After being hit by the financial crisis, the industry bottomed out last year when boat sales hit a record high of 137,000, a 55% drop from pre-2007 levels and a drop 14% compared to 2009.
Expectations of a 10% increase in sales this year have been tempered by rising gasoline prices as well as economic malaise following the earthquake in Japan. It could take at least two years before powerboat sales return to 2007 levels, experts say.
A sign of recovery appeared during the winter boat show season, when attendance – and sales – increased at many shows across the country. Some exhibitors have seen their sales increase 50 to 70 percent over the previous year, according to the National Marine Manufacturers Association, the largest producer of boat shows.
“A few reported that boat show sales were back to 2007 levels, but that was the exception, not the rule,” says NMMA president Thom Dammrich.
Although the mood is better than last year, performance at boat shows has always been hit or miss. Dealers and manufacturers reported “real highs and real lows,” says Cathy Rick-Joule, vice president of NMMA boat shows.
Unsurprisingly, the lower end of the market, which includes smaller, affordable pontoon boats and fishing boats, has been strong. But there are also signs that pent-up demand for high-end yachts, which saw some mildness during the recession, is returning.
However, the category of intermediate boats remains weak. These boats are typically between 25 and 35 feet long and cost between $100,000 and $300,000, says Larry Russo, CEO and President of Russian Navy, Massachusetts’ largest powerboat dealership.
Russo Marine suffered losses after 2007, forcing it to drop from six concessions to three. It became profitable again in 2010.
The typical mid-size boat buyer has been hit by the mortgage crisis, which has caused financing to dry up. “The home equity line of credit borrower is largely absent from the market today,” says Dammrich.
Buyers are also finding it harder to get the same deals as they did two years ago when distress offers and repossessed boats flooded the market.
The industry, meanwhile, downsized during the recession, leading to fewer boats being built. Manufacturers have also shrunk their dealer bases, leading to a 40% drop in the number of boat dealerships in the United States.
Brunswick, the world’s largest recreational boat builder, shrunk its North American manufacturing footprint by closing 17 factories and axing eight boat brands after 2007.
But as the industry emerges from the recession, there are still some great bargains for savvy boat buyers.
“The bargains still exist because the industry has been cost-conscious,” says Rick-Joule, “We’re not out of the woods yet.”
The average sale price is down 12 to 16% from three or four years ago, estimates Steve Tadd, marketing director of Global Nautical, the fourth largest boat manufacturer in the United States
“We had more and more star boats, more technology, more gimmicks, more glitz,” said Andrew Graves, president of Brunswick Boat Group during a recent meeting with investors at the Miami International Boat Show. “People wanted it and they would pay for it…In today’s world, the consumer is the opposite of that.”
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