Choppy but Improved Selling Season in September

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Dealer sentiment regarding retail conditions returned to almost neutral territory in September — measuring at 49 and up from 44 in August — but sentiment on the three- to five-year outlook ticked down to 43 from 46 in August, according to a monthly survey measuring September trends. The conflicting data reflected widely varied responses among dealers, depending on their region and segment.

Dealers cited government action or inaction as the primary headwind, with one commenting that despite good weather, business was slower than expected. “Mentions of a recession and unrest in the White House are not helping,” one respondent wrote to the Pulse Report, a Baird survey issued in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only.

Another reported mixed messages from vendors regarding the economy, while others cited all kinds of concerns that included “caution with the economy, election year on the horizon, instability of stock market, pricing of new boats, and options for discretionary income usage.”

Other dealers had a more optimistic outlook. One said that promotions, a healthy economy and new products were resonating with customers. A handful of dealers echoed concerns that more customers were being turned down for financing, and some continued to cite poor-quality product from manufacturers. “The complete lack of quality from all manufacturers is staggering at this point,” one dealer wrote. “They all tout their products as equal if not superior to similar items you would find in the automotive industry. It is almost laughable at this point. They put a premium price tag on something that will inevitably break down within the first few uses. For what they are charging and the pitch they are giving to customers, you sure would think it would be more robust.”

Retail trends improved slightly from August, though more dealers, 41 percent, reported retail declines compared to the 35 percent that reported growth, according to the survey, which polled 63 dealers in North America. Several dealers mentioned the high price of boats, lack of workforce and the possibility of a recession as drags on consumer demand. “Business has been very choppy,” one respondent wrote. “We find if you are not flexible on prices, it’s hard to make deals. Obvious that there is more inventory in the field.”

Several dealers were concerned about inventory in the coming slow season; 65 percent still considered inventory “too high” in September (down from 72 percent in August) versus 3 percent who thought it was too low. “Boatbuilders continue to overbuild. Oversupply is causing buyers to shop more, and dealers are stuck in the middle as always,” one retailer wrote.

Another stated: “Manufacturers are getting greedy by forcing inventory on dealers because of the shortage two years ago. The current pricing is outpacing the rate of inflation.”

The survey asked dealers how many brands they represent, and whether that number grew post-recession. While most dealers carry boats from three to five manufacturers, they often only carry one or two brands within a segment.

Almost half said they carry more brands now than they did prior to the downturn, but almost all respondents said they were not taking on additional brands. That resistance could make it challenging for brand startups and international builders entering the U.S. marketplace to find distribution outlets. 

This article originally appeared in the November 2019 issue.

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