A flashier breed of pontoons

Posted on Written by Reagan Haynes

38_pontoons_01They’ve shed some of the boxy look and are winning converts with their speed and versatility

Pat Estep was looking to buy a boat, a fast boat. He’d been using a three-seat Sea-Doo that runs at 65 mph, so he was used to speed.

But speed wasn’t the only requirement. Estep and his wife, Christa, wanted something that would accommodate friends and family. Their daughter and two young grandchildren live near their Evans, Ga., home, and their other daughter visits with her husband and toddler. In February, the Esteps decided to buy a 22-foot Sylvan pontoon with a 150-hp Yamaha outboard engine that can handle 12 people, pull a tube and run 42 mph. It was safe, spacious and comfortable enough for their grandkids to nap aboard. And they can keep it in the water year-round.

The Esteps reflect what appears to be a trend.

When Soundings Trade Only interviewed dealers around the country about boat sales this spring, almost all were disappointed. Several, however, say they saw surprising growth in pontoon sales. Though sales of aluminum pontoon boats remain below their prerecession peak, they have been increasing — something that has yet to occur in the broader fiberglass market.

Builders and dealers attribute this to two things. First is versatility. Some think improvements in the pontoon segment have caught on with consumers. These boats can run at a good clip, tow a tube, and carry more passengers than a runabout or other more traditional design. Also, as some downsize from two boats to one they want that one boat to do everything.

The second is generational. Baby boomers looking to accommodate growing extended families are attracted to pontoons for their size, comfort and price, which is often lower than a runabout, for example.

“I think pontoons are maybe stealing some of the fiberglass people,” says Sue Gouveia, who owns Canon Marine in Penrose, Colo., with her husband. “It’s like moving your back patio out on a floating dock, but now they have great speed and can do all the fun stuff you can think of with boats.”

Though sales have trended erratically — up by double-digit percentages some months, down in others — some dealers say the pontoon segment has helped them stay afloat. Pontoon sales in May were up 17 percent over April, according to data released by Grand Rapids, Mich.-based Statistical Surveys. In Florida, one of the top states for pontoon sales, 27.7 percent more had been sold year-to-date as of April, according to Aarn Rosen, who heads the marine division at Statistical Surveys. But year-over-year, Florida was only up 4.5 percent between March 31, 2010, and the same date this year. Kentucky, another top 10 state, was down 23.8 percent in that same time frame.

From its peak right before the recession, the pontoon market plummeted 60 percent after the market crashed, says Steve Vogel, CEO of Elkhart, Ind.-based pontoon builder Bennington Marine. It has rebounded but is still well off its highs — 45,000 units at the peak to around 22,000 now.

There still hasn’t been a sustained rebound in sales since the initial decline, when the market dropped in double digits every month for a year, says Vogel. “So I wouldn’t say the market is surging back, but it is showing signs of life and we’re very grateful for that,” he says. “If you compare it to what’s going on in some of the other segments, they’re probably off more than what ours was and they probably haven’t started to bounce back yet.”

“All the pontoon builders are up, not just us,” says Bob Menne, founder and CEO of Premier Pontoons in Wyoming, Minn. Premier’s sales had increased around 40 percent over last year as of June, and Menne predicts the company will end the year around 42 or 43 percent higher.

Market share

Though sales aren’t booming, some pontoon builders say they are gaining market share in large percentages. Entering the recession, Bennington had about 11.5 percent of the total pontoon market, says Vogel, selling around 5,000 units annually. That increased to around 21 percent in the first quarter of 2011, he says. “If you look at the total number of boats, new and used, being purchased, it’s very close to what it was prior to the recession, but there has been a huge shift to used boats,” he says.

39_pontoons_03With so few used boats left in the marketplace, more customers want to buy new entry-level boats, and Vogel says Bennington is counting on that to lead the recovery. “It doesn’t take much of a shift in new versus used to swing our market in very big numbers,” he says. “If that shifts about 10 or 15 percent, we’ll see our market come back to somewhere around 40,000 units again and … we’re hoping to see that in the next 24 months.”

Premier Pontoons from 20 to 25 feet have sold well nationally, Menne says, and the entry-level 20-foot segment has been most consistently popular since 2008. He says fiberglass boaters are increasingly switching to aluminum pontoons. “When you look at the overall boaters in the country and the number of boats sold, the pontoons have taken market share away,” he says.

Fiberglass boats offer performance advantages and are easy to trailer, so there will always be demand, Menne says. But he predicts that won’t offset the growing demand for pontoons, especially as buyers discover that pontoons aren’t difficult to trailer. “I hear it on the street. I hear it at shows all the time — and this is from people who don’t know who I am — ‘I’m going to get a new pontoon and get rid of the runabout,’ ” Menne says.

Sales ‘pockets’

Though traditionally seen as freshwater boats, pontoons are gaining ground in areas associated with saltwater boating.

In Connecticut, for example, pontoon sales from March 31, 2010, to March 31, 2011, were up 27.21 percent over the preceding 12-month period — March 31, 2009, to March 31, 2010 — with 63.3 percent of those in the 21- to 28-foot range. Rhode Island saw a 28.6 percent overall increase, the largest in the nation.

Pennsylvania saw a 17 percent increase during that time, and pontoon sales in New York were up 13.1 percent.

All of the Western states except for Nevada and New Mexico showed declines, many in double digits. “There are certain pockets that have been better than other pockets,” Menne says. “Minnesota is doing better than Wisconsin and they’re right next door. Why? We really don’t know.”

Sales in Minnesota were up 8.4 percent, and in Wisconsin they were down 2.1 percent. Michigan sold 24 percent more pontoons than last year and had the most consistent increases in all sizes — 27.3 percent in sales of pontoons 20 feet and under, 20.5 percent in the 21- to 28-foot segment, and 20 percent in the 29-foot and above market.

“What you’re hearing from dealers, it’s all relative to the glass market,” Vogel says. “The pontoon segment may be one of the bright spots in the market today, but if you look at retail registration data, it is very accurate.”

Hard to get

Pontoons have been in such high demand at Caruthers Marine in Vicksburg, Miss., that they’ve been hard to get, says general manager Joey Simmons. “Right now, I’m out of pontoons and the companies I want to buy from won’t be able to get me them until August, and that’s the close of the season,” he says.

Premier was booked six or seven weeks out in mid-June, says Menne. “And orders are coming in daily, so it’s going to be a good summer for us,” he adds.

Many builders, including Premier, had expected the market would be weaker than it has turned out, and dealers ordered conservatively. “It’s not something you can change in a matter of 30 days; it takes time, increasing your scheduling of materials and staffing,” says Menne.

Suppliers also had to step up production and, though they worked hard, some had challenges keeping up with demand. The tsunami and earthquakes in Japan had some effect on supply, but Menne and Vogel say the shortfall was mostly because of overly conservative forecasts.

“Dealer inventories were so low two years ago, when you double your share and the market is up a little, that’s a lot of demand on us for product,” says Vogel.

At the market’s bottom, Bennington was building 24 boats a week, down from its previous high of 25 a day. In late June, Bennington was building 28 boats a day and had worked all but two Saturdays since Jan. 1, Vogel says. The builder hadn’t even projected 6,000 units for the year.

“We’ve worked hard to take care of our dealers,” says Vogel. “I know our dealers would like us to have more product out there, but when you increase production that quickly and you still can’t meet demand, you know you’re doing something right. We all know how bad it was two years ago, and we’re grateful to enjoy success today.”

An evolving pontoon

Some pontoon buyers have made the move to pontoons from other types of boats, says Larry Whitely, spokesman for Bass Pro Shops Group, which sells Sun Tracker pontoons. “Versatility is a big factor,” says Whitely. “[Buyers] want their guests to have fun and that means being able to satisfy a variety of interests.”

Families are attracted to the safety factor, Menne says.

“Our product is probably the best on the market for small families and grandparents to go enjoy a day on the water,” Vogel says. “It’s a safe boat, it’s very comfortable, it’s easy to board and it’s easy to maneuver. It does all the same things a much sleeker boat will do.”

Another perk is the layout, Menne says. “It’s got a flat deck, so you’re not confined to choose one seat and sit; you can get up and move around,” he says.

Amenities are evolving, something Menne set out to do when he launched Premier 20 years ago. “Right out of the gate, we started offering things that hadn’t been offered in the marketplace in terms of interior and design and carpet colors and helms. And we noticed sales taking off right away,” Menne says.

Premier recently made changes to its product line so the boats don’t “look like a box anymore,” Menne says. “In the past, they were quite boxy looking, so we made a big change and that’s really helped us a lot.”

Some new designs are powered with 200- to 350-hp engines and features include double decks, water slides, lounges and galleys. “One we sold was for a handicapped gentleman,” Gouveia says. “He wheeled his chair on and latched it down on the helm. People that could never get from dock to boat are able to get on the water. And it was loaded with features and horsepower.”

Pontoon buyers

Canon Marine’s biggest 2011 sale was a 31-foot Premier with twin 300-hp Mercury Verados. The boat could reach 50 mph, tow a skier, and the family could load it up with coolers, says Gouveia. The boat cost $120,000.

There is “huge demand” in the $35,000 to $75,000 range, says Menne.

In the Ozarks region, pontoons and “tri-toons” continue to grow in popularity, says Richard Collins, general manager at Raymond’s Boat & Motor Sales, with three locations in Missouri. He says he has seen demand pick up in the $40,000 to $60,000 range. “That used to be unheard of,” he says.

“Obviously the higher the price, the smaller the market, but I [recently] got an e-mail from a dealer in Spokane that delivered one of those $120,000 packages to a family,” says Menne. “That type of stuff is selling. The numbers are not huge, but they’re decent, and we go after that market,” in part because the margins are so good for dealers, he says.

The average family income of Bennington buyers is around $120,000, says Vogel. “You’ve got people on the lakes who will buy a $100,000 pontoon boat, but I don’t want to mislead you to think that’s the norm, because it’s not, and that’s not where the growth is in the market.”

At the beginning of the recession, Bennington decided to do a major redesign to capture the value-conscious consumer, Vogel says. “We felt that we needed to make Bennington affordable, but we didn’t do it by cheapening our product or cutting corners,” he says. “Now we’re getting entry-level customers who are new to boating and high-end customers who maybe would have bought a runabout for twice the money, and they still pay $50,000 or $60,000 for a pontoon because of the multiuse.”

Value shoppers also like the fact that pontoons typically use less fuel than runabouts, says Menne.

People in their 50s or 60s today have owned more boats than any other generation, Whitely says. “As empty nesters, many of them see the water as a powerful attraction for gatherings of friends and family. Pontoon boats are a natural destination boat for these occasions.”

In the past, first-time boat owners often were younger. Now Bennington is seeing more baby boomers who have never owned boats deciding they want a pontoon, Vogel says. Some boomers who had planned to retire at 65 now realize they’re healthier than they’d imagined and want to keep working, so they want to get a “toy,” Vogel says. Others who have to work reward themselves by buying a boat to enjoy time with their friends and families. Retirees, like the Esteps, simply want to enjoy their time on the water.

Virtual expectations

Getting customers engaged in product design makes them more passionate and gives builders good ideas, says Vogel. “We’ve done some things on the Web to facilitate that for dealers and we’ve staffed up internally to be able to do that,” he says.

Both Bennington and Premier have online tools to help consumers customize their pontoons, from choosing colors and fabrics to layouts, even on the smaller value boats.

“That’s just the way it is,” says Vogel. “A guy spends $100K on a boat, you’re not going to tell him how to build it. He’s going to tell you.”

This article originally appeared in the August 2011 issue.

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