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Dealers Are Ready to Take Stock

Retail sentiment refloats a bit from a negative level, but dealerships still crave more inventory
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More U.S. boat dealers were disappointed than were impressed with business conditions in the first half of 2022, according to the monthly Pulse Report survey that measures retail boat trends. A total of 36 percent of respondents to June’s survey said the first six months of the year were below or well below prior budget expectations. Only 22 percent said the first half was above or well above expectations.

“The market has softened quickly, like a light switch,” one dealer stated in the survey, which is conducted by Baird Research in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only.

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More dealers reported retail declines than growth by a margin of 49 percent to 32 percent in June, with dealers citing rising prices as a headwind. Dealers continue to report strong service demand.

“New-boat inventory remains incredibly lean,” the Baird analysts said, with 71 percent of dealers stating that new-boat inventory was “too low.” Preowned inventory was also reported as “very lean,” with 74 percent of dealers responding it is “too low.” Several dealers said they were starved for inventory to show walk-in customers.

“We will take all new-boat inventory that any of our factories will ship us,” one dealer said. “We feel demand the past six months was not as strong as everyone talks about because no one has inventory. It will be interesting [to see] how demand is once all dealers have inventory again.”

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That same dealer also said he was “more than a little concerned about the large price increases … and sticker shock.”

Dealer sentiment was still negative in June but improved somewhat compared with May. The Marine Retail Sentiment Index on current conditions was measured at 37 in June, up from 34 a month earlier. A reading of 50 is considered neutral. Sentiment on the dealers’ three- to five-year outlook was 33 in June, versus 27 in May.

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Bright spots in the monthly survey included pontoons, repowers and the payoff when concentrating on sales strategies and customer service again, after two years of expecting “quick-close and slam-dunk deals,” as one dealer termed it.

“Many manufacturers still have not figured out how to communicate delays effectively,” another dealer wrote. “They are leaving dealers in the dark. … Uncertainty with regard to when a customer can have a boat or what the price will be are creating major hurdles for new buyers. We’re going to have to go back to a system where price is determined when the boat is ordered on presold boats, rather than allowing the manufacturer the ability to reprice it up until it is invoiced.”

Multiple dealers said higher prices from boatbiuilders likely will be an additional deterrent for consumers who are concerned about a slowing economy and their losses in the stock market.

“It seems that the negative consumer reaction to the tremendous increase in boat prices is starting to have an effect,” one dealer wrote. “Our customers are in total shock about new-boat prices. The manufacturers we represent have raised prices over 35 percent in three years.”

The net result of all the overlapping market forces may approximate a normalization of the boating business after the halcyon years when the pandemic created a catalyst for buying.

“The glory days of Covid and unrelenting demand are now over,” one dealer wrote. “We started noticing demand dropping about 120 days ago, and sure enough, we are back to normal business.”

Another dealer said he expects “continued demand for new and used boats, but perhaps not at the rate we’ve seen over the past two years. We will remain busy delivering boats that are retail-sold but not to the dealership yet. Continued parts shortages and lack of engine availability are keeping the pace from going any faster than it currently is. Overall business levels may not be as strong as last year but are still very respectable, all things considered.” 

This article was originally published in the August 2022 issue.

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