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Are boat sales joining the 2010 auto, home rebound?

An Australian boat show. Photo by Flickr user Robert Hornung

Along with car sales reps and RV lots, boat dealers had a pretty grim 2009 as consumers shied away from big-ticket purchases.

Boating Industry, the trade journal, says on its website that by some estimates 25 to 50 percent of dealers vanished during the downturn.

Many of those that remain have been optimistic about sharing the 2010 rebound that auto and motor-home sellers have experienced so far this year.

Here in Michigan – the state with the most freshwater shoreline in the U.S. – veteran dealer Ron Wilson of Wilson Marine in Brighton says trade so far this spring is “Unbelievable.  Up 20 to 30 percent over last year.”

Not every region is experiencing the same uptick; this Spokesman-Review piece indicates that Washington’s boat sellers still are suffering.   The recent stock market plunge can’t be helping, nor can the oil spill in the Gulf.

Either way, here are a few marine industry trends you may want to check out in your pond:

Consumers moving to all-purpose craft. Sales of cruisers, ski boats and the like are still “anemic,” but pontoon boats are surfing off the lots, Wilson said.  The floating party craft can be used for towing tubers, fishing, entertaining, as a portable swimming raft or just for puttering along quiet nature areas.  As such they are the boat of choice for shoppers this year.  The pontoon craft also have lower operating costs in terms of maintenance, fuel consumption and service than other large boats.

Wilson said that buyers are demanding larger engines to make their new boats more multifunctional.  Where 50-70 hp was common for a pontoon, now shoppers are demanding motors up to 250hp.  (I don’t want to be on that lake!)  That means buyers are willing to spend an extra $5,000 and up for more robust power plants — an interesting trend.

Sales of aluminum fishing boats with small outboard motors also are doing well, indicating the anglers are getting back into the swim.  And younger buyers are popping up more often, looking for bargains.  “Everything in the marine industry suffered the same asset devaluation as the residential housing and motor-home markets,” said Wilson.

Marine lending. Hardy anyone is using cash from home-equity lines anymore, so boat-financing companies and the credit offices of marine dealers are hopping.  Loan terms of 10 years are common, and interest rates are 7 percent or 8 percent.   Check with your regional banks about the boat-lending trade they’re seeing this spring, and how requirements may have tightened.

Also note that – as this blog for marine dealers points out –  boat retailers are frantically trying to get exempted from the pending financial-reform regs that will provide consumer-protection oversight of creditors and lenders.

Inventory. Many dealers whose Web sites I checked mentioned their inventory was plump with “bank-repo” stock.  You might check with your DMV or other state registry to find out how repossession agents are licensed in your state and what records are kept.  Use this info to track down the companies doing the reclaiming and stats on defaults and give-backs.  (This is a good tip for car, truck and RV repos as well.) This Boats.com commercial site includes links to state DMV offices.

Wilson said one big problem this year is that boat makers are behind schedule, because they didn’t anticipate today’s level of demand.  Even when the assemblers and engine-makers are on track, they can be derailed by gaps in the supplier chain.  The people who make the windshields, the gauges, the cleats – many may have gone under during the recession.  I couldn’t find a directory of companies searchable by ZIP Code or state, but try the National Marine Manufacturers Association, which puts on a big annual trade show for the after-market segment.   Needless to say, the NMMA is also a font of other interesting stats and news; ask its press contacts for access to the 2009 statistical abstract which includes data on consumer behavior.

Other angles to check include marinas, repair shops,  ancillary firms such as haulers and upholsterers, boat rentals, fishing and bait shops, and so on.  Many of these are small, independent businesses that depend on seasonal trade for year-round survival.

Sources to check include the American Boating Association, and the United Marine Manufacturers Association.

About the Author

Veteran financial writer Melissa Preddy served as a business writer, editor and columnist for The Detroit News from 1995 to 2008, is a Michigan-based freelance journalist. She now works as a writer and editor for a medical research unit of the University of Michigan Medical School. Follow her daily posts. | E-mail: Melissa Preddy

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