Prediction time, once more. Barring an unexpected economic jolt or a black swan event, most signs point to continued growth in our industry in 2017.
New-boat sales do well when consumer confidence is high. And a preliminary report from the University of Michigan in December showed consumer sentiment rising to its highest level in nearly two years.
President-elect Donald Trump’s business-friendly economic plan of lower taxes, financial deregulation and infrastructure spending has so far resonated positively on Wall Street and beyond.
In early December, all major U.S. stock indexes hit record highs. And it goes without saying that the long-running bull market and the accompanying wealth effect are good for boat sales. For the moment, the so-called “animal spirits” are alive and well and roaming the docks and showrooms.
In addition to the surge in equity markets, home prices have been rising and the economy has been steadily adding jobs; the unemployment rate declined to a 9-year low of 4.6 percent in November. All good signs for boat sales, which rely on optimistic, sure-footed consumers willing to spend discretionary dollars.
That’s the big picture.
“New” will continue to be the principal driver of boat sales. And builders that invest in new products that make boating simpler, more intuitive and, perhaps, more car-like will do well.
True innovation that transforms boats or a lifestyle will remain rare. But features that enhance functionality and enjoyment — everything from greater connectivity and slow-speed handling systems to comfortable social layouts — will pull folks off the fence and into new models.
Although new-boat sales still lag pre-recession levels, the industry has seen almost six years of slow to modest growth. Look for new-boat sales in 2017 to be up between 5 and 6 percent in units and significantly higher in dollars. Low fuel prices and interest rates and the availability of retail and wholesale loans also will continue to contribute to growth.
Across market segments and product categories, those companies that excel at taking care of their customers will separate themselves from the pack.
Other trends: Outboard power shows no sign of abating for a host of reasons — reliability, performance, space savings, ease of use and so forth. Look for additional improvements across horsepower ranges as new models are developed.
Post-recession growth notwithstanding, affordability remains a concern. New-boat prices make it difficult to attract millennial, entry-level and even middle-class buyers to our sport. The entry-level boat continues to be a used one.
How do we attract younger first-time boaters — those who might be hamstrung with student debt or are more interested in experiences over ownership? Boat clubs, rentals and sharing models need to be part of an ever-widening funnel.
Workforce shortages remain an issue that requires industrywide action and coordination. There also is renewed focus on growing the sport by diversifying the consumer base to include more Hispanics, African Americans and Asians. This will become increasingly important as the influence of baby boomers wanes.
The youngest boomers (those in their 50s) and older Gen Xers will continue to drive the high-end portion of the market. They have the discretionary income and are motivated in part by the realization: “If not now, when?” Looking at the graying edge of the boomer cohort, I expect older owners to maintain their current boats, downsize (if practical) and gradually age out.
Concerns? Will the rhetoric from the bruising presidential election prove to be just that, or will the future bring sharp increases in trade barriers? There is also the potential that rising inflation will increase the pace of future interest-rate hikes, which could prove to be a drag on growth. And the strengthening dollar will not only have an effect on boat companies that do business abroad, but also will make imports cheaper.
One thing that won’t change: We have the raw materials to support the best recreation on the planet. Wind in your face, sun on your back and the wide horizon ahead. Boating knits family and friends together like few other activities. And the sense of freedom and independence it engenders is unmatched. That may be our most valuable commodity and one we need to trumpet every chance we get.
This article originally appeared in the January 2017 issue.