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Tax Cuts Didn’t Seem to Hurt or Help New-Boat Sales

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Thirty-two percent of marine dealers who responded to a May survey said the change in tax laws had no effect on business, and 22 percent were unsure whether they’d impacted customer spending.

“Preseason and boat show sales were down this year,” wrote one dealer responding to a Baird survey conducted in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only. “It is unclear to us exactly why that is, but we believe it is partially a result of financial instability due to questions about taxes and the economy.”

More dealers thought the Tax Cuts and Jobs Act passed by the Trump administration had a positive effect on business, 22 percent, versus the 20 percent who said it was negative. One dealer said he was seeing more customers finance rather than pay cash, and another said tariff uncertainty and the impact on markets had been challenging.

“Based on the fact our new-boat sales are flat to slightly down, the tax cut or improved employment hasn’t helped,” wrote one dealer. “At the same time, I don’t believe they’ve had a negative impact, either.”

One retailer said that the middle class was hurt, rather than helped, by the tax changes, while another countered that boaters have more money in their pockets.

For the first time this year, more dealers reported declines — 51 percent — than the 28 percent that experienced growth.

Weather was the top-rated headwind for retailers, with one commenting that rain and high waters that came after winter translated into fewer shoppers. The weather factor metric for May matched the lowest reading in the survey since April 2014.

Comfort with new-boat inventories also worsened sequentially, reflecting disappointing retail results. Fifty-six percent of the dealers reported that inventory was too high, versus 5 percent saying it was too low.

Government action or inaction was cited as the next largest hang-up to selling boats as tariffs continued to dominate the news. The tariffs have sparked major price increases — something one dealer said was slowing sales.

The current outlook from dealers was 40, versus 58 in April, and the three- to five-year outlook was 39, versus 45 in April. “Preseason and boat show sales were down this year,” wrote one retailer. “It is unclear to us exactly why that is, but we believe it is partially a result of financial instability due to questions about taxes and the economy.”

One respondent commented that younger people were not taking to boating; another said government instability was hurting consumer confidence, and a third said dealers experiencing growth “must be where the extremely wealthy reside.”

“Floor traffic is way down,” said another. “We don’t seem to be getting the opportunities to earn a customer’s business like the last few years.”

One dealer commented that sales of boats larger than 30 feet had slowed in the past few months, and that boats larger than 40 feet were even slower. However, the outlook was positive for others, with one retailer noting, “After the 2017 election everything took off, wild 2017 and 2018, best years ever.” 

This article originally appeared in the July 2019 issue.

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