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.
Making Contracts Fair
A dealer who faces the looming ax of non-renewal each year by the manufacturer is faced with a dilemma. On one hand, local buyers are what keep the doors open, but the worry of facing non-renewal from a manufacturer can make a dealer less enthusiastic for putting up a fight on behalf of his customer. A manufacturer, on the other hand, may be focused on the big picture, and may not be as concerned about one unhappy buyer hundreds of miles away. This can result in consumers losing in the tug-of-war when the manufacturer decides it's the dealer's problem and the dealer is reluctant to rock the boat.
The good news is that in the past few years, the National Marine Manufacturers Association (NMMA) has tried to standardize dealer contracts. The Marine Retailers Association of America (MRAA), which represents dealers, has often felt the new contracts were one-sided in favor of the manufacturers, while manufacturers complained that they should be able to decide who sells their products. There's still wide disagreement over what constitutes a fair contract, though the overall relationship between dealers and manufacturers has improved and driven up the quality of the consumer's experience.
Lately, some states have stepped in to improve relations between dealer and manufacturer, to the benefit of buyers. Alaska and Florida, among others, have drafted laws that more clearly define how dealers and manufacturers interact. These laws specify that the warranty labor rate has to be closer to the shop's normal rate, as well as how much notice a manufacturer must give to cancel a dealer's contract — and more importantly, how to correct steps that might lead to a cancellation. This last point is critical to consumers because the shop where they bought their boat may suddenly no longer cover warranty work and force them to travel long distances for service.
BoatUS To The Rescue
New boats and engines are far more sophisticated than they were even a few years ago, and sometimes a breakdown is more than a small dealer can handle. What then? Even if a dealer is at the end of his rope, reputable manufacturers know that they need to continue to offer assistance until the buyer is happy. In Gary Loretz's case, after a year of corresponding back and forth with Yamaha, he filed a complaint with the BoatUS Consumer Protection Bureau. BoatUS corresponded with Yamaha, which investigated the matter and quickly saw that the problem should have been handled differently. They sent Loretz a brand-new engine — this one with fuel injection instead of the problematic carburetors — which, Loretz says, has worked perfectly ever since.
Engines, The Source Of Many Challenges
Unlike most auto manufacturers, boatbuilders don't make their own engines, but instead buy them from other manufacturers. For inboard/outboard and inboard engines, boatbuilders are responsible for designing parts of the engine's fuel, control, and exhaust systems to fit their boats, and to install the engines per the manufacturers' guidelines. When something isn't right between boat and engine, it can deteriorate into a lot of finger pointing but little resolution; even dealers can become frustrated when there is uncertainty over which manufacturer will pay to correct the problem.
Kevin and Tracy Dunlap from Oconto, Wisconsin, bought a new Cruisers Yachts Express 34 with Volvo 7.4 Magnum engines. These engines, which were designed primarily for trucks and SUVs, feature "overlapping" of the exhaust intake and exhaust valve timing. This makes on-the-road vehicles more efficient. But in a marine application, that same efficiency design has the potential to cause the engines to ingest exhaust water back through the manifolds, potentially resulting in engine damage. The Dunlaps' engines ingested water, and suffered damage, but were still repairable. The engines' warranty had expired shortly before the breakdown and the owners were faced with an expensive repair estimate of more than $5,000.
Initially, the boatbuilder claimed the engine installation was done according to Volvo specs and that the issue was with Volvo's engines. Volvo claimed the builder installed the engines incorrectly, causing the ingestion, and denied any assistance, especially because the engine warranty was expired. After the Dunlaps' problem began, they learned about a bulletin from Volvo specifying the parameters regarding the installation of mufflers and manifolds, and had the manifolds measured by a marine surveyor, who found that they were substantially under Volvo's specs. The Dunlaps contacted the BoatUS Consumer Protection Bureau for help.
After 25 years and thousands of complaints, the Bureau has found that even though a warranty has expired, manufacturers will sometimes extend assistance on a goodwill basis. The good news is that with the Bureau's assistance, Cruisers Yachts acknowledged the problem and responded by offering two new mufflers as well as $2,500 toward payment for the modifications and installation.
When shopping for a boat, keep in mind that dealers with long-standing relationships with manufacturers are usually able to provide the best assistance when something out of the ordinary crops up. A new dealer may not have the clout to get the manufacturer to go the extra mile.
If the dealer can't help, often a letter outlining the problem to the manufacturer's warranty or customer-service department will provide results. If not, contact the BoatUS Consumer Protection Bureau; we can often provide the leverage to get things moving again.
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