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Inventory Weighs on Dealers Moving into the Off Season

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Dealers remain focused on reducing inventory levels through the slow season, with 80 percent of respondents to a market trend survey saying inventory was too high in November, versus 3 percent that said it was too low.

“The channel inventory appears to be much higher than it should be for this time of year,” wrote one of 81 dealers responding to the Pulse Report survey, administered by Baird Equity Research in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only.

“I see a lot of downward pressure on non-current inventory, which will also lead to pressure on used boats,” continued the dealer, adding that his business plans to take fewer new boats compared to last year.

Dealers are already lowering prices on 2020 boats, wrote another dealer, when asked what is not working for his business. Manufacturers aren’t doing enough to help, said a third.

Stronger-than-expected fall retail sales somewhat offset sluggish sales in early summer — attributed largely to bad weather — but moving into slower-selling months will mean dealers remain focused on working through inventory into 2020, wrote Baird in the report.

“We expect manufacturers to continue limiting shipments in Q4 in order to manage channel inventory, as off-season retail activity limits dealer sell-through,” the report said. “Still, the boat market is very fragmented, so retail trends and inventory positioning may vary widely by brand.”

Looking ahead to 2020, 61 percent of dealers predict their clientele will demand similar products in terms of size and amenities as in 2019; others expect increased demand for smaller, more value-oriented products (24 percent); and 15 percent think demand will increase for larger vessels with more amenities.

Many said they remain concerned about the increasing price of boats, as well as the upcoming election and political discord. “Regardless of political view, the population group that can afford a boat is continuing to decline,” wrote one dealer. “Until a plan is made and implemented to increase wages in this country on a broad scale, we will continue to see customer bases diminish. We have managed in the past to find a cheaper product to satisfy the customer desire and needs. But finding even cheaper products to fulfill those desires and needs is becoming exceedingly difficult.”

Those concerns may have contributed to another drop in short-term and long-term dealer sentiment. The three- to five-year outlook decreased from 51 in October to 41 in November, and the current sentiment dropped from 52 in October to 41, placing both back into negative territory. 

This article originally appeared in the January 2020 issue.

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