Dealer Sentiment Drops Sharply Year-Over-Year

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Marine dealers are less confident about the industry than they were a month prior, according to a survey asking about October trends. Dealers rated current sentiment at 60 out of 100 — a number that’s still in positive territory yet is lower than it has been in many months. The rating is also a sharp decline from October 2017, when the rating soared to 77, and a dip from this past September, when it was 65.

“While sentiment remains in positive territory, dealers have grown more cautious entering the off-season,” according to the report, conducted by Baird Research in cooperation with the Marine Retailers Association of the Americas and Soundings Trade Only.

The three- to five-year outlook dropped even lower, to 59, the lowest rating since Trade Only began partnering to conduct the poll in February 2017. It’s a stark contrast to September’s rating of 73 and the October 2017 number of 78.

Sentiment about current conditions was in the 50s in 2014. The minimum for the three- to five-year outlook in the history of the survey is 59, according to Baird. The metric is set up so that 50 is a neutral reading.

Higher interest rates, product affordability, political uncertainty and lack of consumer urgency led dealers to a more cautious outlook, according to the survey. “The consumer has seemed to have lost the warm and fuzzy feeling and slammed the checkbook shut,” one dealer wrote. “Maybe after the November elections we can find some direction to the upside.”

Many dealers said that new-boat sales had “fallen off the cliff” and that finding leads required lots of digging. “Business has slowed way down for the last couple of months for us, for no obvious reason,” one dealer said. “Customers just aren’t coming through the door buying boats.”

Several dealers commented on lackluster fall promotions compared to the high cost of boats. “Consumers are not motivated by a $2,500 promo on a $280,000 boat,” one dealer wrote. Another noted: “Promotions are not rich enough in comparison to the price of the product.”

Dealers also mentioned large price increases by manufacturers, likely due in part to tariffs squeezing boatbuilder costs. “Price increases are 5 to 7 percent, and some manufactures are lowering MSRP, creating a margin crunch,” one retailer said.

Inventory also was on dealers’ minds, with more than half — 55 percent — saying they felt inventory levels were too high in October, and only 11 percent saying they thought they were too low. Some said they had too much dated inventory but indicated that they had trouble getting new models to pique customer interest. They also said they were unable to find used boats.

Fall boat show sales appeared to have been in line with 2017 shows, with 55 percent of dealers saying sales were flat, 34 percent reporting increases and 12 percent saying sales decreased. The flat comparison was optimistic, since October 2017 was more robust than usual. “Last October was the best in company history,” one dealer wrote. “To be flat this year is outstanding.”

The report concluded that while marine trends appear to have slowed, “October is seasonally less relevant and faced a tough prior-year comparison. Put another way, the 2018 season is largely complete, with well over 90 percent of demand occurring before October.”

This article originally appeared in the December 2018 issue.

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