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May Rebound

Dealers grew more confident given improving retail trends, but several remained cautious about the lasting effects of the pandemic
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A rebound in new boat retail in May, combined with boatbuilder shutdowns in April due to the novel coronavirus, prompted half of marine dealers to say inventory was too low while 23 percent said it was too high.

The response ratio was the leanest new inventory reading since 2008, according to the Pulse Report, a survey administered by Baird Research in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only.

Factory rebates and incentives were helping to drive interest, one respondent said.

“Finance penetration is very high,” the dealer wrote. “Frankly, we are not lying when we tell people we will be out of key models of boats and motors very soon.”

Of the 67 dealers who responded to the questionnaire asking about May market conditions, 81 percent said used boat inventory was too low, versus just 8 percent who said it was too high — the largest gap recorded in survey history.

“If it floats, it sells,” one dealer wrote.

Still, dealer comment was spotty, indicating that the rebound was inconsistent among regions and industry segments.

“Get this virus over, we are locked down,” one respondent wrote.

Another wrote: “There still seems to be interest, although many potential customers are shopping and waiting to see what happens.”

Dealers also reported stronger consumer interest in listing late-model boats, as well as an increase of trade-in activity. Almost half — 48 percent — said there had been a significant or moderate increase in people wanting to list models five years old or fewer. Fifty percent said they had seen an increase in trade-ins of boats five years old or less.

If the industry sees a rise in customers looking to sell later-model boats, it could be a bellwether about what will happen in the market, says Jack Ellis of Info-Link, a Florida firm that tracks new and used boat registrations.

“It can indicate whether people are having to sell boats because they lost their jobs, or what have you,” Ellis says.

Many dealers say they were seeing trades on older boats, and stronger consumer interest in boats older than five years.

“Older used boats are in demand but also harder to finance,” one dealer wrote. “Lenders have tightened up on units 12 years and older.”

Some customers have been able to sell boats on their own before trading them in, costing the dealership the trade, one dealer wrote.

“We are being more cautious on trade-in values, so it may be tempering some trade activity,” another wrote. “Most of the interest in trading is older-model boats, not five years or newer.”

The uptick in new boat retail demand prompted a jump in dealer confidence both in the short- and long-term; sentiment on current conditions took a gaint leap from 19 in April to 76 in May, and the three- to five-year outlook edged up to 64 from 60 in April.

Still, dealers were cautious about whether the trend would last.

“I’ve never seen a buying frenzy like this,” one dealer wrote. “Is this a short-term bump or is it a long-term change in consumer habits?”

Another expressed “real concern” about the continuing issues associated with covid-19 and how they would affect late-summer and fall buying trends.

The dealer asked, “[With] the recent retail selling surge, how deep into the summer will it continue? 2021 inventory ordering raises a number of questions for both the dealer and the manufacturer.” 

This article was originally published in the July 2020 issue.

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