Bigger horsepower and a move away from two- to four-stroke are the two overriding trends in the current outboard market, according to John Pfeifer, president of Mercury Marine.
Talking to IBI at METSTRADE yesterday, Pfeifer also highlighted connectivity as a major driver in future outboard engine development.
“Inboards and sterndrives continue to be important to us and we’ll still be investing in it going forward but it’s not a growth area,” Pfeifer admitted, saying focus is currently on supplying the demand for ever increasing outboard power. “We launched a 350 and a 400 a couple of years ago, we can’t make them fast enough. We’re seeing outboards powering a 42ft Boston Whaler and those guys aren’t staying at 42ft. 50ft-plus boats will soon be wanting outboards.”
Pfeifer added that horsepower requirements were on the up across its entire engine spectrum. “Owners of pontoons used to settle for a 50hp outboard, now they’re choosing a 115 – it’s quiet, powerful, enables them to tow a skier.”
With the move up in power, the Mercury boss also confirmed a move away from two-stroke, both in leisure and commercial sectors. “Only around 20% of new engines today are two-stroke and that number’s going down every year, which is good news for Mercury.”
Perhaps most interestingly Mercury’s president highlighted the growing desire for connectivity: “We’re still in our infancy regards to connectivity,” he admitted, but referenced a number of innovations the manufacturer has launched recently including its VesselView, engine information display and its Skyhook virtual anchor. “Along with the Skyhook we now have the Bowhook and Drifthook. which the boat user can upload on the spot – downloadable upgrades will be a key feature going forward.”
Today 50% of Mercury’s business comes from its Parts & Accessories operation that it has been expanding through acquisition over the last couple of years. As well as its purchase of Dutch distributor Lankhorst Taselaar earlier this year, it added Bell Recreational Products Group in the Midwest, BLA in Australia, and Payne’s Marine in Canada to its distribution portfolio in 2014, 2015 and 2016 respectively.
Its P&A business, now 80% aftermarket and 20% OEM, accounts for more than US$1.2bn in annual sales and the company plans to raise sales by US$350m through acquisitions by 2018. “Being a distributor in the aftermarket is an important part of the equation,” said Pfeifer. “OEMs want a system that’s reliable, they don’t want to have to piecemeal components together.”
In spreading its reach beyond the engine to relevant component parts, via new distribution channels targeting the aftermarket, Mercury has been able to smooth out the cyclicality of its business. According to Pfeifer in unit terms sales of 250hp-plus engines have advanced beyond their former peak levels. Dollar sales are also up for smaller units below 115hp, despite them not reaching peak numbers yet, thanks to a shift up across the board in horsepower and increasing technology pushing up retail prices.
“Four-strokes are getting easier to service, they’re more intuitive,” said Pfeifer. Such factors, along with proven reliability, were encouraging increased adoption of four-strokes for commercial usage, he said.