Like it or not, we are smack-dab in the age of thrift. Not a great time to be selling big-ticket items that require significant amounts of discretionary income, but you and I know that reality, chapter and verse.
It has been an especially tough market for new boats. Retail credit markets are tight, most consumers are paying down debt rather than taking on more, and what potential buyers there are on the docks are looking for deals. And be honest: Is anyone surprised that folks looking at new boats are experiencing a healthy dose of sticker shock given what's happened to the value of their homes?
When you can buy a nice house in a good neighborhood for less than the cost of some large outboard-powered center consoles, you know the world of relative values is on shaky ground. But that's what we're up against.
It raises the question: Are there ways to reduce the cost of new boats to make them more attractive in this price-sensitive environment? Can we make boating more affordable?
As always, there are no simple answers, but several trends are emerging, including downsizing across a host of market segments and more no-frills boat lines. There will always be a segment of the population that can buy high-end new boats, regardless of price, but even that pool has shrunk significantly with the Great Recession. More importantly, our industry cannot afford to price the middle-class buyer out of the market.
These are the guys I see at my marina. They're the ones out fishing at 5 o'clock in the morning or anchored off the sandbar in the afternoon, swimming and picnicking with their families. They rent slips; buy fuel, oil, ice and fishing tackle; upgrade their plotters or fishfinders once in a while - and occasionally whack a stump or rock with their lower unit and have to bring the boat in for repairs. They are the devoted, passionate members of the tribe, the lifeblood of the industry.
We need to keep them in the ranks, along with young families still building careers and baby boomers who are eyeing retirement but are in no hurry to swallow the anchor. For them, price matters more than ever. New or used, the boat has to be affordable, which leads us to the current downsizing trend.
Many of those buying new today are purchasing smaller boats. That shouldn't come as a surprise, but it does mark a slowing, if not a reversal, of the bigger-and-faster-is-better mantra that drove new-boat sales for many years. That run, of course, was fueled by easy credit and an overinflated housing market. And while you learn to never say never, those days probably aren't coming back for some time.
There are a number of companies developing smaller value lines to try to tap into this trend. At the same time, consumers may have to change their expectations in terms of size, performance and accommodations in order to fit their budgets to the cost realities of the new-boat market.
I suspect a good number of experienced boaters will still buy all the quality they can afford in a new boat, even if that means purchasing a smaller one. For myself, I'd rather buy smaller and better than larger and weaker. In other words, consumers don't have to give up quality or resale value, but they may have to find those attributes in smaller, more modestly powered packages.
Unless you're building a thousand boats at a time, it's tough to reduce manufacturing costs. The economies of scale just aren't there. It's a low-volume, labor-intensive business. But more and more companies are doing what they can to streamline their build processes, including reducing the number of options and models offered. Luxury options that don't add tangible value to a boat are clearly candidates for the conspicuous consumption scrap heap.
Building boats designed to be powered by smaller engines is another way of keeping costs in check. Horsepower is not cheap. You certainly won't make customers happy by underpowering their boats. On the flip side, is 50 knots a sensible top-end benchmark? In the real world, how often are people able to safely run their boats at that speed?
Modest power and modest speed are part of the affordability equation. Again, it's going to require some recalibration on the part of consumers, builders and dealers. Manufacturers can help shape consumer expectations through their advertising and marketing images and messages.
When the world was flush with credit, you could get away, I guess, with selling boats that were finicky, ostentatious, inefficient, overcomplicated and expensive as hell. I'm not sure that's a winning formula moving forward. You can make a case, I believe, that reliable, seaworthy, handsome, efficient, fun and reasonably priced boats will find a market, especially today. Realistic? Time will tell.
This article originally appeared in the November 2010 issue.