Dealer confidence still near record high

Marine dealer sentiment ticked down slightly in April, but was significantly higher than in the same month last year for businesses surveyed in the MRAA/Baird Marine Retailer Pulse Report.
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Marine dealer sentiment ticked down slightly in April, but was significantly higher than in the same month last year for businesses surveyed in the MRAA/Baird Marine Retailer Pulse Report.

The MRAA/Baird Marine Retailer Sentiment Index declined from 81 in March to 80 in April. It was up nine points from a reading of 71 in April of last year. The all-time high is 81 for the monthly index, which began in December of 2013.

Baird said the index’s three- to five-year outlook was flat sequentially — 71 in March and April — but was well above its reading of 67 in April last year.

“Retailers reported solid demand in April as another good year takes shape,” Baird said in its report. “Retailer confidence remains near record levels, but it will be hard to improve upon current optimism levels. Notably, used boats remain scarce, keeping upward pressure on demand for new boats. New-boat inventory appears balanced.”

Sixty-six dealers were surveyed in April. Baird said 60 percent of them reported new-boat sales growth in April, down from 66 percent in March, “but [it] still remains within a solid range.”

On the used-boat side, Baird said 58 percent of dealers reported sales increases — down slightly from 59 percent in March.

“Seasonally, April is the first key month of the retail season, representing 13 percent of annual sales,” Baird said.

Baird said the trend suggests that the second quarter is off to a good start. The survey found more optimists than pessimists, but Baird said one retailer cautioned that “we are still ahead on the year, but the peaks and valleys in consumer demand make it difficult to project future sales.”

“Overall business is good, but you cannot make any mistakes,” another dealer told the survey. “Customers [are] more informed and in control. Ease of doing business is key and pays dividends from both the manufacturer and dealer side.”

Baird noted that sentiment among marine and RV dealers (near record highs) is bullish relative to power sports dealers (below 50).

“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,” Baird said.

Dealers told Baird that new-boat inventory improved sequentially and remains well below levels from a year earlier. Baird said 29 percent of the retailers surveyed believe inventory is “too low,” compared with 30 percent who think it’s “too high.”

“Net, we consider inventory levels to be within a ‘normal’ range,” Baird said.

Baird said used-boat inventory remains extremely lean, as inventory levels decreased even further on a sequential basis. Baird said 65 percent of the dealers surveyed felt used-boat inventory is “too low,” compared with just 5 percent that said it is “too high.”

“We continue to believe that a limited supply of quality late-model used boats will eventually force consumers to consider new-boat purchases,” Baird said.

Separately, this month’s survey asked dealers what an experienced technician typically earns at their dealership annually, excluding benefits.

Baird said the responses varied, but the largest percentage of retailers indicated they pay experienced technicians between $50,000 and $60,000 a year. A minority (34 percent) pay less than $50,000.

Baird said many dealers indicated that a lack of experienced technicians is a major challenge for the industry, and some “suggest that higher pay is a necessary component to attracting new talent.”

“Need technicians!” one dealer commented. “Can’t service our customers properly or on a timely basis. This industry must address this as a crisis now.”

With the exception of weather, dealers indicated that all demand factors were positive in April, Baird said, and dealers also indicated that all demand factors improved in April, relative to the prior year.

Compared with the prior year, Baird said “retailer responses suggested that improvements in the economy and a more favorable outlook toward government actions/inactions were the most impactful drivers of demand during the month.”

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,” 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.

This article originally appeared in the June 2017 issue.

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