Skepticism

[Blizzard]

There seems to be a lot of skepticism about SEI in rec.boats and other discussion groups. I've read SEI's statements about eliminating middlemen, volume purchasing and so forth, but the the prevailing concern still seems to be "if SEI drives are so inexpensive compared to OEM, there must be something wrong with them." So, is there a catch? Are they cheap Chinese knock-offs or something? Are corners being cut somewhere in the manufacture? (Please don't take offense, there's none intended: it's just that I think these are the kinds of questions going through many skeptical minds right now.)

[Technical Support]

The drives are not “cheap Chinese knock-offs” and corners are not being cut in manufacturing. However, our drives are very economical which naturally raises the question, “How do you do it?” I am comfortable answering the question in a general sense, but I cannot go into specifics. Certainly you can appreciate that such information is proprietary and not something that we want to share with our competition.

Basically, our economics come from eliminating middlemen, creating economies of scale, and keeping overheads low. Take a typical aftermarket prop shaft for example. It’s made overseas and then marketed by a West Coast trading company to Sierra who pays a commission to a manufacturing representative to sell the shaft to a distributor (such as Land and Sea) who sells the shaft to a boat dealer who uses the shaft and his labor to repair a customer’s drive. The shaft is either directly or indirectly handled by five entities. Sterndrive Engineering has streamlined this process dramatically.

As for ecomomies of scale, you cannot go to an aluminum casting company, for example, and ask them to make you 10 cases. Sterndrive Engineering has made the investment in product design and tooling for the purchasing of 1000’s of cases each year. Very few aftermarket company’s have the resources to make these kinds of investments. Consequently, their costs are higher.

Sterndrive Engineering has priced its drives to sell 1000’s each year, not 10’s or 100’s. Our economics only work if we achieve our sales targets. Other companies are pricing their products so that they can be profitable with much less sales. Our goal is to be the largest supplier of replacement drives in the world by next year and we have priced our product to achieve this goal.

As for why are they less than OE, the answer lies in how almost all OE’s price their replacement parts. If you were to try and buy a Chevy truck one part at a time, I’ve read estimates that it would cost over $100,000. Part sales are usually the most profitable aspect of the OE business and are critical to maintaining the bottom line.

I hope this helps and thanks for your interest in Sterndrive Engineering.

[Blizzard]

Thanks for taking the time to reply. What you say makes sense. I'm not in the market for a replacement at the moment, but I'll definitely consider SEI when I am.

[Precision-Upholstery]

Blizzard, I took the dive with the purchase of 2 SE106 Upper and Lower. With the three year warranty, It doesn't take rocket science to say if it's gonna happen it will happen in three years. In the General discussion forum, I have started a trip by trip journal. I only have had three tripsabout 5 hours and so far so good, Once I do the break in, we shall see if the tide changes. The onething that made the purchase a little easier was that SE i only 2 hours from my front door. I figure if I have problems then 2 hours is a drop in the bucket to beat the doors down. But on the same token I givecredit wwhere credit is due. As I stated, 3 trips- 5 hours, Paint still on drives and At this point I'm Happy.