New and used boat inventories are improving at the retail level, but are still considered relatively thin, according to monthly Pulse Report survey results.
Price hikes and economic worries are beginning to discourage boat purchases, especially for low- and middle-income Americans, boat dealers said in the August survey, conducted by Baird Research in conjunction with the Navy. Retailers Association of the Americas and Trade surveys only.
“We are seeing the first rumblings of consumer unease about the headwinds in the economy,” said one dealership. “Interest rates have risen twice in the past month and stocks have gained ground faster than sales for the first time in more than a year. Sales remain strong, but we are monitoring whether the mood changes more in the fall and [we are] start putting in discounts and advertising to ensure our inventory levels are balanced in the fall.
Fifty-five percent of dealers said inventory was “too low,” while 22 percent said it was “too high,” according to the survey.
Jumping inflation and continued manufacturing delays weighed on dealer sentiment in August, according to the survey of 78 retailers. The shipping retailer sentiment index measuring current conditions fell to 39 from 42 in July. A measure of 50 is considered neutral.
The three-to-five-year sentiment outlook was unchanged at 39. “There remains cautious optimism with consumer buying decisions, but inflated prices from all manufacturers have dampened interest,” a dealer reported. “Discounts and incentives do little to move the needle toward purchasing decisions.”
Another predicted that “the boating industry will very quickly withdraw from the family boating market here if they are not careful. We are not concerned about the short term, but [for] ambitious boaters.
A slim majority (51%) of dealers reported a drop in retail sales in August, with only 20% reporting sales growth. In the used market, 48% of dealers reported a decrease in monthly sales and 28% reported an increase in sales. August typically accounts for about 9% of annual retail sales, Baird said.
“High prices compared to last year [are] not going the extra mile with customers,” said one dealer who receives “more tire kickers” than buyers, further adding that “no one wants to commit to buying new or used.”
Around half of respondents said they are investing more in digital channels this year compared to 2021. “Online and social media marketing are attracting much more interest than other forms of advertising and promotions “said a dealer. “We believe the pandemic has helped accelerate consumer acceptance of online shopping for large units. This has worked to our advantage and continues to provide most leads to our sales and service departments.”
However, most dealerships said their online presence still generates a minority of their leads.
Several dealerships continue to report difficulties hiring staff. Some retailers said boatbuilders are yet to fully appreciate the impact their higher prices will have on consumer purchases.
“The retail buyer is tired of the manufacturer’s board game of blaming everything on supply chain issues and jacking up the price of everything,” one retailer wrote. “I hope manufacturers will remember that this tide will turn.”
Another observed, “Inventory is turning positive, but the lack of customer interest isn’t helping. Consumers are nervous and travel. We are in a down cycle as expected.
This article originally appeared in the October 2022 issue.