New- and used-boat sales continued along an unprecedented trajectory in July, but dealers are expressing increasing caution given the pandemic’s rampant spread and the upcoming presidential election.
Dealer sentiment on current conditions increased from 89 in June to 91 in July, but the three- to five-year outlook ticked down to 65 from 71 — reflecting growing uncertainty despite record new- and used-boat demand, according to a survey asking retailers to weigh in on July market conditions.
“I’m going to watch what we stock for next year, going to be cautiously optimistic and stock what I did this year or maybe a little less,” one of 91 dealer respondents said in the monthy Pulse Report, a Baird Research survey administered in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only.
Some dealers said they were apprehensive about how the persistent pandemic would play out in the coming months and year, and about the upcoming presidential election. “Although Covid has significantly helped our local boating industry during this season with demand on new-boat sales, used-boat sales and service all around, we are still cautious as to what the fall of 2020 and the 2021 season will bring,” one dealer said. “We are swimming in unknown territory and nobody wants to be shark bait.”
Service and rigging departments were swamped in late July, another retailer said, adding, “We need to increase service professionals and fix the supply chain.”
Others worried that new-boat buyers may rethink their purchases when making payments during the off-season, and were concerned that government the stimulus had masked the true economic impact of the coronavirus. “I don’t think we have experienced any of the repercussions of the shutdown yet,” one retailer said. “All the helicopter money swirling around has made many delusional or oblivious to the true state of the economy. This fall could be interesting. For once it was good to be in the recreation industry because people just wanted an escape. Come this fall when they have to pay for it, but not use it, will their attitudes change?”
Lack of boats, parts and accessories, as well as a shortage of technicians, created headwinds to sales; 89 percent of dealers said new-boat inventory was too low in July (compared with 86 percent in June). Another 84 percent reported retail growth in the month — the second-highest reading in the survey’s history after the previous month.
Nearly half of dealers said it had been “very difficult” to get new boats, with extreme wait times or limited availability. Another 11 percent said they were unable to stock needed models, and 35 percent reported long wait times. “Sold all my inventory, and I can’t get replacements,” one dealer said, while another said he couldn’t get parts through the supply chain because of manufacturing shutdowns.
“Our checks suggest the tidal wave of retail demand continued into July, outpacing OEM efforts to restock the channel,” the Baird report stated. “We believe depleted inventory levels are leading to missed sales, a phenomenon that likely persists for the [rest ot the] 2020 season. We expect continued strength to close the summer, but note investors may take profits ahead of election season.”
This article was originally published in the September 2020 issue.