Thanks to a sluggish economy, high interest rates and wet, cold weather in some parts of the country, April was a tough month for dealers: 61% reported declines in new-boat sales, and 23% said they experienced growth. Preowned boats did marginally better, as 49% of dealers said sales dropped, and 32% reported growth.
“Boat shows remain fractured, and post-show marketing ran into twin challenges of bitterly cold weather and economic turmoil,” one dealer said in the monthly Pulse Report survey. “Both traditional and digital marketing had minimal impact on activity, resulting in a higher marketing cost per sale.”
Soundings Trade Only, Baird Research and the Marine Retailers Association of the Americas surveyed 100 dealers about retail sales trends, the availability of financing and the impact of the economy on boat purchases.
Retailer sentiment dropped from 32 in March to 24 in April, but the three-to-five-year outlook rose from 37 in March to 41 in April. A neutral score is 50. The fourth month of the year typically makes up about 12% of annual boat sales.
Retailers indicated that government action or inaction, access to credit, the economy, weather and trade-in activity were all headwinds to demand in April. New-boat inventory has been replenished, with 69% of dealers reporting that they had too many boats in stock and 9% saying they didn’t have enough. Used-boat numbers were leaner, with 46% of dealers saying inventory was too low, while 23% said they had too many preowned boats. “We are also concerned with the push by our manufacturers to take inventory despite our inventory levels being too high,” one dealer said.
Another dealer voiced concern for smaller businesses, saying, “Brands of boats aren’t available to become a dealer. Multi-mega dealers have all the territories locked up.”
When asked what was working, dealers said that extended warranties from engine manufacturers helped sell additional units at winter boat shows, and that imports and larger, more expensive yachts were selling. “Upper-midrange, heavy fishing boats, rigging, major service work,” one dealer wrote. Another added: “Turning trades at lower margins than one year ago just to keep cash moving and new boats rolling.”
Complaints ranged from high interest rates and prices to unseasonably cold weather. “Price is chasing consumers away,” one dealer said. “Manufacturers are concentrating on the bigger boats and not 19 to 22 feet for the smaller lakes.”
Dealers said that 41% to 60% of boat sales were financed, and 79% replied that high interest rates were the biggest challenge to getting a buyer financed. One replied that insurance companies were “killing deals with very high premiums.”
Those who have money are willing to spend it, but consumers still seem hesitant to finance new boats for the long term. “More customers are writing checks for their purchases. Hard to make back-end money from indirect lending,” one dealer said. Another said, “We are seeing more cancellations on orders and younger buyers turned off by much higher finance rates.”
Perhaps summing things up for the near future, one dealer kept it simple, saying, “Batten down the hatches.”
This article was originally published in the June 2023 issue.
