How much is the markup on high performance boats?
I'm looking at starting a high performance boat dealership long term (Cigarette, etc.) Obviously, very few boats are sold in this market so what markup can i expect on these boats. If you have experience in this field, is there any money in this.
Thanks
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I spent a few years at a Fountain dealership, here are some observations. As the value of the boat increases, the margins drop. For instance, on a boat that retails for $50,000, you might have a markup of 25%. On a $500,000 boat, your margin can be as low as 6%. The costs on keeping an inventory of performance boats is much greater, most manufacturers do not offer terms, so your line of credit at the bank costs almost as much as any profit you may see. You can recover your costs in after sale service and accessories, fuel sales, berthing, etc. Most of the manufacturers will have a minimum purchase amount for there dealers, so you may have to carry $2-3 million in inventory. If you don't sell this inventory, there are no returns to the manufacturer, so you may end up having to sell the non-current boat at a loss just to make room for this years models. You had best have a large circle of friends and aquaintences who have an interest in performance boats, this is where your sales will come from.
We sell a river racer style boat and outboard package, a 21' boat with a Merc 250 XS. Our suggested retail is $46,000, the last one we sold for $38,000, which is about the break even point. Since the sale, we have sold the owner another $ 7500 in upgrades, and a couple of grand in fuel. The motor is coming in this winter for some tweeking and upgraded fuel delivery system, so i'll make a bit more in labor.
Good luck in your venture, but if you think you're going to get rich fast, think again. The only reason people stay in this business is because of a passion for boats, so if you don't love boats, you are better off trading sow belly futures.
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