More dealers reported growth than a decline in February boat sales — 41 percent versus 31 percent — which was slightly softer than January trends, but an improvement from a weak finish in 2018.
“2019 is off to a slower start than anticipated but lead activity is still fairly strong. Customer commitment is the challenge,” wrote one dealer that responded to a Pulse Report survey administered by Baird in conjunction with the Marine Retailers Association of the Americas and Trade Only Today.
“Really cold weather, government shutdown, trade talks, and just a general feeling of the unknown seems to be impacting decision making,” the dealer added. “Still feel positive about 2019.”
Dealer sentiment about current conditions leapt to 67 in February from 53 in January, still soft in the big picture, but an improvement over its neutral rating last month. Last year, dealer sentiment in February was 79.
Extreme weather and government action or inaction were by far the largest drags on retailers’ current market outlook — the month-long government shutdown was still on minds of consumers, and tariffs seemed to weigh on the minds of small business owners.
“Government shutdown created uncertainty,” wrote one respondent to the survey.
Others worried about the midterm election results; one wrote about fears that Connecticut’s new governor, Democrat Ned Lamont, would “raise taxes a lot” and double sales taxes on boats to close the budget gap.
Lamont has suggested increasing taxes on boats from 2.99 percent to the standard sales tax. According to the Connecticut Post; the state cut the tax on boats last year from the standard 6.35 percent to compete with neighboring states that have reduced or eliminated taxes on boats.
The long-term outlook also improved to 56 versus 44 in January; the rating, though just above neutral, was also significantly lower than the 70 rating in February 2018.
Dealers had concerns about price increases — several builders were forced to raise prices out of cycle to absorb the cost increases associated with tariffs.
“I think we are starting to have a slowdown in the boat business and the boat companies have no clue and are having two to three price increases in a year, out-pricing the consumer,” wrote one dealer.
Dealer respondents overwhelmingly said that tariffs and trade were the largest government concerns, with 44 percent naming that as their top issue for 2019.
“An awful lot of new boat buyers have been taken out of the market,” wrote one dealer. “Be careful with new boat inventory through remainder of year.”
Another pointed to the slowdown in the RV market.
“Watch your inventory!!!” one dealer cautioned. “The RV business has a glut of units sitting at dealers. Everyone was expecting last year to be another growth year in RV and it didn't meet expectations. Now dealers are sitting heavy in inventory. I think there's a good chance this could happen in marine this year.”
“Concerns over inventory and a potential slowdown remain top of mind, but dealers are also facing staffing pressure,” wrote Baird analysts in the report.
"Staffing is always a challenge; the cost of every employee is getting out of control,” said one respondent.