Boating Industry

October 2014

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Page 17 of 59 18 | Boating Industry | October 2014 A boat manufacturer recently shared his con- cern about the percep- tion of 20 Groups among some of his peers. Beyond you'll find my response, which will hopefully clear up some common mispercep- tions about 20 groups and illustrate the ben- efits to both manufacturers and their dealers. BY DAVID PARKER are good for dealers and manufacturers MISPERCEPTION — 20 Groups cause dealers to sell fewer units because dealers are encouraged to charge higher margins. Dealers should sell for less so they can sell more boats. REALITY — In the long run, 20 Groups actually help dealers grow sales volume, while increasing margins only 2 to 5 percent in most cases. After joining a 20 Group, sometimes a dealer will focus on a specific area of business, like accounting functions, service income or improving CSI, causing the attention to sales to temporarily slip a bit. This can be interpreted as sales volume declining due to unreasonably increased margins. Dealers eventually regain their momentum and significantly increase both sales and margins. A solid case study for review When our Cobalt 20 Group began in 1999, the average member was operating at a break-even gross margin, while average sales volume was $4.8 million. By 2001, the average new unit margin increased by 5.2 percent and sales volume increased to $6.2 million. This is a 29.2 percent increase in sales over two years, while increas- ing margins by more than five percent. Net profits grew during the same period by more than 55 percent! In 2013, this same group maintains similar gross margins and net profit percent- ages, but the average sales volume is tracking at $20 million. Eight of the 2013 Top 10 Cobalt dealers are in this 20 Group and six of these dealers are above the group average for new boat margins. Cobalt's No. 1 dealer for the years 2007 to 2011 are also members of this 20 Group. All are top gross margin performers. Dealers do not have to reduce margins in order to sell more boats. Higher sales volumes and higher margins are both achievable. Properly trained dealers re- alize there are many factors that effect higher margins and sales volume: pristine 20 GROUPS Why

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