Dealer sentiment on current conditions ticked down to 32 in June (from 34 in May), while the three-to-five-year outlook inched higher to 49 (from 44 in May), according to the recently released Pulse Report. A figure of 50 represents neutral sentiment.
For this month’s Pulse Report, Soundings Trade Only, Baird Research and the Marine Retailers Association of the Americas asked 88 retailers to assess recent trends in North America.
In June, 54% of dealers reported new boat inventory was “too high” (down from 62% in May), while 12% reported “too low.” One dealer commented, “Entry-level boats are too expensive, leaving those buyers to purchase quality used. We’ve had three excellent months of used boats in a row. No manufacturers (ours or others) seem to see this. … Prices on these boats are too high, and the result is dealers buying fewer boats.”
In used boats, dealers reported lean inventories, as 51% reported used inventory was “too low” versus 20% who reported “too high.”
Dealers saw continued retail declines in June (though improved from May) as 45% of those surveyed reported a decline, compared with 32% who reported growth. Dealers again reported positive trends in used boat retail, with 48% reporting growth and 26% reporting declines. Affordability remains a key concern, with higher-end units often performing well. “The more expensive it is, the better it sells,” one dealer noted. Another said, “Consumers for lower to midrange products are very hesitant to spend money.”
“The manufacturers that support our deals with cash incentives over and above the modest programs are moving boats,” a dealer said. “Those that do not make it tougher. Price is certainly the main thing selling boats right now, and margins are not where we want them.”
Baird’s research through June suggests a modest improvement in trends relative to the last few months, but overall demand “remained under pressure through the balance of Q2. May data indicated the industry was down 5% YTD,” the report said. “With June in the books, we expect dealers to remain focused on maximizing what is left of key months of the season to limit inventory amid ongoing uncertainty related to affordability, inflation and consumer sentiment.”
Asked what was working, dealers cited good weather, enthusiastic sales staff, manufacturer incentives and smart social media use. “It’s easy to sell the boating lifestyle when the weather is great,” one dealer responded.” Another said that “surf boats, tritoons are taking off out West.” Another said, “Manufacturer incentives to move non-current have been a huge help.” Another added, “New products at the dealership (Flamingo Boats) and manufacturer dollars to help get customers over the hump” have helped sales.
Asked what was not working, one dealer said, “There is a serious shortage of techs in the country, and we need to find a way to grow that talent.” Another, to the same point, said the “staff we have are good, but finding new staff is difficult. We would like to have more guys to do service work and things around the shop, but it has been hard to find anyone.” One more dealer said, “Trying to find employees.” There were other comments about the difficulty of finding seasonal staff, as well.
Asked what change would most improve affordability for customers entering boating today, the responses were blunt: “Prices of boating have outgrown middle class.” And, “Companies need to take a hard look at the pricing. No entry-level boats anymore. Pricing continues to rise with no real product innovation.”
One suggested having “boat and engine manufacturers work together to offer better financing rates than traditional banks, combined with better costs to lower our dealer price.” Many dealers suggested that if gas prices and interest rates dropped, there would be improvement.
“We’re dealing with two affordability issues: dollars and time,” a dealer said. “On the dollars side, obviously, offering more entry-level new product [would help]. Smaller boats with lower price points. On the time side, making boating more convenient. Families with kids involved in youth sports are finding it difficult to balance sports participation with quality family time. We need marketing messaging that promotes boating as that needed quality family time.”
