Analyst sees ‘lackluster economy’ hurting boat sales

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A Bridgewater Investments analyst says the boat business “remains a poor business to be in,” cautioning investors against betting on companies that aren’t diversified in their offerings or focused on global sales.

A shift in consumer preferences from new to used-boat purchases will continue, ultimately having a negative effect on the industry, wrote Bridgewater Investments analyst Marshall Hargrave.

“The economics of the boat industry are rather simple,” Hargrave wrote. “A lackluster economy leads to lower discretionary income, leading to low boat sales.”

Sterndrives have seen unit sales declines of 76 percent between 2004 and 2011, he wrote.

Marine Products, which builds the Chaparral and Robalo brands, is the No.1 manufacturer of sterndrive boats, Hargrave wrote. Chaparral moved into the top market share position in the 18- to 35-foot sterndrive segment.

At the end of 2011, Chaparral had an 8.37 percent share, putting it fourth behind Sea Ray (15.5 percent), Bayliner (12.8 percent) and Tahoe (11.5 percent), Hargrave wrote. At the end of June, Chaparral was the market share leader at 14 percent.

However, the company’s prospects for growing its top line or expanding margins is limited, he says.

Bridgewater Investments favors Brunswick Corp. stock over Marine Products because of its product diversity and its broader global focus; Marine Products gets 85 percent of its sales revenue from the United States, Hargrave wrote.

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Comments

6 comments on “Analyst sees ‘lackluster economy’ hurting boat sales

  1. Pingback: Analyst sees ‘lackluster economy’ hurting boat sales « Parker Business Planning

  2. Eddy

    Wow when was the last time sea ray or Bayliner weren’t number one ?
    Chaparral is a better product than sea ray anyways although does not offer the size range.

  3. michael

    Boat sales will never return to the kind of numbers seen during the 1988 to 2004 period until Middle America has good paying jobs again. Due to “globalization” that may never happen in our life time. We were all sold a bill of goods. Remember we were all told globalization would further strengthen the American Economy. Instead it gutted it!!!
    American jobs now exist in China and Mexico. Not many boat buyers there.

  4. Rhem Gillis

    Started in this industry with Uniflite in ’77 and finished with Fountain in ’09, many companies in between. Speed bumps along the way- ’82, S&L collapse, Luxury Tax, 2001, but were back in full production in a year or so. This is different. No more seeing real estate double in value in 10 years, get an equity loan and buy a boat with easy credit. The owners of the big yachts (1.5-4 mil) I have worked with, I’d say 60% made their fortunes between real estate or construction enterprises, and where is that today? Miss the smell of Styrene when I walk into to plant and building quality boats, but it’s like what Nicolas Cage said in Raising Arizona, “Those were the happy days, the salad days”.

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