I wouldn’t have guessed that more than three years after the global economy was swamped that we’d still be slogging our way through such persistent headwinds. But here we are, with 2012 at our doorstep, and although things have improved we still face the challenge of getting people to part with their discretionary dollars during this prolonged, subpar economic recovery.
The good news is that we are at least trudging forward, a direction that just several months ago was in some doubt as the fear of slipping back into recession moved from simmer to boil. Knock on wood: The U.S. economy appears to have dodged that bullet. Europe, however, may not be as fortunate, and just what impact that scenario might have on the U.S. and global economies remains to be seen.
For a range of viewpoints, perspectives and opinions on this year’s business climate, turn to our seven-page “Forecast 2012” special, starting on Page 18.
If I had to pick one word to summarize the marine market in 2012 it would be “challenging.” Look for very modest growth in new-boat sales, especially if we see improvement in the macroeconomic picture. Some segments are likely to be flat, which will represent an improvement, given the declines they experienced through 2011. Smaller boats will outpace larger ones, and used boats will continue to represent the lion’s share of transactions.
Expect continued strength in the service sectors as people hold on to their boats longer. The aging of the fleet translates into more activity in areas such as repair, refits, repowers and equipment upgrades. The average age of a boat today is about 21 years, compared with 16 in the late 1990s. And the age at which most boats are either replaced or sent to the scrap heap is thought to be about 25 or older, although I suspect that will be stretched even more in this current “age of thrift.”
Eventually, older boats will need to be replaced with new ones, and the reduced availability of late-model used boats (there simply weren’t many built) should have a positive effect on new-boat sales in coming years. The current aging trend, however, is not likely to abate appreciably until we see overall improvement in the economy.
Staying close to your customers has always been a good strategy. Keep in mind that the consumer has changed a good bit since the fall of 2008. Prerecession, we all had eyes bigger than our stomachs. Not so much anymore.
“Tight budgets make people smarter,” a builder told me recently. He was referring to today’s buyer, who has become less impulsive and more discriminating, deliberative and cost-conscious than in the boom years.
And that has translated into a general downsizing trend, which also shows no sign of petering out. The move is primarily driven by the desire to cut costs and expenses, but other factors also figure into this trend, including ease of use and reduced maintenance (especially for aging boomers), as well as the improved fuel efficiency that accompanies smaller boats. At the same time, today’s so-called “small boats” are a lot larger and have more amenities than they did 10 or more years ago. You need to have the right product.
Boaters who kept their jobs and have confidence in continued employment are candidates for spending some of their discretionary dollars despite gyrations in the Consumer Confidence Index and the equity markets. And remember, people with money still have money, and some of them are tired of sitting, waiting and worrying.
Pent-up demand, meanwhile, continues to build — an obvious positive — but don’t look for that to transfer into a significant uptick in retail boat sales until the employment and housing pictures improve. And we badly need a more permanent “fix” in Europe that the markets and economists will recognize as something more substantial than simply kicking the sovereign debt can down the road another quarter-mile.
For people to move off the sidelines, a good bit of fear and uncertainty has to be drained out of the markets. How? From political leaders here and abroad, we need more decisive action, leadership, political will and bipartisanship.
The tribe is out and about, looking at boats and gear at the shows, online and in dealerships. They are thinking and weighing and mulling — and waiting. Even a modest but sustained improvement in jobs and housing would do much to steady the ship, improve confidence and go a long way toward making our forecast brighter.
This article originally appeared in the January 2012 issue.