Dealer sentiment on current conditions inched up to 34 in May (from 33 in April), while the three-to-five-year outlook declined to 44 (from 45 in April), 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 43 retailers to assess recent trends in North America.
In May, 50% of dealers surveyed reported declines in new-boat retail sales, compared with 29% who reported growth. Dealers reported more strength in used-boat retail, with 42% reporting growth and 30% reporting declines. Retailers indicated that government actions, the economy, weather and access to credit were the primary headwinds in May, the Baird report says.
Baird Research suggests continued modest declines in boat sales as the industry grapples with affordability pressures, weak consumer sentiment, stubborn interest rates, persistent inflation and high fuel prices.
“Despite the headwinds,” the report said, “dealer inventory comfort improved sequentially, and sentiment held steady, suggesting trends are not incrementally softening. We expect demand for both boats and boat stocks to ebb and flow with market and geopolitical volatility this selling season.”
Sixty-two percent of dealers reported new-boat inventory was “too high” in May (down from 67% in April), while 10% reported “too low.” One dealer commented, “Overall, we’re in a healthy place with our inventory but would always want to run leaner. Our marketing is running up against reduced enthusiasm for boating as gas prices remain high and consumer confidence is low.”
In used boats, 44% of dealers reported used inventory was “too low” versus 26% who reported “too high.”
Another dealer commented, “New-boat sales have cooled significantly. Elevated boat prices with higher interest rates are pushing boat ownership out of range for many families and keeping first-time buyers out of the market. We have got to get control of builder pricing and finance rates to spur activity. Right now, only our higher-end boats with cash buyers are selling, with many buyers taking a wait-and-see attitude.”
Asked what was working, dealers cited preowned sales, social media marketing and persistence in following leads. “Our preowned sales have been strong; we’ve turned a lot of strong trade-ins into good used-boat sales. We’ve priced aggressively with a goal to turn more units,” one dealer said.
Another commented, “Used boats and trade-ins are getting phones ringing. Preowned inventory keeps cash flow moving and seems to appeal to buyers who are priced out of the high-priced units. Boatbuilders’ high costs are keeping buyers out, while preowned inventory seems to be bringing them back.”
Another noted, “The outboard engine promotions are helping with sales and repowers.”
When asked what was not working, one dealer said, “Margins on new units are now much tighter, with many potential buyers shopping multiple dealers over a much wider area, including several states, all looking for bargains. Many dealers are then reactive, pricing rather than holding margins, cutting their price significantly. There seem to be more shoppers than buyers, with everyone looking for a steal rather than a deal.”
Fuel prices also were a concern to many dealers. One dealer said, “Large and sudden price hikes are nothing new to this industry, but I think gas prices being where they are have some of our customers more unsettled than when boat/part prices spike.”
The survey also asked dealers: “Which of the following profit centers represents the greatest opportunity for growth at your dealership over the next 12 months?” New-boat sales had the highest response rate at 31%, followed by service and repair at 26%, and customer retention/repeat business at 22%. Used-boat sales got 14% of responses.
Dealers also were asked, “Which areas are currently receiving increased management focus at your dealership?” The top three answers, all close to 20%, were growing parts and service revenue, reducing inventory carrying costs and improving operational efficiency. The next three most popular answers were improving marketing and lead generation, improving new-boat sales conversion and expanding used-boat sales.
