New Price Point or Game Over

[gride300]

anyone w/ an econ major figure out what the adjust price should be for inflation and product devolopment. i'd like to see the real value of a new 210.

[GoBig]

Using $36,700 in 1999, adjusted for inflation only, the 2008 price of that same 210 is $46,795. Here is a quick calculator:
http://data.bls.gov/cgi-bin/cpicalc.pl

[Red57Bird]

Price adjustments and calculations can be a bit tricky, because inflation/CPI is derived from multiple consumable segments (i.e. a basket of goods that could include food staples, energy, housing, transportation, metals, other raw materials, etc.) and the average is calculated. Looking back at commodities that have dramatically increased in price over the last several years, energy, metals, and resins rose much higher that the CPI/inflation. Unfortunately those items are used heavily in the manufacture of our beloved Nautiques.

Assuming boat prices should only increase at the rate of the CPI/inflation is like saying oil and other commodities should only increase at that level. Also, comparing them to cars is not an "apples to apples" comparison because of the vast differences in manufacturing numbers. Autos are made by the millions each year, while inboard boats are made in the thousands.

[TravisFling]

True that. Given a set of raw input prices proprietary to our industry might be a better standard to judge by. You can create a basket of goods out of anything, I suppose, eh?

[Red57Bird]

Your right Travis. As an example, a hobby I really enjoy (in addition to being out on the water) is shooting pistol, rifle and shotgun. When I first started shooting in 2002 I could buy a 25 lbs. bag of lead shot for around $9 - I reload my own shells because it is cheaper and it is fun. Last year I cut way back on my shooting because that same bag of lead shot was priced at $48 a bag, a fivefold increase. Same thing with rifle and pistol rounds.

A better indicator is to analyze a "shopping bundle" that contains goods that are used to build our boats, like fiberglass, resin, vinyl fabrics, plastics, stainless steel, wiring, carpeting, etc. Speaking of wiring, copper prices went out of site to the point that builders in our area were having problems with thieves stripping out the wiring in houses under construction. My BIL is a builder and he had 4 houses under construction that were completely stripped of all wiring.

Don't get me wrong, I think that most of the manufacturer's took advantage of the popularity of the wake board boat, along with attractive financing, and pushed prices up. But guess what, I don't have a problem with that because this is called pure market economics. As long as the demand exceeds the supply, prices will increase to an equilibrium where the the two intersect on the supply and demand graph (i.e. prices and supply). Although I don't use this stuff much anymore I have an Economics and Bus. Mgt. degree. Brings back such wonderful memories :shock:

[EarlyRiser]

GoBig, in followup to the original 210: make it a "workhorse" type boat with 3 stripe options, silver cloud hull and deck, FCT1 and an (almost) all in one gauge - Zero Off or PPass. THAT's it! Let the customer or dealer add any options. These buyers will eventually trade up as the economy improves. Thoughts? ER

[EarlyRiser]

Bet they would sell more of these than Byerly boats. ER

[GoBig]

Completely agree with ER regarding the 210. Keep it simple, let the buyers select the features as add-ons. I don't think anyone is debating why CC or the other manufactures jacked up their prices 97% over the past 10 years. Like Red Bird said, simple market economics. Sure, material costs have increased. Sure, resin costs have outpaced inflation --- no doubt about that. BUT, for several years, there was more demand than supply, simple as that. Prices rose. The original point I was making is, "okay, now what?" Those market economics don't apply any longer. Bringing back the original 210 hull with a simplified basic feature set for $39K would a) be really cool!, b) would sell, c) would not cannibalize sales from the higher-end +$70K models, and d) higher volume of lower cost model would utilize excess production capacity from the current slowdown.

When they offer the 2010 210 Super Air Legend model at $39,999, I want to be the first one on the order list (not to be confused with Byerly Legend). They could even market the 2010 model as a tribute to the 210. I'm a genius.

[CradGen2]

Not that I'm an economic major, but Redbird does make several valid points. The company I work for is in the electrical manufacturing business, so we saw the price of copper, steel, resin go through the roof over the last 2 years. Redbird is taking a step back in the process, but look further back in CC build, ie their suppliers are also faced with supply and demand issues.

That said and I haven't been to a cc dealer to compare 2008 prices with 2009 ones. I'd expect cc to at any case hold the 2008 prices in 2009 with what I would expect is a large rebate for the boat shows. I'm not sure when the NY boat show is, but I think it kicks off the show season, which would unveil the 2009 rebate and Nautique ski/wakeboard maybe (not sure how I can but and own 2 nautique 07 216 and 08 210 and not have received a ski hahah). With the price of commodities coming down and supply and demand showing exess supply along with suppliers closing their doors I theroy the price of boat should be less (wishful thinking right) hence the really high rebates.

I like the pre-2007 210 idea, but the issue is going to be build cost being it is not a "Liner" boat. Floor up boats are A. more time consuming to build B. more expensive and C. more then likely cost cc some capital $$ adding a line in the new factory. Currently the 196, 206 and DD 216 are non liner boats and I can see the 216 saying good bye at the end of 2009 (JMO). They more then likely wanted it to say good bye when the 211 came out, but the 211 did not meet the expectations. Again that said, MC, BU and Supra (MBA) make a price point boat using existing molds. CC should do the same things if for any reason is to maintain/gain market share. Has with EVERY manufacture in 2009 the theme is going to be gain market share being the markets and going to shrink rather then grow.

[Red57Bird]

Good points GoBig. I think the only people that might complain about offering something on the really low-end like what you are suggesting, are the guys like you and me that have 03 210s. I paid in the mid-to-high 30's for mine, and if CC came out with an intro boat based on the old 210 hull for high 30's, that would immediately kill our resale values. Sure those boats won't include the ballast and other options that ours do, but they will have a brand-new boat for not much more than a 6 year old boat, plus the warranty.

It's kind of a ****ed if ya do, ****ed if ya don't scenario. My guess is that the CC factory is set up to handle a specific output, and that isn't something that can be cranked up overnight. Because the volumes are relatively low from a manufacturing perspective, you have to have a higher profit/margin in order to support the business. You would have to really increase your volumes to make up for the decrease profits of a low-end boat.

Maybe CC is looking at offering a lower-cost entry model in the future as part of their overall strategy. Then again, maybe that low-end business is not where they want to be. As someone else mentioned, CC has the reputation as a high-end high-quality producer and maybe the risk-reward part isn't adding up for them. This may be a good question for Jeff to pass along to Bill Yeargin.

[wakeboard1]

It is not CC, but Malibu has already been hit hard by the current economy. I heard their largest dealer in California just went under and they have a ton of new 2008 boats to sell. I just read where a guy picked up a brand new 2008 VLX for 40 k. That has to make the people who bought them for high 50's throw up a bit.

[Chexi]

I could walk in today and buy (on credit) a new top of the line CC or Mastercraft. I could even afford to do so. Instead, I bought a 99 Air with an excellent hull and engine but that needed new vinyl. I will put in a completely new interior, upgrade the sound system, and possibly add an automatic ballast. All in, it will be right at $20k if I put the ballast in. You will be seeing a lot more people like me. Those of us who can afford a new top of the line boat (but are not super wealthy) will largely opt not to pay such an exorbitant price for a luxury item. We will simply buy a nice used luxury item, or a not so nice one and make it nice. This will really hurt the manufacturers. It reminds me a little of what happened to the yacht industry when they slapped the huge luxury tax on... it almost killed the industry. While not exactly the same, the new consumer sentiment of worry will not bode well for manufacturers of luxury items. It does not take a huge percentage of people who buy a new top of the line wakeboat every year to stop doing so and somehow get by with their 1 or 2-year old boat to really kill a manufacturer, unless that manufacturer can quickly scale back its operations, let a lot of people go, get out of leases... etc..

[EarlyRiser]

Red, for this boat, I do not see a 5-year warranty. Also, I misspoke regarding the "3 stripe" gel. ONLY 1 of the existing 3 , the middle stripe, would have color. Silver Cloud hull & deck helps keep the cost down. AND for the factory to pull this off, whatever they decide goes; no further factory options. ER

[Nautiquehunter]

I went to the Chicago boat show yesterday .
They had the new Axis on display this boat is
exactly what you are talking about 22 foot long,
fork noise ,snap in carpet for 39k. I must say it is
pretty nice for the price. But when you look at the Malibu
there is no comparison I'm sure they will sell
some to first boat buyers, once you have the
real deal I cant see going back . I think it will
make resale go up for a used top line boat rather than
spend almost as much on a generic model.

[Mr.O]

how bout a good ole fashioned bailout.