Dealer confidence rises in September - Trade Only Today

Dealer confidence rises in September

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Marine dealer sentiment improved in September, but the 3-to 5-year outlook was modestly lower during a month that is past the peak selling season for boats.

The MRAA/Baird/Trade Only Marine Retailer Sentiment Index rose two points from August, to 75, but was flat with the same month a year earlier. The all-time high reading is 81 for the monthly index, which began in December 2013.

Chart of Marine Retailer Sentiment Index Sept 2017

The longer-range outlook decreased from 74 to 71, although it was higher than the reading of 65 in the same month last year.

Fifty-five dealers participated in the September survey. The month represents just 6 percent of annual sales.

“Everything is selling,” one dealer told Baird. “All products except for three 2016 [boats] are 2017-18. [We] have 50 days of supply.”

"Consumer confidence seems to be on the rebound, which helps our entire industry," another dealer said.

Baird said 46 percent of retailers reported growth in new-boat sales, a slight decline from 48 percent in August; 27 percent reported a decline, up from 24 percent in August.

Chart of New Boat Retail Trends Sept 2017

Retailers reported that new-boat inventory remained relatively balanced, though inventory comfort declined modestly on a sequential basis. More dealers considered inventory “too high” (31 percent) than “too low” (13 percent) in September.

Baird said it believes inventory levels are within a “normal” range.

“Retailers reported a steady retail pace in September, a seasonally less relevant month,” Baird said. “New-boat inventory levels increased sequentially, but appear balanced. On the used side, inventory levels increased, but good used inventory is hard to find — a dynamic we believe fundamentally underpins continued growth in demand for new boats — supporting our continued constructive stance on the marine space.”

Baird said the recent hurricanes appear to be having some short-term impact, as some respondents noted that "hurricanes killed September sales" and "the hurricanes slowed momentum; however, we seem to be regaining momentum."

“Sales pipeline is strong, weather is better after the storms, and [we] believe sales will be stronger in the fourth quarter due to the strength in the economy,” another dealer said.

Used-boat sales fared less well than new-boat sales. Baird said 34 percent of retailers reported growth, compared with 48 percent in August and 36 percent last September.

Chart of Used Boat Retail Trends Sept 2017

Used-boat inventory remained extremely lean “as inventory levels remained generally consistent with low levels seen the last few months” Baird said.

Baird said 50 percent of the retailers surveyed report that used inventory is “too low,” compared with just 19 percent that say inventory is “too high.”

“We continue to believe one of the key drivers of new-boat demand in the marine industry is the limited supply of used boats,” Baird said.

Baird said retailers indicated that the economy, access to credit, OEM promotions, weather, new products and trade-in activity all positively affected demand in September.

“Although many of these factors had less of an impact in 2017 versus last year, the economy had a stronger impact this year,” Baird said. “However, retailers indicated government action/inaction continues to hurt demand, but had less of an impact this year.”

boat-buyer-demographics

In the September survey Baird asked retailers to estimate the percentage of their customers came from each of several key age cohorts.

Retailers indicated that the largest percentage of current boat buyers is in the 55-64-year-old range, which represents about 30 percent of buyers. Buyers under 25 and buyers older than 74 represented the smallest cohorts. Each was just 3 percent of the total buying population.

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.

“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,” said Trade Only editor-in-chief Bill Sisson. “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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