Boating Industry

July 2013

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/// Market Trends /// Cutting its own path Part of the Brunswick empire, Mercury Marine is a builder of outboard, inboard, jet and sterndrive engines. Its MerCruiser sterndrive products range from the 135-hp 3.0L up to the 8.2 MAG H.O. ECT, which puts out a stout 430 horsepower. With a wide range of marine engine offerings for the consumer segment, as well as Brunswick's portfolio of 31 boat brands, Mercury is more exposed to the North American sterndrive market than any other company. Facing the same imposed evolution as the automakers move away from traditional engine platforms, Mercury is poised to take a different approach than Volvo Penta. Martin Bass, Mercury's vice president of global category management, feels some of the latest automotive technology isn't a clear win for marine applications when all factors are taken into account. "So far we've taken a different direction [than Volvo Penta] and … we believe that the performance benefit that some of the automotive technology has inherently is offset by the added complexity and cost," he said. "There's no replacement for displacement, so we've focused on maintaining a product line that is purpose-built for marine." When asked for more details about future plans, Bass was understandably tight-lipped, but acknowledged that MerCruiser and Volvo Penta will be moving in different strategic directions going forward. He added that, while his company's strategy differs, there is major investment coming into the sterndrive market over the next five years. "It'll be an interesting time for the industry, because there will be some different paths and technology that the companies take, and we're very comfortable with the position we are going to take," Bass said. "Stand by — you're going to get a lot of good, juicy stuff." Future confidence Given the dismal recent performance of the sterndrive market, major research and development investment may come as a surprise to some. For the manufacturers, however, it's a solid sign that the industry expects the category to rebound from its lull, even if it that doesn't mean returning to the elevated pre-recession annual sales numbers. Both companies cited inherent benefits of the sterndrive powertrain, namely low-speed maneuverability and access to the transom, which 32 | Boating Industry | July 2013 P28x34-BI13JUL-MarketTrends.indd 32 Mercury Racing's 600 SCi meets European emissions standards and outperforms larger displacement units. will keep this mode of propulsion at the forefront of the marine industry. "I think the sterndrive, in particular the gasoline sterndrive product, offers a great mix of some of the elements of boat design," said Bass. "You could easily make the argument that for a majority of consumers, the mix of boat design, performance and cost is a good mix for the gasoline sterndrive product." While the sterndrive market has been the last major industry segment to recover, Bass said it's premature to say that trends seen since the dawn of the recession are permanent. He specifically emphasized the resiliency of the pontoon market that, he feels, is more a result of baby boomers retiring. "Will the sterndrive runabout segments come back, and when will they come back? These are questions that the whole industry is struggling with," Bass said. "Obviously Mercury is committed to those customers in a big way." At Volvo Penta, Kull feels its new, improved products will be the impetus to pull sterndrives out of the doldrums. "With all segments in the marine industry, new sells," said Volvo Penta's Kull. "So we are very keen on our new products that are coming out, [which] we think will grow the segment. In addition to that, we're also offering repair and maintenance agreements [and] extended warranties, all to reduce the total cost of ownership." Cobalt's Hunt echoed that sentiment, say- "There's no replacement for displacement, so we've focused on maintaining a product line that is purpose-built for marine." – Martin Bass, Mercury's vice president of global category management ing new technology always helps customers justify making a trade, as well as helping improve the performance and perceived quality of its products. "When there are significant technology improvements and the customer can feel it, see it and his family can feel it and see it, then it gives them a reason to buy, and that's what we're all striving for," he said. Investing during the downturn A confluence of events impacted the marine industry and sterndrives in particular, making it difficult to pinpoint the most important factor in the segment's rapidly declining sales figures. As customers demanded more features that they saw in consumer electronics, their homes and automobiles, boat builders had to respond to meet expectations. Concurrently, while the global economy entered a tailspin, the federal government began requiring catalytic converters to lower emissions. www.BoatingIndustry.com 6/5/13 10:11 AM

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