Manufacturers aren't sure what to expect as show season progresses amid a stalled economy
They know buyers will return in time, but manufacturers are entering the fall and winter boat show season with an outlook as uncertain as that of the customers they hope to attract. Some prospective buyers are picky over price, others can't get loans, and consumer confidence remains weak as the troubled economy seems to be losing the momentum it gained earlier in the year.
"Going into the boat shows this year, we're optimistic, but to be honest with you, it has been very difficult to pin down exactly what's going to happen within the new-boat market," says David Walsh, director of marketing for Holland, Mich.-based Tiara Yachts. "We feel like there's plenty of opportunity out there."
It's a waiting game, says Sam Blythe, product development manager for Decatur, Ind.-based Formula. "Because of what has happened in the last one-and-a-half to three years, there's definitely a latent buying desire in the consumer," he says. "When they're going to break out of that, I think, is anyone's guess. I know manufacturers are building up to go to shows - we certainly are. A lot of the inventories have been worked down, so new product is going to be shown, whereas a year ago you were seeing some aged product and dealers trying to clear their inventories."
Sales hinge on whether the industry can convince consumers that they're better off buying new, some manufacturers say. "There's just as much value out there in buying a new boat as there is in buying a preowned one," Walsh says. "Just as customers did five years ago, they should consider both options when making their boat decision. There's new technology out there and there's new products. You're going to see value in the marketplace for having a 2010-11 model versus buying a 2008-09 one with low hours."
David Hensel, brand and marketing director for Seattle-based Grand Banks Yachts, agrees with Walsh. "Regardless of what's going on in the marketplace with regard to brokerage inventory, we believe that new boats and new designs will deliver value to the customer," he says. "We've had two or three new boats released each year and we continue to do that."
Grand Banks will showcase its new Aleutian 53 at four East Coast boat shows. Tiara plans to unveil its 4500 Sovran at the Fort Lauderdale International Boat Show.
Formula has launched a new series of boats within its fleet. The FX series melds the styles and features of Formula's performance line (FAS3TECH) and its Sun Sports and Super Sports dayboats, Blythe says. The first boat in the company's new product line is a 29-footer - the 290 FX 4. A 31-footer and a 34-footer will follow, Blythe says.
To generate sales, some builders have repackaged or redesigned boats above the waterline. Since May, Tiara has been offering its Sovran 3500 as a limited-edition boat with a significantly reduced price. The builder and its dealers have chopped about $160,000 from the retail price, offering the boat with Volvo Penta IPS400 diesels for $399,000, Walsh says.
"The program has a specific shorter list of optional equipment, or many more standard features with a lot of value," Walsh says. "With the dealers, we decided to price this boat more commensurately based on the market."
Still, finding success in this economy won't come easy, even with lower prices and buying incentives. "There seems to be a lot of uncertainty in the marketplace," Blythe says. "The consumer has a difficult time getting financing. We have seen a tremendous dropout of dealerships because of lack of floorplanning and availability of credit. And we've seen that the consumer has become very astute in realizing the good deals out there."
It's true - today's boaters are more discerning than ever, so new boats must impress, says Peter Frederiksen, director of communications for Viking Yachts, of New Gretna, N.J. "We're bringing a lot to the table with new models," Frederiksen says, referring to the builder's new 70 Convertible and Zeus-powered 42 Convertible. "If they don't buy [during the shows] for one reason or another, they may go home realizing they've got to get on the stick and sell their boat so they can find something new because the new boats are really good."
But the economy needs to improve for the boat business to turn the corner. "There needs to be a rebuilding of confidence in the country - consumer confidence - but at the level of people who have means to buy boats like ours," says Nordic Tugs president and CEO Andy Lund, who spoke with Soundings Trade Only shortly before the company announced it was temporarily shutting down its Burlington, Wash., plant. The new Nordic Tug 39 retails for $492,800. "Till that strengthens, we're going to continue to see a weak market."
Some companies believe diversifying may help them weather these tough times. "I think people will not give up boating, even in hard times, and it's our job to come up with new product that's affordable and of quality so people enjoy it," says Renzo Rivolta, co-owner of newly formed Mojito Boats, a division of Rivolta Yachts in Sarasota, Fla. "I think the market is going to go toward the smaller boats again for their simplicity and economy."
Rivolta, a builder of high-end custom express and sedan cruising yachts from 38 to 90 feet (as well as sailing yachts), has launched a line of panga-style skiffs from 16 to 22 feet under the Mojito name.
Whether it's in big boats or small, the joy of getting out on the water must be rediscovered and a boat show is the perfect place to make that happen, Frederiksen says. "Boat shows are about looking at new boats, of course, but a lot of times they also remind us to appreciate the boat we have," he says. "People need to fall in love with boating again and remember how much fun it was."
This article originally appeared in the October 2010 issue.