A July survey of marine dealers showed industrywide optimism, despite frustration about the inability to get engines and boats quickly, and growing trepidation about consolidation.
New-boat sales were a bright spot in the survey, conducted by Robert W. Baird in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only. In July, 73 percent of dealer respondents reported growth in new-boat sales, compared to 14 percent who posted declines. That’s in stark contrast to the 53 percent of dealers who reported new-boat sales growth in June and 23 percent who posted declines. That points to more encouraging growth in July after preliminary data showed June sales were relatively flat. Statistical Surveys reported a 1.1 percent increase in the main powerboat segments and a 0.2 percent increase overall for June.
“Our checks suggest marine trends improved in July and were slightly better in June than initial SSI data would suggest,” the report states. “We are encouraged by the improvement in new boat retail, balanced inventory and positive sentiment, and remain upbeat on the broader marine space.”
Dealers indicated in the “What was working” section of the survey that pontoons, PWC, towboats, Yamaha sportboats, aluminum fishing boats and deep-vee models were selling well.
Retailer sentiment rose in July in the short and the long terms, indicating that sales had picked up for dealers after a somewhat lackluster June. Sentiment about current conditions was at 77, up from 76 the month prior, and the three- to five-year outlook rose from 68 to 73.
“Overall, trends remain supportive of our bullish view and even suggest modest upward revisions to initial SSI results this summer,” the report states. “Retail and sentiment improved sequentially, new-boat inventory appears balanced, and used inventory remains hard to come by. While the industry backdrop is favorable, we expect company-specific events — spin-offs, acquisitions, new products — to be larger drivers of stock performance.”
Several dealers reported declines in fiberglass and offshore boats for a second month. “We are not in a saltwater market, but our saltwater outboard boats have slowed way down this year,” one dealer reported in the survey.
In the comments section, dealers again expressed frustration over the inability to fulfill outboard orders, as well as boats. “Lead time to replace boat inventory or for special orders is hurting revenue,” said one dealer. “Need more inventory,” said another. A third dealer said that “not having motors and props” was affecting business.
“Manufacturers producing too many boats and not having enough trained staff,” commented one dealer. “Quality control is poor, causing excess warranty service. New-boat warranties are dominating too much service time, and productive service is suffering. Yes, there is a point of diminishing returns selling new boats.”
Those issues appeared to compound a workforce shortage on the dealer/technician side. “Turnover in staff hurts day-to-day business,” said one dealer.
They also expressed concern about the consolidation taking place among OEMs. “All of the buyouts of our independent manufacturers by large corporations are not good, in my opinion,” said one dealer. Another was “uncertain of BRP and Polaris buying boat companies.”
An active mergers and acquisitions environment suggests further consolidation is likely, the Baird report said, adding that “new owners have wood to chop to convince dealers and investors that consolidation will work.”
“In fiberglass fishing boats, one company has 75 percent of the market,” said one dealer. “This is not good. Looking for others to get back in or a new company to start up and compete for the market. Not sure I like all this buying up. I remember when motor companies tried to buy transoms. It’s not looking good. I don’t like the camper guys buying boat companies to control the industry.”
The survey results weren’t all negative. One dealer said that Bennington was selling well and Polaris was the first company that followed through on the promise that nothing would change with the company. “It’s business as usual with the same people in the same positions,” the dealer said.
This article originally appeared in the September 2018 issue.
