Dealer sentiment on the current retail environment plunged to 27 out of 100 in September as the Federal Reserve continued to hike interest rates and the economy teetered on recession.
September’s reading, down from 35 in August, reflected the lowest sentiment since the pandemic halted commerce in March 2020, and the second-lowest reading since January 2014, when Baird launched the monthly Pulse Report in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only.
A survey of 74 respondents showed that, aside from weather, every metric weighed on commerce. Dealers reported government action or inaction as creating the largest headwind to business, followed by new products, trade-in activity, OEM promotions, access to credit and the economy. Some 70 percent of respondents said rising interest rates were having a moderate to significant effect on demand.
There was one bright spot: OEMs appeared to be working through supply-chain pressure.
For the first time since the pandemic began, dealers in September reported neutral levels of comfort about new boat inventory, with 30 percent saying it was too low and almost 35 percent reporting that it was too high.
“Inventory availability is turning around, but rising prices and interest rates combined with customer apathy, lack of interest and fear of market doesn’t help,” one respondent wrote. “Very little seems to be working at the moment.”
Dozens of comments reflected alarm about steeply rising costs — already a major concern for the industry before inflation spiked 8-plus percent. When asked what’s not working for business, one dealer responded: “22-foot bowriders for $80,000.”
Another answered: “Continued price increases on all fronts. Particularly, we are noticing customer comments and resistance on the increased cost of winter storage packages; i.e., shrink-wrap and anti-freeze suppliers have increased pricing anywhere from 20 to 30 percent.”
“We are ready to depend on our service base for our business health,” another wrote. “This supply-chain business is too overwhelmed to depend on sales.”
Dealers also expressed frustration about getting unfinished or inadequately finished products from manufacturers that are struggling to meet last year’s demand, while grappling with deep bottlenecks from key suppliers.
“Attention to detail is out the window, yet the boatbuilders keep shipping boats to dealers that require extensive re-rigging in many cases,” one respondent wrote. “This is frustrating to dealership employees who have to continually repair these deficiencies, file time-wasting warranty claims, all in order to deliver a new boat to their customer while the cost keeps increasing.”
Many dealers say the labor shortage continues to cause problems as well. When asked whether they had noticed new habits among dealership staffs this year, three-quarters of the 20 comments focused on lack of help.
“We have had to cut down on some of the boats/motors we work on. Everyone is just getting tired,” one respondent wrote. “We just do not have enough people, and it is almost impossible to find additional help.”
This article was originally published in the November 2022 issue.
