NEW YORK (Reuters) - Brunswick Corp. (BC.N: Quote, Profile, Research, Stock Buzz) is considering forming a partnership to provide an alternative to bank financing for the buyers of its recreational boats, the company's chief executive said on Monday.
Brunswick, the world's largest maker of recreational boats and boat engines, has a partnership with General Electric Co. (GE.N: Quote, Profile, Research, Stock Buzz) to finance inventories for its network of boat dealers, said Dusty McCoy, Brunswick chairman and CEO, at the Reuters Manufacturing and Transportation Summit in New York.
The Lake Forest, Illinois-based company is now weighing some kind of parallel joint-venture or other tie-up that could allow it to offer financing for boat buyers who opt to borrow to fund their purchases, he said.
"We believe there's lots of opportunities to help our dealers going forward, especially around the retail area, retail finance," McCoy said.
McCoy said such financing might become a future source of earnings for Brunswick. "It could be," he said.
But he said the company would be constrained by the relatively small number of boat sales each year -- about 300,000 industry-wide in the United States. Brunswick accounts for about a third of that sales volume, he said.
By contrast, U.S. auto makers, who have long counted on earnings from their finance operations to offset declining vehicle margins, are able to finance millions of units each year, McCoy said.
"One buys money as one buys any other raw material," McCoy said. "At our smaller scale we're concerned about our ability to buy money in order to be competitive. Therefore we're looking at partnerships and other arrangements that would permit us to enter that space competitively."
McCoy said he expected that current quarter industry-wide boat sales would be "flat to down," in part because higher gasoline prices had cut into the disposable income of the large share of boat buyers who rely on financing. Continued...
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