Alarm grows as used US boats flood in

16 May 2012

Distressed sales, naive buyers, worried local dealers - this market is not shipshape, writes David Lockwood, as published on www.smh.com.au

Ships come and go but those arriving on our shores are unloading more pre-loved American-made boats than we've seen before. Capitalizing on the favorable exchange rate and apparent arbitrage - that is, the price difference for the ''same'' boat in different markets - would-be skippers are lining up for what, at face value, appear to be real bargains. But talk with local industry players and they paint a different picture.

Marine consultant Ken Evans, who worked for Mercury for more than 30 years, says while parallel importing was about in the 1980s, it was a drop in the ocean compared with what's going on today.

"One reason is that some of the boats are bloody cheap,'' he says. ''They've been bought at no-reserve auctions and are distressed sales."

Evans wants buyers to beware. "If people bring in boats with engines in or on them [inboard or outboard power] they are on their own as there is no factory-backed warranty. Only established dealers complying with the manufacturer's sales structure get factory backing.''

Evans says it's the responsibility of the boat dealer or importer to supply parts and warranty for seven years. So boat import agents could be legally bound to back their customers' buys.

The Outboard Engine Distributors Association is reeling over the number of engines (and parts) being imported outside the manufacturers' authorised dealer networks.

"What's happening is that people are finding great deals, usually via the Internet, on engines which are being brought in from overseas," said OEDA executive officer Lindsay Grenfell.

"But deals that look too good to be true usually are. We don't want people taking their family to sea with engines which could have come from anywhere and which haven't been properly checked. There could be any number of serious issues."

Authorised local dealers conduct pre-delivery programs, using specialised diagnostic equipment, to ensure all engines are properly prepared and work as they should. And they also ensure engines are fitted correctly.

But it's not just marine engines that are driving the trade deficit in this area. Parallel or grey imports are considered the biggest threat to the industry.

A ship recently docked in Newcastle carrying 62 boats - but just one was a new model heading to an established Sydney dealership - and we hear of 80 second-hand American boats being unloaded in Melbourne. Doubtless, more are on the way.

If you must apportion blame then point the finger at the economic downturn in America. At the recent Sanctuary Cove International Boat Show, guest speaker Thom Dammrich, president of the National Marine Manufacturers Association, said new-boat sales in America were down 80 per cent to 135,000 units last year, compared with 523,000 in 1998. In the first quarter of this year they fell a further 20 per cent. So desperate dealers are looking overseas to offload stock and banks are highly motivated.

Then again, one man's loss is another man's gain. With the American boat market in tatters and the Aussie dollar soaring, it's been the perfect mix for importers. Enter Steve Lazarides from his eponymous boat-importation company based in Sydney. He says "business is booming." Of the above-mentioned shipment of 62 boats to Newcastle, 48 were pre-loved American craft destined for his customers.

"I'm a delivery boy … I deliver dreams," Lazarides says. "Compared with the same local boat of the same year model in the same condition, there are minimum savings of 30 per cent.'' There are a lot of boats coming into the country and there does not seem to be an end to it. But it's not Lazarides's fault - ''It's the end user that is deciding the market," he told Tidelines.

Lazarides says the boats he sells are generally out of warranty and buyers do not really care about that anyway.

"There are people out there trying to scare buyers who don't know any better,'' he says. ''Dealers are scared because they have to pay rents. And Riviera must be kicking themselves to see their [exported] boats coming back home. At the end of the day, it drives second-hand prices down.

''But when all this settles down you will have a lot of boats in the country. All the boats that are selling are 2000- models and up. For those with pre-2000 boats, god help them.

''At least it will allow a lot of people with $100,000 to buy a 35-footer in future. But the dollar won't stay up there forever."

Stephen Milne, director of brand and communications at Riviera, was optimistic.

"It was inevitable, considering the dollar structure, but providing people buy a Riviera we're happy. Second-hand sales are a strong part of the industry and we're happy to support our owners at the end of the day. Besides, it's only a certain kind of person chasing these deals. There are always the bargain hunters."

But an apparent bargain is not always the bargain you think. "Some of the boats coming back from America haven't been looked after and there's the possibility of horrendous storm damage," Milne says. "We had a 58-footer in Texas that was lifted over a two-storey building and thrown on its side. It was repaired and then put back on the market. You just don't always know what you are buying."

Mike Joyce, a boat dealer from Riviera's R Marine offices at Rushcutters Bay, says the recent imports don't concern him because he couldn't supply the boats - 56- and 60-footers - in the first place.

"They just weren't available second-hand here,'' he says. "Besides, I've imported a specialised boat from America before, a Cigarette for my own uses, and I struggle to understand how anyone could make money out of it. You need to find the boat, inspect it, get a surveyor, have it packed on a ship, organise to have unpacked here, then prepare the boat, swap the electrical systems, radios, lights, and so on … "

Meanwhile, on line boat sales sites such as Boatpoint and the classifieds in marine magazines are getting more ads for second-hand American craft. Restraint-of-trade laws prevent publishers from rejecting ads, much to the chagrin of local dealers, but the market for big boats, say above 20 metres, has always been international. It's just that it's come back to the 30- to 40-footers.

"You're buying a boat off someone on the other side of the world, that you don't know, who you will never see again, and are relying on the report of a surveyor you also don't know,'' says Tony Poole from Bluewater Power Yachts, the importer of the American-made Luhrs offshore fishing craft in the 30-40 foot league.

''Then there are all the issues with compliance, quarantine and quality. The boats have aluminium and not stainless steel rails, old firefighting equipment, TVs that don't work. They might be hurricane damaged.

"You also have to convert the boats from 120 volts to 240 volts with a transformer, maybe add an inverter, but then appliances blow up, and it's just an electrical nightmare."

At the end of the day, caveat emptor - buyer beware. What you're buying from your local dealer is peace of mind. If something doesn't work, call for help. Dealers keen on keeping your custom will dispatch free advice or send someone out to help. And off you go.

david.lockwood@bigpond.com

St Kilda Boat Sales advice to 'prospective buyers' on the dangers of importing your own boat from the USA.

Buy from an Accredited Dealer who is a member of the Boating Industry Association. Accredited Dealers demonstrate to customers that we operate at the highest standards and that our business is both ethical and professional – in short, that we are a leader in our industry. An Accredited Dealer is one which has demonstrated that the dealership is following a set of audited guidelines, aiming to provide higher standards of excellence within our industry.
We proudly display the Accredited Dealer logo to demonstrate to the purchasing public, that you can buy with confidence from this dealership.
Specifically, Accredited Boat Dealers follow an agreed Code of Conduct, operate Trust Accounts and who's business practices are Audited to confirm compliance. All of these requirements are created to provide consumer protection, thus increasing buyer confidence.
All Victorian Accredited Dealers must issue the buyer with a Statutory Declaration confirming, the purchased vessel and/or Trailer is being sold with Clear-Title and that NO Finance is owing. This protects the consumer from potential Police investigations etc, because the Statutory Declaration confirms that no-one has any interest whatsoever, in the vessel and/or Trailer. Sadly, the Vehicle Securities Register (VSR) does not operate nationally for vessels in Australia. Because the Hull Identification Number (HIN) is not a mandatory recording requirement at the time of registration, in some states of Australia. Just go to Vic Roads and see for yourself!
Vendor Statements are available from all Victorian Accredited Dealers, confirming the Vessel and/or Trailers service history, accidents, modifications, insurance, registration and usage.
Be aware that some of the boats 'For Sale in the USA' - maybe stolen and consequently, they may also have been 're-birthed.'
The buyers inability to understand and validate, the full service history and usage of vessel and/or Trailer. Many US Dealers and Brokers, are all selling the same vessel, so you can't talk to the actual vendor.
If a mechanical inspection is offered by the US Broker, then what guarantees do you have as to the inspectors qualifications, impartiality and relations with the selling dealer! A Conflict of Interest and Commission payments are both worrying factors, there's no-way to truly validate the information you are given.
Trailers that aren't built to the Australian Standards in the first instance, may not able to be registered by the relevant state authorities, because they are Not Compliant. Therefore, they may not pass the formal inspection required for registration.
Consequently, it's best to stick with proven, quality and reliable products. Consequently, we recommended buying a recognised Australian branded Trailer. Look at the leading manufacturers such as; MacKay, Dunbier or EasyTow to name a few!
Buying a vessel that is built to Australian Compliance and Standards means it is factory fitted with the 240v electrical system, at the time of build. If it's not, it's important to have your vessels Electrical System fully re-wired to suit 240v, tested and issued with an Electrical Compliance Certificate. USA built boats are wired to their standard 110v. So it's not just the Power Point Socket that needs changing. You must also change all of the Wiring, Electrical Looms, Refrigeration, Air-Conditioning, Chargers, Shore Power all Other Electrical Equipment connected.
Any conversion from 240v to 110v through the use of a transformer, inverter or adapter - simply won't work, in the long-term. They have proven in the past to be both unreliable and dangerous. The risk of Fire and/or Electrical Shock is real. Your safety and that of your crew and guests is YOUR responsibility! Remember, Electricity and Water Do Not Mix!
Insurance companies will Not Cover any Vessel and/or Trailer that is Not Australian Compliant. The Electrical Compliance Certificate and Registration papers may need to be lodged.
Check the width of the Trailer to ensure your local state Registration Compliance. Being over-width will Not Pass inspection. Also typically, the tow-hitch and coupling height on the Trailer more than likely, will need to be lowered to meet Australian Compliance. A structural engineer usually can assist.
Vessel and Engine Manufacturers Warranties Do Not Apply outside the country of the purchase. Therefore, any US installed Engine and/or Hull purchased outside the authorised Dealer channel here in Australia, is Not Covered by either Vessel and Engine Warranty.
Read information published by the Outboard Engine Distributors Association (OEDA) and The Australian Marine Engine Council Inc (AMEC) on this matter. Member companies include: Mercury, Honda, Yamaha, Suzuki, Evinrude/BRP and Mariner have all individually stated that: 'Buyer Beware' and to 'Exercise Extreme Caution' if you're thinking of importing your own boat, because of the lack of Warranty, Non Australian Compliance and a buyers inability to understand the usage and service history.
Australian Consumer and Trade Practices regulations and laws, Do Not Apply to the Selling Dealers, Brokers and Mechanical Inspectors in the USA. You have No Legal comeback, should you run into problems.

THE BOTTOM LINE.....IS IT ALL WORTH IT?

Simply, just negotiate harder with your local Accredited Dealer and buy an Australian Delivered and Compliant Boat......After-all, the actual savings may not be as big as you think and local support, assistance and an on-going relationship will work in the long run!

Besides, buying from an Accredited Dealer means your supporting the Australian industry which employs local people, 000's of people in fact. Accredited Dealers and Authorised Service Centre's offer Apprenticeship's and Training for young men and women.

It also means that the sales and repair revenues, stays here in Australia! Now that's good for us all and our economy.......

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St Kilda Boat Sales - Alarm grows as used US boats flood in