MBM meets the man behind Bavaria's image change, and talks about his business model
I know it seems a while ago now, but there was a time, all of a year ago, when the words private and equity weren’t immediately associated with the words toxic and debt. It was in these halcyon days that a little-known (outside the world of high finance) private equity firm called Bain Capital acquired the German boatbuilder Bavaria for a snip under a billion pounds. An inflated sum, many said at the time. But talking to the newly installed German CEO of Bavaria, Kay Schwabedal, it would seem Bain, and Bavaria, are well-placed to ride out the convulsions currently debilitating money markets.
In fact, Bavaria not only seems to be surviving but thriving; the new Bavaria 37 Highline model on show here apparently evidence of this. The Bavaria style, the new management team at Bavaria contended, was in need of a facelift, and the result is now here for us all to see. It’s definitely impressive, and a sign that Bavaria is willing to ‘chic up’ to appeal to a younger audience. There are plans afoot to give the Highline treatment to more models in the range, but Mr Schwabedal would not be drawn on which ones.
Also interesting was the CEO’s reasoning for why Bavaria is better placed than most to see out the storm. Bavaria works more or less to a ‘just in time’ production model. The customer orders a boat from its UK dealer Ancasta, and in a matter of weeks, thanks to the builder’s impressive investment in production technologies, the boat is ready to be delivered. The upshot of this is there’s no stock languishing in yards being discounted constantly by worried dealers. This maintains the value of the brand, and decreases the exposure of the dealer. “We tend to think boats shouldn’t sit in parking lots,” he told MBM. It’s well known that other major boatbuilders rely heavily on stocking deals, effectively forcing boats on dealers that are perhaps not in the best financial position to take them. If Bavaria’s business model is indeed the future, as Mr Schwabedal contends, then MBM wonders how long it will take his competitors to follow suit.