MIAMI 2019: Wells Fargo president: ‘Very stable 2019’

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MIAMI — During an annual presentation last night at the Miami International Boat Show, Bruce Van Wagoner, president of Wells Fargo’s Commercial Distribution Finance Marine Group, said the company expects a “very stable 2019.”

Economists at the industry’s largest floorplan financing provider forecast unit sales for new boats to be up 4 to 5 percent, with revenues up 7 percent for the year. Several years ago, the company developed an accurate forecasting model using proprietary data, industry data and five major economic trendlines that allows it to look ahead 18 months. Wells Fargo economists review the data every quarter, so it’s possible that forecasts can change.

“Most of our customers are either flat or up,” Van Wagoner told Trade Only Today in an interview. “The numbers to date are good. It seems like the downturn was yesterday, but we’ve seen steady growth over the last eight years. We expect to hit a new peak this year in dollars.”

Wells Fargo monitors six segments. In the “salt-fish” category, Wells Fargo estimates that 30,000 units were sold in 2018 for total revenues of $1.7 billion. “We’re projecting 5 percent growth in units for 2019,” he said. “That’s a nice chunk of business.”

For the pontoon segment, which sold 56,000 new boats last year, Wells Fargo estimates unit sales rising by as much as 5 percent for this year.

In the sterndrive runabout segment, which does not include jetboats or PWC, unit sales are expected to be flat with last year’s 19,000 units.

Van Wagoner expects the aluminum fishboat segment to grow by about 2 percent, compared with last year’s sale of 51,000 units.

Towboat sales could be up as much as 8 percent this year, compared to last year’s sales of 11,000 units.

Van Wagoner said U.S. dealers took more inventory last year because there were more available boats, with the retaliatory tariffs from Canada and the United States. “For the most part, we think dealers have adequate inventory,” he said. “We watch very closely at the dealer and manufacturer levels. Coming out of the downturn, we had an average of 194 days in inventory. Now we’re down to 160 days, so that is very healthy. Inventory levels are reasonable.

“Partly it’s millennials who are more interested in the experience,” Van Wagoner added. “Some are going to rent rather than make initial down payments. Will this dampen new-boat sales? People are wondering. I think that could be a shortsighted view. Some people may not buy a boat, but I think many others will.” That could be particularly true with the wealth transfer from baby boomers to the millennial generation.

Van Wagoner said the industry is smaller than it was a decade ago, but retailers have evolved into multilocation dealerships focused more on service and storage. “They’re more diversified than ever,” he says. “The thing I’m most proud of now is how well the dealers and manufacturers are working together. I’m really happy with the way the industry has restructured. There is just a much greater sense of cooperation now.”

In its 18-month projection, Wells Fargo expects the boating industry to be stable. “Unless there’s something dramatic that happens with the economy, we don’t really see anything that will change that trend line,” says Van Wagoner. “We’re feeling good about the market and the direction that dealers are going.”

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