Dealer optimism picks up in August - Trade Only Today

Dealer optimism picks up in August

Pulse Report says survey results reflect expectations of modest growth in the retail segment
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Graph of Retailer Sentiment 8/2017

Marine retail dealer sentiment improved in August from the previous month, but the mood was less optimistic than at the same time in 2016. 

The MRAA/Baird Marine Retailer Sentiment Index rose to 73 from from 69 in July, but was several points lower than the reading of 81 in August last year. That 81 reading also represents the all-time high for the monthly index, which began in December 2013. 

Seventy-seven retailers participated in the August survey. 

Baird said its survey results suggest that “sentiment remains well above water — supportive of modest retail growth. While the peak of the retail season has passed, limiting the appeal to some investors, we still believe growing wealth among affluent consumers will support growing demand for boats and the lack of used supply will steer buyers toward new boats.” 

What’s working? 

“Value selling is working,” said one dealer who participated in the survey. “If we can show prospects that they are buying a quality product at a fair price, then we are able to easily close transactions. The issue lies with the dramatically increased pricing from manufacturers; they are getting a bit out of line.” 

Graph of Household Wealth 8/2017

“Low used inventory and new technology helping new boat sales,” another dealer said. 

“Quality of some manufacturers is off,” one dealer said. “Dealers are not in business to continue to correct all the flaws coming to the dealer. Seems like the volume of boats being produced has caused problems. Manufacturers have to get it right.” 

“Need qualified salespeople … that resource just doesn’t exist,” another said. “Same old promotions aren’t working any longer.” 

The 3- to 5-year outlook declined modestly from July, dropping from 76 to 74, and it also was lower than the reading of 77 in July last year. Baird said retailers “remain constructive” on the industry overall in regard to current conditions and the 3- to 5-year outlook. 

Baird said 48 percent of retailers reported new-boat sales growth in August, an improvement from 44 percent in July despite a difficult prior-year comparison. 

“While our checks indicate a modest reversal in the moderating retail momentum reported in July, August is past the peak of the retail season and represents about 10 percent of annual sales,” Baird said. “Thus our checks appear slightly better in a mildly choppy environment.” 

More than 60 percent of the dealers surveyed chose consumer confidence as the largest factor driving new-boat sales. 

Graph of New Boat Retail Trends 8/2017

“Several retailers selected increases in discretionary income, as well,” Baird said. “Availability of credit, low fuel prices and job growth appear to have less of an effect on new-boat sales.” 

Baird said new-boat inventory edged higher, but remained at a balanced level in August; 36 percent of retailers considered inventory “too high” and 29 percent considered it “too low.” 

“Still, we believe inventory levels are within a “normal” range,” Baird said. 

Baird said 48 percent of retailers reported growth in used-boat sales in August, compared with 51 percent in July, noting that the trend “remains healthy.” 

“Meanwhile, we’re encouraged that used inventory remains lean — a key factor we think supports higher new-boat retail demand,” Baird said. 

Baird said 54 percent of the retailers in the survey indicated that used-boat inventory was “too low,” compared with just 10 percent that considered it “too high. 

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

Growth drivers 

Baird said retailers indicated that the economy, access to credit and OEM promotions positively affected demand in August, although none of those factors had as large of an impact as they did last year. 

Weather had the most impact, and it was negative. Tradein activity, government action/inaction and new products also negatively affected demand during the month. 

“Surfing is keeping the inboard boat market alive,” one dealer said. “Weather is killing us. Gas sales way off. Having an impact on service and accessory sales.” 

Graph of Used Boat Retail Trends

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. 

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 October 2017 issue.

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