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A Looming Shift in the Trade Winds

Boat-buying sentiment may start to deteriorate, but the change could ease the inventory conundrum
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Some boat dealers say Americans are not quite as eager as they have been to buy new boats, possibly setting the stage for a rebuild of significant unit inventories for the first time in at least two years.

While some dealers are still seeing customer interest and orders, others say economic foreboding and high boat prices have resulted in a slowdown of inquiries, according to May’s Pulse Report, which is conducted by Baird Research in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only.

“It’s like we just hit a brick wall,” said one of the 45 dealers who responded to the survey.

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Previously, any lack of new orders was consistently blamed on a dearth of inventory from builders. That trend held true in the May survey, with 83 percent of dealers saying new-boat inventory is “too low” versus 7 percent that said it was “too high.”

Original equipment manufacturers are still working through a backlog to fill prior orders. Many retailers say they would welcome a buildup of boats to display.

“Dealers reported extremely lean inventory levels, supporting a significant restocking cycle for marine OEMs and suppliers even if retail trends deteriorate,” the Baird researchers said.

One dealer warned the industry against “thinking that the end consumer has an unlimited piggy bank and disposable income,” and will continue splurging on the hobby of recreational boating.

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“With what the price on new boats is, at some point you cause consumers to take a pause and ask, Is this really worth it?” that dealer said. “I think we are there.”

Another dealer warned that a welcome arrival of new-boat inventory could quickly escalate to an unwelcome level, given the economic outlook and how it affects consumer sentiment. “If we are not in a recession already — I feel we are — then we are quickly heading there,” that dealer said. “Last year, not enough inventory, and now there will be an oversupply glut.”

Other dealers said they are devoting more resources to active sales efforts. While inflation and high gasoline prices have created headwinds, some dealers are still receiving inquiries via social media marketing and other campaigns.

Booking sales is “becoming a little more challenging with fuel prices and current economic conditions, but hard work and grinding out deals is still paying off,” one respondent said.

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“Sharpening the ‘sales pencil’ is helping move more product,” another stated, “but the flip side is one is not able to make up the lower margins with any increase in the supply chain.”

Some dealers pointed to higher costs and headaches in attracting competent employees, particularly service technicians. “Staffing continues to be a struggle,” one dealer said. Another pointed out the inevitability of labor costs resulting in more expensive boats at the retail level: “It’s tough not to pass on the buck to the customer while overpaying for labor.”

Other dealers continued to cite a lack of shipments, not only from boatbuilders, but also from components suppliers. “Sales activity [is] still decent, but deals are getting tougher,” one dealer said. “Product quality and parts shortages making deliveries more challenging and stressing our people and schedules. [We] really do not want the cure for all of this to be a major decline in sales.”

Still another dealer said, “The ‘battle for outboard engines’ between OEM boat manufacturers and ‘boxed engine’ dealers is a lose-lose situation. We have lost untold sales for repowers this year because of engine-manufacturer/OEM-builder agreements to supply and prioritize them above their dealer network. Yes, global demand has been up … but there has been a choice to deliver units to boatbuilders that are supplying packaged product to dealers that may only sell packaged boats and may not even sell loose or boxed engines.” n

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