Baird Poll Shows Marine Industry Gains Traction
MRAA/Baird Marine Retailer Pulse Report: New boat retail was up slightly, as smaller boat categories provided most of the lift. Still, retail remained sluggish in the important sterndrive and inboard-cruiser categories. Used boat retail improved as well, further depleting used inventory supply. Net, we remain bullish on the space as the wealth effect releases pent-up demand, but weather needs to improve as the peak season arrives.
Boat retail increases. Retail trends improved significantly in March – a positive sequential improvement. Seasonally, March represents 9% of annual sales. Retail trends become increasingly important throughout the spring, as the retail selling season peaks in June/July. New boat retail was up slightly, as 40% of retailers reported an increase. Used boat retail was even stronger, with 42% of retailers citing “up/strong” retail during the month.
Sentiment improves from weather-driven lows. The MRAA/Baird Marine Retailer Sentiment Index stands at 58 based on current conditions and 71 based on the 3-5 year outlook. While 41% of retailers report a “favorable” current outlook, 53% report a “favorable” 3-5 year outlook – indicating that dealers remain more optimistic about a cyclical recovery in the industry, despite less favorable near-term demand factors (e.g., weather).
New boat inventory appears balanced. Marine retailers are comfortable with new and used inventory levels. Among new boat retailers, 66% report that inventory is just right or “too low.” Among used boat retailers, 92% indicate inventory is “just right” or “too low.” Positive retail trends during the month have further depleted already anemic used boat supply – a positive for future new boat retail demand.
Credit remains healthy. Marine retailers reported good access to retail and wholesale credit in March. 50% report that retail credit conditions are “favorable” compared to three months ago, while 51% report “favorable” wholesale credit conditions.
Bullish in affluent marine consumers. We remain bullish on discretionary spending as the wealth effect releases pent-up demand. Although wages remain depressed, affluent consumers are benefiting from monetary policy aimed at reflating asset values, creating newfound wealth. We expect this wealth to trigger the release of pent-up demand over time, especially in the deeply depressed boat market.