A report from IBISWorld anticipates an annual rate of decline of 8.6 percent in luxury and megayacht revenue during the last five years, but a boost in dollars through 2017.
“The decline is largely attributable to a significant downturn in 2008 and 2009, resulting from the recession and the global financial crisis. Demand for luxury boats plummeted in response to heightened unemployment, declines in disposable income and reduced consumer sentiment during the recession,” IBISWorld industry analyst Kathleen Ripley said in a statement.
“In 2011, revenue began to recover and this trend is expected to continue in 2012,” she added.
From 2011 to 2012, industry revenue is expected to increase 7.1 percent, to $939.8 million. The industry is benefiting from a swift recovery in spending among the wealthiest American households. Low interest rates and streamlined manufacturing operations also have supported industry growth.
Ripley added that in the five years to 2017, industry revenue is projected to continue increasing at an average annual rate of 6.9 percent.
“The key factors underpinning future increases in demand include the continued economic recovery, growing international demand and continued interest in nautical technology and superyacht construction,” she said. “Over the next five years, industry profit margins are expected to expand as a result of steady increases in demand and more efficient production.”
The luxury and megayacht manufacturing industry has a low level of concentration. In the five years to 2012, the number of industry firms has decreased at an average annual rate of 3.2 percent.
Many builders that fell during the recession were taken over by financially stronger companies.
In coming years, companies will face changes in consumer preferences in addition to increasingly stringent safety and environmental regulations. External competition from luxury and megayacht builders in China and Italy will force many establishments to downsize or exit the market, according to IBISWorld.