Nearly every aspect of retail in the boat business improved in January as dealers became more comfortable with inventory levels, reported sales growth, and grew more confident about the year ahead, according to a survey.
Retailer sentiment about current conditions improved dramatically to 69, versus 54 in December, and the three- to five-year outlook also edged up to 56, from 54 last month, according to the Pulse Report, a survey administered by Baird Equity Research in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only to gauge retail trends on a monthly basis.
Dealers cited innovation, new products, expansion and promotions as boosts to their businesses in January.
“After a very quiet November and December, it was nice to see a revival in buying interest along with boat purchases,” wrote one of the 78 dealer respondents. “This could be due to our winter boat show moving from February to January. Larger sterndrive bow riders (25 feet) are selling along with continued center console demand. Lower credit union loan rates are helping.”
They also reported improvement in inventory levels — 64 percent of the 78 dealer respondents said it was too high in January, compared 73 percent who thought it was too high in December and 80 percent that reported inventory levels too high in November.
Some traced the higher inventory levels back to increasing boat prices.
“Boat manufacturers want to keep shipping new product but are doing little to assist in moving the products sitting at the dealerships,” wrote one dealer. “Potential boat buyers are being super cautious. Especially younger ones with big college debt that needs to be paid off. With the ever-increasing prices on new boats, we are decreasing the next generation of boat buyers to a tiny percentage. Just look what $100,000 buys you in a boat now.”
Almost half reported growth in January, 49 percent, versus 23 percent that reported a decline, an improvement over recent months — in December 36 percent said business had increased compared to 31 percent that said it had declined.
Several commented on strong winter boat show sales and leads, though others said their regional show had been flat, reiterating market choppiness.
“Boat shows are getting too expensive and [there are] too many,” wrote one dealer, adding that the technician shortage has also been a drag on business.
Anecdotally, commentary around boat show activity has been positive, though Baird says show attendance has been more mixed.
More than half, 55 percent, predicted retail growth in 2020, versus 22 percent who forecast declines; the majority expected the industry to increase between 2 to 3 percent, followed by those who said they thought it would remain flat with 2019.
Government action/inaction seemed to be the only major drag on business.
“The tax cut has worn thin, the Fed looks to slow increases in its balance sheets, the out-of-control government spending, has to slow at some point,” said one dealer. “When all these things come together, the market will most likely pull back considerably. This will have a deflating effect on consumer morale and confidence — are we positioned to meet the challenges that will present themselves when this occurs?”
Many dealers said they hoped early 2020 momentum would continue into spring.
“Net, we view our January checks as a positive for the space, but would caution investors not to overrate January results or make large revisions to 2020 outlooks,” wrote Baird in the results. “Our checks suggest trends improved in January, but we realize winter months are seasonally less relevant. Still, we are encouraged by offseason retail activity and de-stocking progress — supporting our constructive view on the marine space.