“Stronger than expected trends from Cleveland Boat Show — takeaways.”

That was the lead on the conclusion of a team from Northcoast Research Partners, an independent, full-service institutional equity research firm that conducted a variety of channel checks with strong regional operators exhibiting at the show.

The Northcoast team, led by senior equity research associate Drew May, conducted discussions with dealers exhibiting at the show. “We believe it provides a directional indicator of early-year show performance, as we note Ohio ranked in the top five states for boat registrations in the U.S. in 2022. There were also several Boating Industry Top 100 Dealers present at the event,” the team reported.

The Cleveland Boat Show is the oldest and largest boating and fishing event in Ohio, and is considered a reliable indicator of the year ahead for retail sales. Running Jan. 18-21, Thursday and Friday attendance ran into Ohio’s first big snowstorm. But the weekend cleared and produced thousands of boating enthusiasts.

The Northcoast Research observations provide an outsider’s look at the retail picture for marine dealers at a time when economic news remains mixed. “While no one boat show is a make or break for the industry or marine operators,” the Northcoast team wrote, “we found it helpful to simply gauge the temperature of the event.”

Key takeaways from the show include:

1. Sales were described as in line with to slightly above last year’s show, with steady demand from qualified buyers despite traffic being lighter than last year’s show due to inclement weather.

2. There was an elevated level of non-current-model-year inventory compared with prior years.

3. Show discounts on model-year 2024 units ranged from 10% to 25% off MSRP, with show discounts for 2023 units ranging from 15% to 30%.

4. A belief from the dealer community that 2024 will be a “good, not great” year given the current macro climate, though many were more positive on industry dynamics following the show, citing the level of buyer interest experienced.

The Northcoast report continued: “Post our time spent at the event, we continue to hold a cautious view on the marine industry, though we come away incrementally more positive than prior to the show. We view the marine industry as in a similar position to that of the RV industry a year ago, with non-current inventory at the dealer level likely higher than ideal levels, and affordability/interest rates the greatest hurdle to conversion.”

Looking at the state of demand, the research team observed industry contacts appeared “somewhat upbeat” with the foot traffic and sales trends at the show. On average, dealers indicated sales were roughly in line to slightly stronger than 2023 show levels.

Concerning specific product trends, the team said: “If the buyer needs to finance it, it’s not selling well. If the buyer is paying cash, it’s selling well. Further, higher-priced models that attract cash buyers performed better than products more oriented toward being financed. That said, we note pockets of strength on the value end of the spectrum, including entry-level boats as well as some mid-tier-priced pontoons and deckboats.”

Reviewing the inventory side of the equation, it was noted that supply-chain bottlenecks are behind us, as nearly all dealers displayed 2023 inventory along with 2024 units. The report noted discounts as high as 30% for 2023 boats and that dealer margins have become “razor thin” as they seek to clear out aging inventory with 2024 units on the way.

Looking forward, dealers held a cautiously optimistic view on the 2024 selling season, given the level of interest from qualified buyers amid the difficult macro backdrop.

In speaking with dealers at the close of the show, the Northcoast researchers indicated a level of surprise surrounding how healthy traffic, interest and sales were.

“While most do not expect 2024 to be a record year,” said the research team, “on average, dealers believe 2024 can be good, not great. However, we can note one dealership, which sells premium boats (on average $300,000 and above), indicated this was their best January ever.

“From our view, we believe 2024 is likely to be similar to 2023 in which the market will be bifurcated with high-ticket premium products and entry-level units making up the bulk of unit sales during the year,” the team concluded.

Northcoast Research Partners is headquartered in Cleveland and covers subsectors of the auto aftermarket, as well as outdoor recreation, including RVs, boats, ORVs and motorcycles.