’s normal etc.....


I had this same issue with my 2019R23. The steering wasn’t that bad, but it sucked to drive surfing and at certain speed and turning radius without ballast. I changed my prop from the 537 to a 2773 and all my steering issues went away. It must have been some strange interaction between the prop pushing water across the rudder.


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[SONIC]

I'd be curious to know the markup on these 100+K boats.
That's pretty much the sole factor in whether a dealer can afford that kind of service.

On a Maserati the markup is quite large, which allows the dealerships to build those ridiculous showrooms with a coffee lounge and a hot tub for prospective buyers. It also allows them to drop the coin on service when needed.
Now a ford dealer is sure as hell not going to drive out to your house to look at your car. (unless you paid for that extra).

I can definitely see it being an option to have on call service for an extra 5K on the out the door price. That would give the dealer the ability to cover the problem boats while also making a profit on the boats that don't need service but people buy it for peace of mind. Like an on call service warranty.

My guess is the profit margins aren't as high for the dealers as you'd think. Most of the profit is probably going to the manufacturer.

[Bamer]

I'd be curious to know the markup on these 100+K boats.
That's pretty much the sole factor in whether a dealer can afford that kind of service.

On a Maserati the markup is quite large, which allows the dealerships to build those ridiculous showrooms with a coffee lounge and a hot tub for prospective buyers. It also allows them to drop the coin on service when needed.
Now a ford dealer is sure as hell not going to drive out to your house to look at your car. (unless you paid for that extra).

I can definitely see it being an option to have on call service for an extra 5K on the out the door price. That would give the dealer the ability to cover the problem boats while also making a profit on the boats that don't need service but people buy it for peace of mind. Like an on call service warranty.

My guess is the profit margins aren't as high for the dealers as you'd think. Most of the profit is probably going to the manufacturer.

From best I can guess is that any company that’s yields 10% profit and the end of the day is doing ok. The question is, how many people are taking 10% or look at it from a part perspective. How about the zero off cruise control. I believe the msrp is something like $800. I know for a fact the a commercial off the shelf garmin GPS puck that costs $118. This puck could easily perform same as the zero off GPS receiver puck. Add a couple 100 bucks for software for the cruise control capability and I’d bet zero off manufacturers cost is ~$350. All of these add-ons are great profit centers!


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[SONIC]

True,
But my question is how much of that 800 bucks goes to the dealer and how much of it is distributed to the various manufacturers involved and the factory for installing it.

[KoolAid]

From best I can guess is that any company that’s yields 10% profit and the end of the day is doing ok. The question is, how many people are taking 10% or look at it from a part perspective. How about the zero off cruise control. I believe the msrp is something like $800. I know for a fact the a commercial off the shelf garmin GPS puck that costs $118. This puck could easily perform same as the zero off GPS receiver puck. Add a couple 100 bucks for software for the cruise control capability and I’d bet zero off manufacturers cost is ~$350. All of these add-ons are great profit centers!


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Volume. Garmin sells more units in one week than Zero off sells all year. The entire marine industry sells about 260,000 boats per year, and this includes jet skis. So surf boats sell less than 15,000 units per year.

[KoolAid]

As for the main topic here. The dealership is the busiest during the season. You have boats they have sold under warranty that need repairs right now. Older boats they sold that need repairs right now, you have new boats sold by other dealerships that need repairs right now, and then you have old boats other people sold that need repairs right now. There are only so many marine techs. Even if you could hire them all during the busy season, what do you do when it slows down, lay them all off? Who would want to work for that company if they laid off most of the techs after the busy season. That is the struggle the dealerships faces. 12+ hour days 6 days a week for the entire season. Then in the off season, they repair and winterize the boats. Dealers would have more time if the customers brought their boats in for service during the winter instead of July 2nd expecting it to be first repaired. I get more calls the month of July than any other month. People like to wait until the last minute with their boats.

[D&P Powell]

People like to wait until the last minute with their boats.

And then drop the infamous "I paid 80-100k for this boat, I expect it to be serviced NOW"?

[Bamer]

Volume. Garmin sells more units in one week than Zero off sells all year. The entire marine industry sells about 260,000 boats per year, and this includes jet skis. So surf boats sell less than 15,000 units per year.

True that, but does zero off actual build the GPS receiver? I doubt it and if they do then same on them. I guarantee there is nothing special about the zero off GPS receiver. They should buy from Garmin, then mark it up 10% and wrap software needed to make cruise control happen. Hell, I don’t know why tige even uses Zero Off, I can get a software engineer intern to write the cruise control integration into the tige clear screen and buy that $118 garmin puck. Trust me, I’ve done this on systems I work on. Literally, had summer interns write the software I’m talking about here on real-time embedded processors.


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[Bamer]

As for the main topic here. The dealership is the busiest during the season. You have boats they have sold under warranty that need repairs right now. Older boats they sold that need repairs right now, you have new boats sold by other dealerships that need repairs right now, and then you have old boats other people sold that need repairs right now. There are only so many marine techs. Even if you could hire them all during the busy season, what do you do when it slows down, lay them all off? Who would want to work for that company if they laid off most of the techs after the busy season. That is the struggle the dealerships faces. 12+ hour days 6 days a week for the entire season. Then in the off season, they repair and winterize the boats. Dealers would have more time if the customers brought their boats in for service during the winter instead of July 2nd expecting it to be first repaired. I get more calls the month of July than any other month. People like to wait until the last minute with their boats.

Boat service is a very tuff job. I get it and try not to be that guy.


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[BCRider]

I may be totally wrong here as I've never bought a new boat but from my understanding anything that breaks under warranty is reimbursed by the manufacturer for parts and labor once the dealership forwards the receipts or opens a warranty disputre/RMA etc. The manufacturer isn't going to cover costs for the dealership to send a guy out and cover travel. To me it's like any manufacturer warranty on most products..... We will cover the part and labor (in this case) to change but you have to get it to us (shipping). It would be up the dealership to then have a service or maintenance contract that would cover the cost to send a guy out or pick it up from your house etc. That being said I know dealerships do pick up/drop off or come out to troubleshoot on people's docks/lifts but sometimes I think that is more to save a customer or just go above and beyond on a case by case basis like a guy that buys a new boat every year.

Either way I agree regardless of the cost of these new rigs they should be sent out with less issues than it appears. It's probably also a case of only hearing about the ones that have had issues.

[IDBoating]

Volume. Garmin sells more units in one week than Zero off sells all year. The entire marine industry sells about 260,000 boats per year, and this includes jet skis. So surf boats sell less than 15,000 units per year.

I've spoken about this before, but since this topic has been raised again....

KoolAid has it right: It's all about volume. Why can you buy a runabout for $50K when an inboard sells for 2-3X that? Volume. Production costs per unit go down as volume increases. True for every industry. They sell tens of thousands of new runabouts every year. KoolAid's 15K per year of wakeboats is likely a bit high, to be honest; during the last peak year prior to the last downturn the entire wakeboat industry shipped just over 10K new boats annually. And you, the customer, get to specify custom color combos in the gelcoat, your choice of upholstery color mixes, tower colors, trailer colors, engines sizes, your personal picks from a long list of possible factory options - you get the idea. The wakeboat industry, which includes what, maybe 8-10 manufacturers, probably doesn't do two identical boats in any given year.

Let's be honest here: These are actually SEMI-CUSTOM boats made almost on a one-off basis for each customer. There's very little economy of scale. The hull molds can be amortized but they can't crank out a couple hundred, or even a couple dozen, hulls at a time to streamline production because every hull has a different set of color choices, logo choices, decal choices, etc. No one here will be surprised that I've been in most of these manufacturer's factories and I can tell you I've never seen two identical boats on the line. Not once, not anywhere. These boats are ordered, built, and shipped one at a time.

Consider this: A close friend once mentioned to me that Ferrari limits their production to 10K units per year. Think about that... there is no single wakeboat manufacturer that makes as many boats in a year as Ferrari makes cars! Everyone agrees that Ferrari is an "exclusive" brand, right? What does that make a wakeboat? What does that make a Tige? I don't know Tige's exact production numbers but it's safe to say they make at least 75% fewer boats each year than Ferrari makes cars. And when you order/buy a Ferrari, you might get to choose the overall body color but you don't get to choose 3-4 separate hull color areas and patterns. The cars rolling down the production line at Ferrari look a lot more identical than the boats rolling down the line at a wakeboat factory. And I bet the price would skyrocket if you demanded to have the same ordering flexibility from Ferrari that we take for granted from every wakeboat manufacturer.

Another disadvantage of low volume production: Sometimes you don't see enough of certain things to find all of the bugs. Microsoft does incredibly extensive beta-test programs on every release of their products, yet it's a running joke that their stuff isn't stable until at least the first bug patch because you don't learn about things until enough people have hammered on it. When a wakeboat manufacturer builds (say) an average of 125 boats per month, there are going to be gremlins that don't show up until they're out on the water for days or weeks or months.

Bottom line: Wakeboats cost like houses because they're built like houses: Semi-custom (in some cases almost full custom) one-offs with all the little details that the buyer gets to specify. That lack of commonality costs a LOT of economy. There's a reason cookie-cutter houses stamped out by the hundreds in smashed-together neighborhoods cost a bit less - everything's mostly the same, the subcontractors can parallel lots of things, replicate the same jobs over and over, etc. Even Ferrari enjoys more of that benefit than does Tige, or anyone else in this industry.

Now, as to the GPS cruise control question. Yes, Garmin makes a couple of different pucks that cost well under $100 in volume. Yes, you can build a cruise control system based on those pucks. Yes, ZeroOff from Murphy costs quite a bit more than that, and most of it is in the software that runs ZeroOff - not in the hardware. Why does Murphy charge so much for ZeroOff? Because they can. But here's the scary little secret they hope nobody knows: They make a lot of noise about their ZeroOff patent portfolio but it has a gigantic hole in it that means anyone that wants to can design a competing GPS-based cruise control system and undercut their prices with zero patent infringement risk. ZeroOff might be technically 5% better than this alternative, but precious few people are willing to pay 100% more to get 5% better cruise behavior (and most people would never notice the difference at all). So why hasn't anyone jumped on this wonderful opportunity? (Believe me, we've been begged to do it many times!) Because the volume isn't there. We've looked at doing it (which is why we did a very deep analysis dive on their ZeroOff patent portfolio) and while we could implement it easily there's just not enough volume to interest us at the moment. They're already an established player so even if we managed to split the market with them we're looking at just a few thousand units per year best case. It makes more sense for us to focus on our proprietary technologies and products where we are the best (and in many cases the only) solution, which drives up our volumes and thus drives down our prices and makes us more affordable to be installed in more boats. That's the harsh reality: Just because something CAN be done doesn't mean it makes good business SENSE to do it.

To sum up all of this... you're buying complex semi-custom products. Such products do not have the margins, nor the volumes, to leave a bunch of money on the table for manufacturers and dealers to spend for on-call Boat Techs, free loaner boats while your boat is being serviced (yes, I've seen people expect this!), and all the other comforts that buyers of Ferraris, McLarens, etc. have come to expect. That is the reality. Yes, $100-250K is a freaking lot of cash but it costs that much more to build a semi-custom wakeboat as compared to a factory-standard I/O runabout that's built in the thousands every year. Ironically, the margins on those runabouts are higher than the margins on wakeboats.

Is there a market for a "concierge wakeboat" service? I doubt it. Maybe a specific dealer in an ultra-wealthy waterfront community (think: The Hamptons) could pull it off by upcharging for the boats at the sale and then charging an annual membership fee or something. But a wakeboat manufacturer that sells nationwide, or worldwide, to everything from The Hamptons to my humble little lake here in North Idaho will not be able to craft up a one-size-fits-all package like that. The prices they'd have to charge would drive all but the most wealthy buyers to their competitors and they'd quickly be out of business. A local dealer with predictably wealthy customers, maybe. But not on a national scale.

Sorry to rant a bit. But I've walked through these wakeboat factories, met with the fine people from the floor to the front offices who work HARD to make them available to the market every year, and I get a little irritated when folks throw rocks at them. It's frankly amazing what they do and how well they do it. Trust me, they KNOW their products are expensive. They work HARD to keep prices are as "low" as they are. And despite a few horror stories, I think they do an amazing job of building and supporting this very complex equipment.

Just my $0.02, and worth exactly what you paid for it! {grin}

[Bamer]

Service? Anyone?

I've spoken about this before, but since this topic has been raised again....

KoolAid has it right: It's all about volume. Why can you buy a runabout for $50K when an inboard sells for 2-3X that? Volume. Production costs per unit go down as volume increases. True for every industry. They sell tens of thousands of new runabouts every year. KoolAid's 15K per year of wakeboats is likely a bit high, to be honest; during the last peak year prior to the last downturn the entire wakeboat industry shipped just over 10K new boats annually. And you, the customer, get to specify custom color combos in the gelcoat, your choice of upholstery color mixes, tower colors, trailer colors, engines sizes, your personal picks from a long list of possible factory options - you get the idea. The wakeboat industry, which includes what, maybe 8-10 manufacturers, probably doesn't do two identical boats in any given year.

Let's be honest here: These are actually SEMI-CUSTOM boats made almost on a one-off basis for each customer. There's very little economy of scale. The hull molds can be amortized but they can't crank out a couple hundred, or even a couple dozen, hulls at a time to streamline production because every hull has a different set of color choices, logo choices, decal choices, etc. No one here will be surprised that I've been in most of these manufacturer's factories and I can tell you I've never seen two identical boats on the line. Not once, not anywhere. These boats are ordered, built, and shipped one at a time.

Consider this: A close friend once mentioned to me that Ferrari limits their production to 10K units per year. Think about that... there is no single wakeboat manufacturer that makes as many boats in a year as Ferrari makes cars! Everyone agrees that Ferrari is an "exclusive" brand, right? What does that make a wakeboat? What does that make a Tige? I don't know Tige's exact production numbers but it's safe to say they make at least 75% fewer boats each year than Ferrari makes cars. And when you order/buy a Ferrari, you might get to choose the overall body color but you don't get to choose 3-4 separate hull color areas and patterns. The cars rolling down the production line at Ferrari look a lot more identical than the boats rolling down the line at a wakeboat factory. And I bet the price would skyrocket if you demanded to have the same ordering flexibility from Ferrari that we take for granted from every wakeboat manufacturer.

Another disadvantage of low volume production: Sometimes you don't see enough of certain things to find all of the bugs. Microsoft does incredibly extensive beta-test programs on every release of their products, yet it's a running joke that their stuff isn't stable until at least the first bug patch because you don't learn about things until enough people have hammered on it. When a wakeboat manufacturer builds (say) an average of 125 boats per month, there are going to be gremlins that don't show up until they're out on the water for days or weeks or months.

Bottom line: Wakeboats cost like houses because they're built like houses: Semi-custom (in some cases almost full custom) one-offs with all the little details that the buyer gets to specify. That lack of commonality costs a LOT of economy. There's a reason cookie-cutter houses stamped out by the hundreds in smashed-together neighborhoods cost a bit less - everything's mostly the same, the subcontractors can parallel lots of things, replicate the same jobs over and over, etc. Even Ferrari enjoys more of that benefit than does Tige, or anyone else in this industry.

Now, as to the GPS cruise control question. Yes, Garmin makes a couple of different pucks that cost well under $100 in volume. Yes, you can build a cruise control system based on those pucks. Yes, ZeroOff from Murphy costs quite a bit more than that, and most of it is in the software that runs ZeroOff - not in the hardware. Why does Murphy charge so much for ZeroOff? Because they can. But here's the scary little secret they hope nobody knows: They make a lot of noise about their ZeroOff patent portfolio but it has a gigantic hole in it that means anyone that wants to can design a competing GPS-based cruise control system and undercut their prices with zero patent infringement risk. ZeroOff might be technically 5% better than this alternative, but precious few people are willing to pay 100% more to get 5% better cruise behavior (and most people would never notice the difference at all). So why hasn't anyone jumped on this wonderful opportunity? (Believe me, we've been begged to do it many times!) Because the volume isn't there. We've looked at doing it (which is why we did a very deep analysis dive on their ZeroOff patent portfolio) and while we could implement it easily there's just not enough volume to interest us at the moment. They're already an established player so even if we managed to split the market with them we're looking at just a few thousand units per year best case. It makes more sense for us to focus on our proprietary technologies and products where we are the best (and in many cases the only) solution, which drives up our volumes and thus drives down our prices and makes us more affordable to be installed in more boats. That's the harsh reality: Just because something CAN be done doesn't mean it makes good business SENSE to do it.

To sum up all of this... you're buying complex semi-custom products. Such products do not have the margins, nor the volumes, to leave a bunch of money on the table for manufacturers and dealers to spend for on-call Boat Techs, free loaner boats while your boat is being serviced (yes, I've seen people expect this!), and all the other comforts that buyers of Ferraris, McLarens, etc. have come to expect. That is the reality. Yes, $100-250K is a freaking lot of cash but it costs that much more to build a semi-custom wakeboat as compared to a factory-standard I/O runabout that's built in the thousands every year. Ironically, the margins on those runabouts are higher than the margins on wakeboats.

Is there a market for a "concierge wakeboat" service? I doubt it. Maybe a specific dealer in an ultra-wealthy waterfront community (think: The Hamptons) could pull it off by upcharging for the boats at the sale and then charging an annual membership fee or something. But a wakeboat manufacturer that sells nationwide, or worldwide, to everything from The Hamptons to my humble little lake here in North Idaho will not be able to craft up a one-size-fits-all package like that. The prices they'd have to charge would drive all but the most wealthy buyers to their competitors and they'd quickly be out of business. A local dealer with predictably wealthy customers, maybe. But not on a national scale.

Sorry to rant a bit. But I've walked through these wakeboat factories, met with the fine people from the floor to the front offices who work HARD to make them available to the market every year, and I get a little irritated when folks throw rocks at them. It's frankly amazing what they do and how well they do it. Trust me, they KNOW their products are expensive. They work HARD to keep prices are as "low" as they are. And despite a few horror stories, I think they do an amazing job of building and supporting this very complex equipment.

Just my $0.02, and worth exactly what you paid for it! {grin}

IDBoating, why not take gps cruise control to the runabout market?

Love your inputs and I see all your points. Well said[emoji1303]...

I understand market analysis and you have to put your design team making products that will have the biggest potential return on your investment. I’ve had subs no-bids projects for the same reasons. Not enough market for them and/or doesn’t fit their business model.


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[chpthril]

Ina perfect world, the level of CS should not be on a sliding scale based on the purchase price/value. Service should be service. Also, cost of labor and cost of parts (some but not all) should not be based on value of boat. Take a body shop. Say they charge $120 p/hr for body repair. SHould not matter if its a honda civic or a Lexus. Labor is the same rate. Quality of work? SHould be the same also.

Knowing that most manufacturers, same as car manufactures, pay a reduced labor rate to the dealer, I think it would be hard for them to pay a reasonable rate to a 3rd party service contractor. He would face the same challenges as the dealer, its a seasonal biz. The number of crew needed during the busy time, is 2x needed during the slow time. You could not afford to pay the crews to stay on during the slow time, so the compromise is to roll with less crew in the busy season to a point were some jobs take a bit of time to get to, but you are not overloaded with laborers come slow season.

Then what about the warranty training. Someone has to pay for that. If you as the show invest that into the tech, you want to keep them around. But if they leave, they take that info with them. Cant go all out MIB and do the flashy thingy on them and erase the info you paid for. Are you going to ask the tech to pay for the training? Ive been on both sides of this one, LOL!

[NG572]

Hmmm, understand your points on margin and volume. However, I still think it is very possible to have a runner type individual employed by a dealership to drive to customer location, pick up boat, then deliver boat when service has been completed. I know some dealerships do this today but none (that I know of) doing it as a selling point or as a regular service. This would save the boat owner a lot of time, and if you can afford one of these boats, time is probably more critical than the cost factor. Call it Dealership Prime (takeoff from Amazon Prime) and charge $100 per year for this service or include it for the first year for free. My mind works this way... Jeff Bezos is a billionaire because everyone else said "that is impossible" and he said "no its not"!