Will Dealers Continue to take on Foreign Brands?

Eighty-five percent think that imports of new boats will increase at U.S. dealerships this year
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Marine dealers believe that revenues from foreign-built boats will continue to increase as a percentage of overall sales in 2020, with 85 percent of those responding to a monthly survey predicting some growth in imports.

More than half of the 83 dealers responding to the Pulse Report — a survey administered by Baird Equity Research in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only to gauge December retail trends — expect imports to increase at their businesses up to 5 percent as a percentage of total dollar sales.

Twenty percent forecast import gains between 5 and 10 percent in 2020, and another 14 percent project increases of more than 10 percent. Only 15 percent of respondents believe that imports will decline across U.S. dealerships.

That could indicate that many dealers have filled voids left by U.S. brands, including Sea Ray, which discontinued yacht production in 2018, by partnering with foreign boatbuilders. A strong dollar and robust market have made the United States an increasingly attractive target for foreign builders. At the same time, foreign builders are not paying the 25 percent tariff on imported boats that U.S. boatbuilders face in the European Union.

Retailers were split on how they view the economy depending on their location and market segment, a trend that carried through much of 2019. Some dealers reported strong consumer confidence in December, but others say that potential buyers remain hesitant. “We’ve had good late-season activity,” wrote one dealer. “Can’t really pinpoint why, but we’ll take it.”

More marine dealers report slight retail growth in the seasonally slow month (36 percent) than those reporting declines (31 percent). “It is normal for December to be the lowest month of the year,” said one dealer. “However, we continue to experience a downward turn starting in August.”

Retailers continue to express concern about the rising cost of new boats, trade issues and lack of a skilled workforce, as well as the upcoming election. “Just a tough economy — low consumer confidence, and buyers with the available credit or cash do not see the value in boats as our costs keeps climbing,” wrote another dealer. “They are being priced out of the market [so we can] make a fair profit to keep the business going.”

Others point to financing as a headwind. “The lack of financing for trade-ins over 15 years old is slowing new sales and potential profits for dealers,” wrote one dealer. “There are loads of people looking to buy a boat, but their cash and revolving credit finances are limited, so they are unable to purchase at the lower end of the market. There is far too much emphasis in the marine trade on the 30-foot-and-larger market. As an industry, we need to get refocused on boats that brought the masses into boating in the first place."

This article originally appeared in the February 2020 issue.

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