Inventories of new and used boats are improving at the retail level but are still considered comparatively lean, according to the results of the monthly Pulse Report survey.
Price increases and economic worries are beginning to discourage boat purchases, especially for low- to middle-income Americans, boat dealers said in the August survey, conducted by Baird Research in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only.
“We’re seeing the first rumblings of consumer unease at the economic headwinds,” one dealer stated. “Interest rates have ticked up twice in the last month, and inventory has gained ground faster than sales for the first time in over a year. Sales still remain strong, but we’re watching to see if the mood shifts further into fall and [we are] beginning to put some discounts and advertising into ensuring our inventory levels are balanced going into fall.”
Fifty-five percent of dealers said inventories were “too low,” while 22 percent said they were “too high,” the survey found.
The jump in inflation and persistent manufacturing delays weighed on dealer sentiment in August, according to the survey of 78 retailers. The Marine Retailer Sentiment Index measuring current conditions declined to 39, versus 42 in July. A measure of 50 is considered neutral.
The three- to five-year sentiment outlook was unchanged at 39. “There remains cautious optimism with consumers’ purchase decisions, but inflated pricing from all manufacturers has slowed interest,” one dealer reported. “Rebates and incentives are doing little to move the needle towards buying decisions.”
Another predicted that “the boating industry is going to price itself out of the family boating market really quickly here if it’s not careful. We’re concerned not for the short term, but [for] the aspirational boaters.”
A slim majority (51 percent) of dealers reported retail declines in August, with only 20 percent reporting sales growth. In the preowned market, 48 percent of dealers reported a monthly sales decline, and 28 percent reported sales growth. August typically represents approximately 9 percent of annual retail sales, Baird stated.
“High prices from last year [are] not going over with customers,” said a dealer who is getting “more tire kickers” than buyers, further commenting that “no one wants to commit to purchase of new or used.”
About half of the survey respondents said they were investing more in digital channels this year compared with 2021. “Online and social media marketing is creating much more interest that other forms of advertising and promotions,” one dealer said. “We feel that the pandemic helped speed up consumers’ acceptance of online shopping for major units. This has worked to our advantage and continues to provide most of the leads into our sales and service departments.”
However, most dealers said their online presence was still generating a minority of their sales leads.
Multiple dealers continue to report challenges in hiring staff. Some retailers said boatbuilders do not yet fully appreciate the impact that their higher prices will have on consumer purchases.
“The retail buyer is getting tired of the manufacturers’ shell games of blaming everything on supply-chain issues and running the price of everything through the roof,” one dealer wrote. “I hope the manufacturers remember this tide will turn.”
Another observed: “Inventory is turning positive, but lack of customer interest doesn’t help. Consumers are nervous and traveling. We are in a downward cycle as projected.”
This article was originally published in the October 2022 issue.