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Cautious Optimism

We asked dealers to offer their Magic 8-Ball outlooks on retail conditions for the new year
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For this month’s Pulse Report, the monthly survey conducted by Baird Research in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only, 111 marine retailers were contacted to assess current and future retail trends. And in a trend that goes back to the spring, dealers continued to report strong consumer demand and extremely lean inventories.

Dealers were also asked to opine on 2022 retail growth expectations — again, inventory availability is expected to be a major driver of performance. Those who responded said that 2022 production is presold as demand continues, positioning companies for strong sales trends through 2022 and 2023. Restocking activity is expected to last well beyond 2022.

Broadly, dealers expect 2022 sales near 2021 levels. At the margin, more expect growth (39 percent) than declines (37 percent), with growth slowed by a lack of units in stock. “We only expect 2022 to be down due to lack of being able to get inventory. We would be up more than 15 percent if we could get inventory,” one dealer said.

Overall, more dealers reported retail growth (44 percent) than declines (29 percent), a sign that availability may be improving in seasonally lower volume months. “Demand is still through the roof,” one dealer responded.

However, almost 90 percent of dealers reported that new-boat inventory is too low, while just 2 percent reported is was too high. Used inventory also remains extremely lean, with 78 percent of dealers reporting used inventory as too low. One dealer commented on used-boat sales: “The used NADA is priced way too high right now. That’s why the new market it doing so good for us. Guys are trying to sell their boats for more than they paid, and smart shoppers have noticed. They will wait for a new boat with a full warranty.”

Another voiced cost concerns for a bevy of boat-related products: “I think people are hitting their ceilings on the costs of boating. It’s not just the inflated purchase price of major units, though also the costs of upkeep. Shrinkwrap is increasing by 40 percent. Non-toxic antifreeze is up big, [as are] other items across the board. And then there is the rising costs of labor. It all adds up. We are still selling but for how long?”

While the lack of inventory has limited retail sales in 2021, it has also reduced carrying costs, and many inbound units are already presold. “We would have had a better year if some of the manufacturers kept up with their commitments. We understand but are hoping for more inventory next year,” was one response.

Sentiment on current retail conditions improved last month (46 versus 43), while the three- to five-year outlook decreased (44 versus 52). Dealers expressed concern about the impact of higher costs and inflation on demand. One commented: “Manufacturers should be willing to reduce prices in the future if supply chain and disruptions get under control.”

One dealer cited the continued importance of communication, saying that one positive has been “open communication with our primary major unit supplier. I have been receiving regular updates on our on-order, sold and stock boats. Knowledge is value.”

With all the news recently about inflation, we asked dealers how current manufacturer prices compare to pricing on equivalent units this time last year. Ninety-seven percent of dealers reported increases of greater than 5 percent, with most reporting low-double-digits to low-teens percent increases. Most dealers surveyed — 84 percent — also said that they plan to pass along most or all of the increase to consumers.

Another said, “Working hard to have boats, motors and trailers in stock or on order to sell. Not much need for marketing, as customers are coming in without us marketing. Having to pay employees a lot more to retain them. Higher margins have helped offset the increase in employee costs.” 

This article was originally published in the January 2022 issue.

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