From SEI's Forum (http://sterndrive.cc/phpbb/viewtopic.php?t=17)

"Blizzard" wrote
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.)


"Tecnical Support" wrote
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 since, 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.