2021 Projections Vary

Inventory shortages of new boats, parts and accessories are causing many to project growth challenges
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Demand for new and used boats continued through November, but a shortage of inventory from manufacturers — and a host of other economic uncertainties — prompted many dealers to project low, single-digit growth in 2021.

Responses to the November Pulse Report survey, conducted by Baird Research in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only, were lower than typical, with 57 dealers weighing in on current market conditions.

About 55 percent of respondents expect growth between 3 and 5 percent for the year ahead, though projections varied drastically; the next most popular choice was 6 to 10 percent growth; the No. 3 choice was split between the outlook that business would be flat versus those who thought it would be down 15 percent or more.

“Some manufacturers will not be able to deliver any inventory until well into late summer of 2021,” said one dealer. “This will hurt sales of people that are looking to purchase a boat in the spring, only to find out that they cannot. We will lose market share to [dealers that partner with] those manufacturers that can continue to build and deliver retail-sold boats.”

One respondent said 2020 is a “one-off” year. “I believe the economy and sales will decline as more dealers receive new inventory, and manufacturers stop taking orders for 2021 product,” said the retailer.

Some anticipate a slowdown following the election of Democrat Joe Biden, maintaining that President Donald Trump was friendlier to small business owners than his predecessor, Barak Obama.

“I would say we are looking to have a slowdown over the next couple of years with the changing administration and potential negative impacts that may have to 401(k)’s,” said one respondent, adding that lending had tightened during the summer after two years of consumer spending. “If the stock market continues to rise, I would expect the strong sales to continue.”

Around 33 percent projected declines in 2021. “Demand will be high, but growth will be hard due to lack of inventory,” said one retailer. “Prices have been jacked through the ceiling by the manufacturers, and this will hurt us in 2022, as prices never seem to come down.”

Parts and accessories were also in high demand and short supply in November. “Certain electronics and accessories, as well as certain models of engines, are hard to get, and are holding up and discouraging sales,” one retailer said.

Despite the challenges, dealer sentiment on current conditions remained strong in November, though it ticked down to 81 from 85 in October. The 3- to 5-year outlook dropped to 66 for the month versus the 70 reading in September, but the long-term outlook has fluctuated more dramatically than the short-term outlook; the reading was 59 in August. That likely reflects strong retail demand, inventory shortages, as well as an uncertain economic situation with the pandemic and the changing administration.

“Sure nice to take a year off winter boat shows, save a couple hundred thousand dollars, do all the housekeeping we’ve been putting off for years and give our weary staff a nice long break over the holidays,” said one dealer. “Governments need to figure out how to get rapid, at-home Covid tests in consumers hands so we can look out for our families properly without shutting down the economy and cancelling Christmas. With the hundreds of billions spent to date, it’s a joke this hasn’t already happened.” 

This article was originally published in the January 2021 issue.

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