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Aluminum tariffs have dealers bracing for price increases

Marine retailers overwhelmingly think rising prices of pontoon boats, aluminum fishing boats, trailers and other aluminum products are inevitable in the wake of tariffs that the Trump administration imposed, with only 4 percent of respondents to a recent survey saying they believe prices will remain the same.

But despite bad weather and the tariffs, dealer confidence for short- and long-term sales rose in May for the second month in a row.

Forty-six percent said they expect prices of pontoons, aluminum fishing boats, trailers and other aluminum products to rise 5 to 10 percent, while 37 percent of respondents said the increase would be less than 5 percent. Twelve percent expected prices to increase more than 10 percent.

Aluminum is used to build more than half the boats sold in the United States (excluding personal watercraft), and 90 percent of boats sold to Americans are built in the country. A 25 percent tariff on steel and a 10 percent tax on aluminum from Canada, Mexico and the European Union went into effect June 1 after EU trade discussions and NAFTA talks stalled.

Sales of aluminum boats, which typically can be purchased at a lower price point than fiberglass boats, have led overall industry growth postrecession, according to data from Statistical Surveys Inc. Excluding personal watercraft, aluminum boat sales grew 6.28 percent in 2015, well ahead of the 4.59 percent growth of fiberglass boats. In 2016, the trajectory continued, with 6.4 percent growth in aluminum boat sales versus 5.23 percent growth in sales of fiberglass boats.

Weather remained a drag on demand as chilly temperatures and rain continued throughout the month of May.

“Poor weather [is] having an impact on all facets of our business,” wrote one dealer who responded to the monthly Pulse Report conducted by Robert W. Baird in conjunction with the Marine Retailers Association of the Americas and Soundings Trade Only. “No urgency, customers delaying using boats, not a lot of fun delivering new boats in 50-degree weather,” the dealer said.

Still, short-term dealer sentiment remained strong at 72, though it dropped from 76 in April. The three- to five-year outlook also improved for the second month in a row, at 74 versus 72 in April and 64 in March.

Dealers said trade-in activity and government action/inaction created minor headwinds to demand, while the economy, access to credit and OEM promotions all helped spur demand.

Many dealers indicated that pontoons, aluminum fishing and surf boats were selling.

Several said fiberglass sales had been slow, as had sales of smaller boats. Two dealers referenced losing sales of Sea Rays, with one saying: “Sea Ray being for sale is killing us as a dealer. No leads on mid-big boats and no new Sea Ray sales.”

Others mentioned workforce shortages as being a struggle, and several said they were taking a beating on warranties and long lead times to receive products.

“Consumers are becoming weary of hearing about late delivery times on new boats and shortages of motors and other components for their orders,” one dealer wrote.

Another said: “Quality of product being delivered to us by manufacturers is the worst I have seen in many years. We are getting killed with warranty issues both big and small, regardless of the brand.”

This article originally appeared in the July 2018 issue.

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