In a traditionally strong month for recreational boat sales, dealers reported continued retail declines and higher-than-preferred inventory levels in May. The softer sales resulted in 49% of dealers reporting a decline versus 27% who experienced growth. Several dealers cited higher interest rates as a headwind, while others pointed to uncertainty from recession fears.
“Nothing seems to be working,” one respondent wrote. “Amid our potential buyer’s fear of continuing uncertainty in the economy [we’re seeing] higher interest rates, tougher loan underwriting, new-buyer sticker shock, high inflation and sputtering demand. Buyers are still very reluctant to make purchases, shying away with a wait-and-see attitude.”
In this month’s Pulse Report, Soundings Trade Only, Baird Research and the Marine Retailers Association of the Americas surveyed 101 marine dealers about retail sales trends, availability of financing, and how they are trying to improve the customer experience.
Retailer sentiment on current conditions checked in at 23 in May versus 24 in April. The three-to-five-year outlook declined from 41 to 35. A score of 50 is neutral.
But it wasn’t all gloom and doom. One dealer wrote, “The early spring in the Northeast has jump-started the season, giving us the best May we have had.”
Used-boat sales declined in May with 47% of dealers reporting a slowdown while 32% saw growth. May typically makes up about 16% of annual retail sales. Retailers reported that government action or inaction, access to credit, the economy and trade-in activity were all headwinds to demand. Looking at inventory, 80% of respondents said they had too many new boats while 5% said they didn’t have enough. “Cutting-edge boat brands are doing well,” one dealer wrote.
There were mixed comments about customer reactions to the price of new boats. “Lowest-price, pre-owned units are moving rapidly,” one dealer wrote, “unlike the pandemic time frame when we couldn’t move a low-cost, pre-owned unit.” Another said that cash buyers were scooping up high-end wake and mid-line pontoon boats.
When asked about the biggest hurdle to providing an outstanding customer experience, the majority cited workforce shortages, followed by warranty issues, unrealistic customer expectations, team communication, parts delays and lack of training. “Access to our valet program and word of mouth are bringing in buyers,” one dealer said. Another focused on rejuvenating personnel, saying, “Staffing of younger technicians and office administrators that want to make the marine business their career.”
Finally, looking at the relationship between boat manufacturers and dealers, the latter say the former needs a reality check. “We have been overloaded with new boats because manufacturer(s) told us if we wanted inventory in time for April, we needed to order in September, and we ended up receiving all of our order by December,” one dealer wrote. “What are we supposed to do, not take them?”
Another dealer seemed to be in a better partnership, saying, “Manufacturers at this point seem to be willing to cut back production until we figure out what is happening in the market and right-size our inventories.”
This article was originally published in the July 2023 issue.
