The National Marine Manufacturers Association reports that the NMMA and The Marine Retailers Association of America is lobbying the federal government for help on boat and floorplan financing.
The NMMA recently issued an Action Alert that urges its members to contact federal officials about adding marine floorplan loans under the Term Asset-Backed Securities Lending Facility, and including boats in TALF’s consumer lending program.
The MRAA also issued its own Dealer Alert to encourage retailers to support NMMA’s efforts.
“The near total elimination of financial institutions from loaning money to anyone except the most highly qualified has driven the industry to the edge of collapse,” the MRAA said in its alert. “Boat production and sales are at an all-time low, employees are being laid off, and many businesses are suffering or closing.”
These efforts come on the heels of GE’s Commercial Distribution Finance business’s notification to marine dealers that it was increasing interest rates. The changes are necessary to provide the “level of service and liquidity the industry requires,” according to a letter from Bruce Van Wagoner, president of GE Capital Solutions’ Marine Group.
“Over the last several months, several marine wholesale and retail financing sources have exited the industry, retail boat registration numbers have fallen off dramatically, and many marine manufacturers have idled and/or rationalized their production,” Van Wagoner said in his letter to dealers.
These changes could have a significant impact on the industry, according to Phil Keeter, president of the MRAA.
“It’s a demand letter from GE asking dealers to do certain things, and if they don’t do those certain things then they will become in default of their arrangement with GE,” Keeter said. “What they’re proposing in the letter for the dealer to have to do is very stringent and almost an impossibility for most dealers at this point in time.”
The “pricing action will apply retroactively to all of your outstanding existing invoices as of April 1, 2009, in addition to all new invoices financed by CDF on or after April 1, 2009,” according to GE’s letter.
Although GE’s rate increase will likely hit small dealers particularly hard, the company’s decision to increase its rates is a response to its own rising cost of funds, according to Don Parkhurst, past president of the National Marine Bankers Association.
“It’s not trying to run people out of the marine business,” said Parkhurst, a senior vice president with SunTrust Bank. “They’ve got to cover their own internal costs.” The increases “reflect what it costs them to raise money today.”
The NMMA offers a link to tell Washington to provide relief for marine floorplan financing.