The silver lining’s coming into focus, but oh so slowlyPosted on Written by Bill Sisson
There was a weekend last summer when the harbor and bay and anchorage where I do a good bit of my boating was just about filled to the gills with boats. It was one of the first times since the economy went downhill that the tribe seemed to be back in full force. It had the look and feel, pardon the expression, of the good old days.
I expect to see more weekends like that in 2013. Participation is up, and more folks are getting back on the water, even if the number of boats in use is down and even if those boats are getting a bit long in the tooth. The good news is that participation eventually leads to purchase.
What does 2013 hold in store? I’ve been fooled too many times since the first mention of “green shoots” by Ben Bernanke in 2009 to suggest that we’ll see anything other than modest growth this year. Given the sluggish pace of recovery, I expect new-boat sales to come in somewhere in the strong single digits, perhaps as much as 10 percent if we avoid the series of speed bumps that has slowed growth and weighed on consumer confidence for the last few years (tsunami, drought, floods, hurricanes, European debt, Middle East unrest, the “fiscal cliff,” fluctuating fuel prices and more).
Some of that was out of our control. Some of it — such as congressional gridlock — was of our own making. If past is prologue, expect more choppiness, more stops and starts, as we slowly work our way forward.
Although economists believe that soaring off the fiscal cliff, a la Thelma and Louise, will send us back into recession, most expect that some sort of deal will be struck, if not before the end of 2012, then sometime in January. Meanwhile, the uncertainty isn’t doing any of us any favors.
We all know the important role consumer confidence plays in boat sales. In early December the preliminary consumer sentiment index from Thomson Reuters/University of Michigan declined sharply, to 74.5, from 82.7 in November, which had been the highest in 4-1/2 years. Part of the reason was concern about the tax increases and spending cuts that will kick in if no agreement is reached. Certainly more cooperation and less partisanship and rancor from both sides of the aisle in 2013 would be welcome, but I wouldn’t put a nickel on that prediction.
Look for continued strength this year in those segments that were the strongest in 2012 — aluminum pontoons, aluminum fishing boats and fiberglass outboard boats to 40 feet.
Boat buyers today are looking for value, reliability and efficiency. And more and more they are factoring in the total cost of ownership. Those with room to downsize without compromising their lifestyle may do so. And customers increasingly will be coming to you, the builder or dealer, with more information at their fingertips than ever before, so be prepared. Know thy product, inside and out.
The aging fleet also will provide increasing opportunities for growth, especially given the dearth of clean late-model used boats on the market. As consumer confidence grows, those builders and dealers who invested in the right new product will reap a larger share of the business. The average age of a registered boat today is about 21 years, compared with 16 in the late 1990s. Prerecession, folks changed their boats about every six years. We’re still a ways from that cycle, I suspect, but you take a silver lining where you can find one.
Keep an eye on the boomers — they will remain something of a canary in the coal mine. Starting back on Jan. 1, 2011, about 10,000 baby boomers a day began turning 65, a tide that won’t ebb for 19 years. How will they choose to spend their time on the water? How will their boating habits change? How can you most effectively keep them in the fold? They will remain a powerful driver of our businesses for some time to come.
The ability to adapt — to think differently — will be crucial in both the short term and the long run. That skill will fuel all aspects of growth, from product innovation to finding opportunities in a changing demographic landscape. It will inform how the most successful among us communicate with our customers and how we design, build, market, distribute and service our products. Adaptation is a new coin of the realm.
Through all the changes, this much remains true: What attracted us to the water a century ago still resonates with boaters and will continue to reverberate with future generations — fun, relaxation, camaraderie, freedom, adventure, the balm of being immersed in the moment, the wonderful sense of being part of a world larger than yourself.
This article originally appeared in the January 2013 issue.