It was rewarding and challenging while it lasted, but the recent surge in demand for new boats is waning. The “Covid bubble” — driven by families seeking a pandemic-safe activity — created the largest and quickest positive surge in U.S. boat market volume since new-boat registrations started being reported in the mid-1990s. And yet during the last two quarters of 2021, rolling, one-year, new-boat registrations in the United States declined just as steeply as they rose.
So what’s next? A look at U.S. boat market history back to the early 2000s offers hints about our likely future.
The data in the Recent History & Forecast chart below shows new U.S. registrations of boats in the first half of 2020 stayed flat for the first half of the year, as people evaluated the family impact of the pandemic.
Bubble Volume Growth
Starting in Q3 2020, demand for new boats shot up. People saw boating as a fun, pandemic-safe family activity. Boat dealerships emptied. The only limit on new-boat registrations became boatbuilder production capacity. Through the next four quarters, until the second quarter of 2021, the annual growth rate of new-boat registrations continued to climb as manufacturers ramped up production.
Covid-19 vaccines became available early in 2021 and were readily available by midyear. The vaccinated seemingly felt liberated from Covid restrictions, ending the driving force for the Covid bubble. The result? New-boat registrations plummeted in the second half of 2021, as the correction phase began to bring volumes back to a sustainable level. While the relative magnitude varied from one boat-type segment to another, the progression of the Covid bubble was identical for all segments.
This bubble occurred after the market experience of a steady, seven-year recovery that followed the Great Recession. Data suggests that, had the pandemic and Covid bubble not occurred, the Great Recession recovery would have reached its natural end.
End of the Great Recession Recovery
The Long Term History chart above shows how devastating the Great Recession was for the boat market and the very steady, seven-year recovery. The recovery has been so long and steady that many in the marine industry have come to expect recovery growth would last forever, but market data suggest otherwise.
In 2019, just before the pandemic hit, the annual 15-plus-foot powerboat new registration growth rate had dipped to a shallow decline for two quarters. Then, in the third quarter of 2019, it had started a shallow increase. The rolling one-year new registration volume leveled off at about 194,000 for fiscal year 2019 and stayed there for the two following quarters.
Recovery from the Great Recession was over. At that point, had the pandemic not happened, boat market growth rates would almost certainly have dropped or even gone flat. That’s why coming out of the Covid bubble, market demand will likely be very near where it was prior to the pandemic, its entry point value. All major boat market segments have exhibited similar behavior.
It would be nice if the Covid bubble ended by descending smoothly to a sustainable market volume, but unfortunately,
higher-than-normal rates of boat purchasing during a market bubble temporarily depleted the pool of boat buyers.
Post-bubble data shows market volume descending, undershooting the final volume settling point. Based on historical observation, the correction undershoot is typically 20 to 30 percent of the excess volume created by the bubble. The chart to the left uses a correction factor of 25 percent to calculate the forecast and the correction undershoot.
After the Covid bubble — the biggest positive surge in recorded boat market history — calendar 2022 likely will present challenges. The first steep downslope of a roller coaster ride is the scariest part, and that’s where the boat market now sits in the first half of 2022.
Based on what history tells us, the market will likely hit the bottom of the correction phase during planning for the 2023 model year. The good news is that after bottoming out — and barring any more unprecedented world events — the ride we all know as the boating marketplace should be headed back to some level track.
John Hughes is a lifelong boater who, in the mid-1990, took a yearlong midlife break from high‑tech sales management to cruise aboard a DeFever 49 from Boston to Glacier Bay, Alaska, via the Panama Canal. His MarineMetrix Market Traction analyses help boatbuilders grow with local market intelligence and tools pointing their dealers toward increasing territory brand share. You can reach Hughes via e-mail at firstname.lastname@example.org.
This article was originally published in the May 2022 issue.