Boat Dealer, Buyer And Manufacturer DisputesBy Chuck Fort
Published: August/September 2012
When dealers and manufacturers disagree about whose responsibility it is to make a repair to a product, it's the consumer who feels the pinch. We're here to help.
In 2009, BoatUS member Gary Loretz bought a new Bennington pontoon boat equipped with a 40-hp Yamaha outboard engine in the Bay Area of California, and trailered it 90 miles to his home. From the first time he launched the boat, the engine had problems. It was often hard to start and when it finally did, it sputtered and ran unevenly.
Initially, Loretz blamed the problems on the Northern California late-winter weather. Within a couple of months, though, the problem became more pronounced and Loretz took the engine to a much closer Yamaha dealer where the technicians spent several hours replacing the carburetors and tuning up the engine. A short time later, the engine began suffering the same symptoms and the shop tried two more times, eventually giving up in frustration. They said they weren't getting the right technical support from Yamaha, or being fairly compensated for their effort.
Yamaha, on the other hand, had a different perspective. They'd paid out a significant amount of money to the dealer for three sets of repairs, and the dealer had failed to identify a faulty part. Frustrated, and with a new boat that was virtually unusable, Loretz called the BoatUS Consumer Protection Bureau. Before we get to the outcome of the Bureau's efforts, some background about customer service in the marine industry will be helpful.
Manufacturers And Dealers
In contrast to car dealerships, which are usually franchises, boat dealers tend to have a less predictable relationship with their manufacturers. In a franchise — for example, a Ford dealership — the dealer pays a large sum to the manufacturer, up-front, so he can sell their well-known products and in turn receive considerable help with training, advertising, and financing. There's a strong relationship, a substantial investment, and incentive for both parties to succeed. In addition, there are specific state and federal franchise laws designed to make the playing field fair between the manufacturer and dealer.
But a boat dealer is different. In most states, the contract with manufacturers is unregulated by law, and in some cases the contract is only a page or two long, or even a simple handshake, and may be set up to last for as little as a year; and there may be minimal investment on the part of the dealer. Without a strong dealer/manufacturer relationship, consumers can get caught in the middle if the two disagree or part ways.
When a dealer sells a new boat or engine, the manufacturer backs it up with a warranty. Manufacturers know that sometimes things go wrong with their products and typically allocate a percentage of profits to be used toward warranty work by the dealer. If a boat has a problem within the warranty period, the dealer repairs it and gets reimbursed for the work. The labor rate for warranty work is often 20-30 percent less and may vary based on sales levels and customer-satisfaction scores; this can disadvantage small dealers. Also, a busy dealer may prioritize full-paying customers ahead of warranty work because there's more profit. The Bureau has had complaints from dealers claiming slow payments after they repair problems that should have been caught at the factory; manufacturers have complained that dealers spend too many hours on warranty repairs and too much money on parts. Based on the number of these types of complaints received by the BoatUS Consumer Protection Bureau, it's easy to see how the consumer can get stuck in the middle of a problem.
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