Baird Survey: Boat Demand Solid During May
Editor’s Note: Robert W. Baird & Co. recently partnered with the Marine Retailers Association of the Americas (MRAA) to contact 170 boat dealers to assess trends in May. The following is a summary of the results.
MRAA/Baird Marine Retailer Pulse. After a better April, new boat retail improved in May as the weather improved. The trend suggests industry retail improved 4% to 6% in May. Despite the late spring, retailers indicated there is still time to recover deferred early-season sales, with most indicating the deferral decision comes after June. Net, we remain confident that the wealth effect will release pent-up demand in the deeply depressed boat market.
Boat demand solid in May. Demand for new boats improved in May, following a solid April. Recall that the harsh winter depressed demand in Q1 (down 1%). Our May checks are similar to our April checks, suggesting industry retail improved 4% to 6% during the month. In May, for every retailer that reported declining sales, 1.8 dealers reported an increase. Marine retailers continue to report relative strength in aluminum fish, pontoon, ski/wake, and personal watercraft and relative weakness in inboard cruisers and fiberglass sterndrive. Used boat retail trends remain strong, although a lack of late-model supply remains a top concern (a trend that should drive demand for new boats, eventually). Lastly, among factors affecting demand, weather, the economy, and government/regulations hurt while new products, promotions, and access to credit helped. Seasonally, May is an important month – historically representing 16% of annual sales.
Inventory OK. New boat inventory appears elevated for this time of year, but improved sequentially in May. We believe the late start to spring caused inventory to accumulate ahead of the prime selling season. Meanwhile, used boat inventory remains lean due to limited supply. Net, we think that tight supply of late-model used boats bodes well for future new boat retail demand.
It’s not too late for a good boat season. We asked dealers, “At what point during the season do buyers choose to defer a boat purchase until next year?” The vast majority (89%) said that the decision to defer a boat purchase did not occur until after June. So, while the delayed start may have a slight impact on 2014 demand, there is plenty of time for boat retailers to catch up. Historically, the season peaks in May, June, and July. To that end, the MRAA/Baird Marine Retailer Sentiment Index remains positive.