Baird Poll: Marine Dealers See Dropoff in July
MRAA/Baird Marine Retailer Pulse. Retailers reported flat to marginal growth in July, a deceleration from the pace in June. As the peak retail season nears the end, 2014 is shaping up to be a modest disappointment after a late spring delayed the start. Still, we continue to believe a modest wealth effect will release pent-up demand in the deeply depressed boat market over the next several years.
July boat demand: Retailers reported flat demand in July against a difficult YOY comparison (+18%). Still, following 6% growth in the U.S. powerboat market in June, the trend is a modest disappointment as the peak selling season draws to a close. Seasonally, July represents the end of the peak retail season, comprising 15% of annual sales. Marine retailers report available credit at both the retail and wholesale levels.
Inventory appears elevated. As the peak selling season nears the end, dealers have become increasingly sensitive to inventory levels. Sixty one percent of retailers report that new boat inventory is “too high” versus 16% reporting that inventory is “too low.” In a few cases, demand for new boats (e.g., Sea Ray) is well ahead of production, creating a favorable delivery backlog. Meanwhile, the promotional environment appears even with last year, suggesting OEMs and retailers have not resorted to unhealthy discounting to move inventory.
Innovation. We asked dealers for innovative ideas to rekindle demand. Responses cover the spectrum, but several focused on joystick technology, ski/wake innovation, and lower-cost boats.
Bullish on affluent marine consumer. We remain bullish on discretionary spending as affluent consumers benefit from monetary policy aimed at reflating asset values, creating investment wealth. While the late start to spring deferred demand and condensed the selling season, we expect the wealth effect to release pent-up demand, particularly in the deeply depressed boat market, over the next several years.