Australia, a nation renowned for its net import economy in the realm of leisure equipment, is also home to some of the finest caravans, motorhomes, and fishing boats. This thriving sector of Australian manufacturing is fuelled by unique consumer preferences, specialized skills, and entry barriers that are hard to replicate. Despite occasional political and structural upheavals, Australian leisure manufacturing continues to flourish.
However, this piece isn’t about Australian manufacturing. Instead, it focuses on Australia’s evolution from selling boats to trading currency. For decades, Australian boat dealers have been importing, managing, and establishing the presence of globally recognised brands, ranging from luxury motor yachts like Azimut Bennetti and premium sports fishing outboards like Grady White, to family cruisers such as Chaparral.
At first glance, this might seem similar to the traditional dealership model where boats are purchased from manufacturers, shipped to the dealership, showcased, marketed, and eventually sold. However, MitchCap’s Marine Dealers, who have partners importing boats from across the globe – USA, Europe, South America, and Asia – will tell you that this brings new risks to the Boat Dealer Business Model.
These businesses have had to evolve, creating robust planning and shipping infrastructure to minimise risks and safeguard their operations. Importing large leisure equipment involves several risks including shipping delays, demurrage, unforeseen additional costs such as on-water and counter-terrorism insurance, and fluctuations in foreign currency.
The average marine dealer works on an 18% Gross Margin, 7% Net Margin. Let’s say you are importing a USD$300,000 with a 90-day lead time to shipment and payment. A movement of in AUD from 0.66c to 0.60c for example between order and shipment would increase the cost of landing the boat by around $50,000 and an increase of 10%!
It is therefore critical that dealers have a clear FX Management Strategy in place and understand the basics of Hedging. To manage these risks, MitchCap has partnered with Convera.
“It’s important to stay focused on your core business by establishing relationships with specialists such as Convera, that can support your FX risk strategy. Markets evolve rapidly and most businesses lack the resources to stay abreast of developments. Working with a specialist in the field will help ensure your business gets up-to-date analyses of currency movements, and tailored support for building a risk strategy that’s right for your business.” said, Steven Dooley, Head of Market Insights at Convera.
While the added complexity of being a dealer-importer does introduce some risk, the right financier with experience in shipment-to-floorplan, insurance requirements, and FX partnerships can undoubtedly execute this strategy with high profitability. To learn more about establishing or improving your Shipment, Import, and Floorplan Finance Strategy for your dealership, feel free to reach out to MitchCap.
