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Dealer confidence remains high in May survey

Boat dealers reported solid demand in May, with 63 percent saying they saw growth in new-boat sales.
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Boat dealers reported solid demand in May, with 63 percent saying they saw growth in new-boat sales, according to the monthly survey conducted by the Marine Retailers Association of the Americas and Baird Equity Research.

The results ticked up from April, when 60 percent reported new-boat retail growth.

Many retailers cited weather as a significant headwind in May, which accounts for about 16 percent of annual new-boat sales, the report said.

Record and near-record rain fell during the month in the Northeast, the Mid-Atlantic, the Mississippi Valley and the central to southern Appalachians, the National Oceanic and Atmospheric Administration said.

Retailers remained bullish on their outlook of current conditions, with a sentiment index of 80, up from 69 last year.

The 3- to 5-year outlook declined again, to 68 from 77 in April, but it was still higher than the longer-term outlook from a year earlier, at 65.

“Broadly, we believe retailer sentiment remains high, but note that we see little room for sentiment to improve much from these strong levels,” the report said.

Sentiment was higher in the boat and RV category than in other power sport segments, Baird said.

“We attribute the dichotomy to discretionary income trends, with marine consumers benefiting from a strong stock market and healthy real estate prices and power sports dealers struggling with weak energy and agricultural economies,” the firm said in its monthly report.

New-boat inventory appears to have improved, as 43 percent of retailers now consider inventory to be too low, compared with just 26 percent that believe it is too high. A few dealers said new inventory was difficult to obtain. Meanwhile, the lack of quality late-model used boats remains a plus for new-boat sales.

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Among used-boat inventory, 76 percent of respondents said inventory was too low, compared with 7 percent who said it was too high.

Retailers indicated that weather, trade-in activity and government action or inaction negatively affected demand during the month. Relative to last year, weather and trade-in activity were incrementally weaker than in the prior year.

“Poor weather in May appears consistent with commentary from dealers we surveyed in other leisure categories during the May time frame,” Baird said in its report. “On the positive side, retailers report that the economy remains healthy, access to credit is strong, OEM promotions are working and new products are having good success.”

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Dealers continued to reference difficulty filling positions, particularly on the service side, in the comments section of the survey.

“Need additional marine techs,” one dealer noted. “Hard to get out what we have sold, and service is backed up to the point where customers are turned off.”

Workforce has been a major issue confronting the industry as a whole. Several sessions and meetings were held during the American Boating Congress in May to help address the growing problem.

“The reality of the situation is it’s not just that we have a workforce shortage — we certainly are having difficulty finding skilled labor — but at the end of the day what that means for us as an industry is we potentially could have a customer service problem if we don’t have technicians to service boats and keep people on the water,” said MRAA president Matt Gruhn following that event. “If that happens, what’s the incentive for someone to stay in boating? If the problem becomes larger and grows and we ultimately have difficulty finding people to build the boats, how do we sustain the growth curve we’ve been on?”

Another dealer referenced softer-than-predicted sales in the 40-foot-and-larger category.

In late April Brunswick Corp. reported somewhat challenged margins in the first quarter as sales of 40- to 60-foot fiberglass sterndrive and inboard boats softened.

“Our mix this year shifted a little more toward value products,” Brunswick CEO Mark Schwabero told investors and analysts during a conference call on April 27 to discuss first-quarter financial results. “From our perspective there was a bit more competition from European manufacturers. With the strength of the dollar, our ability to sell outside the U.S. is limited.”

Dealers said outboards, dual consoles, fishing boats, center consoles and used cabin boats were selling well. A couple of dealers said holding events was an effective way to attract business, with one saying, “In-store events are drawing record participation directly leading to sales.”

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Dealers also were asked what percentage of the purchase price was being financed by new-boat buyers. Responses varied, but most of the respondents said buyers finance at least 60 percent of the purchase price. Just 29 percent financed 50 percent or less.

The Pulse Reports are designed to provide industry professionals with a regular, timely look into retail trends at the dealership level. They were launched by the Marine Retailers Association of the Americas and Baird Research in December 2013 as the first report of its kind compiled specifically for marine retailers.

Soundings Trade Only joined the partnership with Baird and the MRAA in February and will continue to participate in the distribution of the survey and the reporting of its results in future months.

“The information contained in each Pulse Report simply can’t be found anywhere else, and we strongly believe our print and online audiences will find them extremely useful,” Trade Only editor-in-chief Bill Sisson said. “Joining MRAA and Baird in gathering data and distributing the Pulse Report results each month was an easy choice for us.”

Retailers who would like to participate in the survey can email Baird senior analyst Craig Kennison at ckennison@rwbaird.com.

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