Hopes were high among organizers and exhibitors at the Feb. 12 opening of the 68th annual Miami International Boat Show and Strictly Sail Miami.
“People use this show as a barometer of the industry, a barometer of the consumer,” says Thom Dammrich, president of the National Marine Manufacturers Association. NMMA produces the show, which ran through Feb. 16 at the Miami Beach Convention Center, the Sea Isle Marina & Yachting Center, and Miamarina at Bayside. There were 2,115 exhibitors — about 75 fewer than in 2008.
In his annual state of the industry address, which he presents at the Miami show, Dammrich said attendance has been down at all NMMA shows this season — from 2 percent to more than 40 percent. However, he says, the desire to go boating remains strong.
“Though current economic conditions are depressing consumers’ buying at the moment, dealers tell us there is significant pent-up demand among consumers attending boat shows,” he says. “People still want to go boating and to buy boats.”
That said, there is no denying that 2008 was a poor year for most in the industry. Boat sales were down 28 percent in units and 25 percent in dollar terms last year, Dammrich says. Preliminary figures indicate total sales will drop below the $30 billion level in 2008. That is a figure last seen in 2001.
“Falling housing prices, combined with tightening credit throughout the year and the collapse of the stock market in late fall created a perfect storm for boating,” he says. “Consumer confidence sank to record lows, and many people saw as much as 40 percent of their wealth evaporate from falling housing prices and stock prices.” On top of that, fuel prices last summer “absorbed a greater and greater share of a consumer’s disposable [income].”
And just when the industry thought the situation couldn’t get worse, floorplan financing for dealers began to disappear, as lenders pulled out of the marine market and those who remained tightened credit and raised fees and rates, according to Dammrich.
In the year ahead, Dammrich says he expects credit will flow again in retail and wholesale, the housing market will improve, and consumer confidence will start climbing again.
Credit union outreach
The NMMA, Dammrich says, is working with lawmakers to ensure boats are treated the same as cars in any stimulus package, and is promoting greater credit union lending for new-boat purchases. The NMMA has met with national credit union officials to initiate a pilot program in this area.
Also, legislation recently passed the House of Representatives with a provision allowing TARP funds to be used to support dealer floorplan financing.
And despite all the grim news, preliminary figures show boating participation was up 1 percent in 2008, and “participation precedes purchase,” Dammrich says.
“The first half of 2009 will continue to be challenging, but by the third quarter we should begin to see an improving environment for the boating industry,” Dammrich says. Now is the time for businesses to make improvements and get ready for the recovery, he says. “We cannot lose sight of the fact that the work we do in this industry improves the quality of life of boaters, of the American public,” Dammrich says. “Boating is not going away. I believe it will be back as big as ever.”
One bright spot at the show was the release of the J.D. Power and Associates 2009 boat and marine engine surveys, which showed the industry is doing a better job of pleasing its customers on both fronts. The consumer research firm honored 11 boatbuilders and engine manufacturers for the satisfaction consumers have with their products.
Engines, boats, sales and service all received higher satisfaction ratings this year, says Todd Markusic, senior director of the power sports practice at J.D. Power. Survey results are based on responses from 9,790 owners who registered a new boat between June 2007 and May 2008.
Overall satisfaction increased from 813, on a 1,000-point scale, in 2008 to 830 in 2009. The express cruiser and large runabout segments primarily drive the overall increase, according to the survey.
“In a time when sales are down nearly 30 percent and consumers are scrutinizing their discretionary spending, enhancing satisfaction and improving quality is vital,” Markusic says. “The strongest brands are going to survive … now is the time, more than ever, to have a satisfied customer.”
Also, Markusic notes, there was a decline in problems per 100 boats. This year, 283 problems were reported per 100 boats, compared to 315 in the previous year.
In measuring the overall boat ownership experience against motorcycles and automobiles, boating is improving, with a score of 8.5, compared to 8.72 for motorcycles and 8.95 for autos. In satisfaction with the sales process, boating is now outperforming motorcycles, and in service satisfaction, it’s only slightly behind motorcycles. Marine, Markusic says, improved in all areas and is closing the gap with the other two industries.
Survey results show 20 percent of new boats are purchased at boat shows. The figure rises to 26 percent in the express cruiser category and 24 percent with small runabouts.
“Obviously there’s great value in these boat shows,” Markusic says.
The median owner-reported price paid for a new boat increased by approximately $1,500, to $31,495 in 2009, the smallest price increase during the past three years.
For more on the survey, including winners in the individual categories, go to www.jdpower.com.
Look for more on the Miami International Boat Show in the April issue of Soundings Trade Only.
This article originally appeared in the March 2009 issue.