The recreational boating industry generated $36.7 billion in retail spending last year, a 3.2% increase from 2012, with performance and outboard boats leading the recovery.
Soundings Trade Only reported that for the first time since before the Great Recession, the ratio of used- to new-boat sales decreased.
An estimated 166,800 new powerboats and sailboats were sold in 2013, an increase of 2.2% on the heels of the industry’s 10.7% increase the previous year, according to new data released by the National Marine Manufacturers Association (NMMA).
The NMMA is anticipating continued momentum with an additional 5% to 7% increase in retail sales of new boats in 2014.
“As the nation’s economic recovery matures and boating businesses prepare for summer, a peak selling season for recreational boats, accessories and services, we expect to see continued stable growth in sales,” NMMA President Thom Dammrich said in a statement. “Following a year of inclement weather throughout the U.S. driving pent-up demand and Americans taking to the water in record numbers, the industry is primed for a busy selling season.”
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Recreational boat sales growth in March amounted to just a trickle, but the solid single-digit increases the industry saw in April suggest that builders and dealers could enjoy sustainable gains in the warmer months ahead.
Soundings Trade Only reported that sales in the industry’s main powerboat segments rose 5% to 10,973 and industrywide sales climbed 8.9% to 17,061 from the same month a year earlier in 30 early reporting states that represent about 64% of the U.S. boat market, Statistical Surveys reported today.
“I think this is the start of a good swing and the momentum we needed, and all we need now is some good spring weather to kick the boating season into full gear,” Statistical Surveys Inc. National Marine Sales Manager Ryan Kloppe said.
Among the high-volume categories, the 11- to 40-foot outboard segment stood out. Sales there rose 11.3%, or 377 boats, to 3,703, and they are up 6.6% for the year through April at 10,692 in the early-reporting states.
Kloppe said boats in that segment are versatile and come with a range of pricing options.
“I think that’s going to be the hot category this year,” he said.
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The long winter undoubtedly impacted boat sales, but data reveal the strongest first quarter since at least 2010, with sales that slightly outpaced those in 2012, a year characterized by a mild winter and early spring.
Soundings Trade Only reported that first-quarter sales on a three-month rolling basis this year significantly outperformed those in 2013, a year that also brought cold weather in many parts of the country well into spring months, Info-Link Technologies managing director Jack Ellis told Trade Only Today.
“If you recall, early 2012 saw a really mild late winter and early spring and had rising sales,” Ellis said. “So last year, people were like, ‘What’s happening? Sales are down,’ but last year was a terrible winter that dragged out and they were comparing it to a great early spring and late winter the year prior. Yet this year, the winter is even worse and sales are about equal to where they were in 2012, when everyone was saying, ‘Rah rah, rah, look at how boat sales are going, and it’s still only the first quarter.’ ”
About a third of first-quarter sales always occur in warm-weather states such as Florida, Louisiana and Texas, Ellis said.
“All those places are doing well,” he said. “What that tells me is that though there is probably going to be a bit of a lag in the Northern states, states that are not cold are doing pretty well. So hopefully when we come out the other end, in April or May, it will pick up again.”
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Editor’s Note: The following is a report by R.W. Baird & Co. analyzing powerboat sales during March.
Boat sales flat in March. U.S. powerboat retail was exactly flat in March, according to Statistical Surveys Inc. March typically represents 9% of annual sales, becoming more important each month through the June/July peak. For the quarter, powerboat retail fell 1% as weather took its toll. Brunswick already reported preliminary Q1 results, which fell short of expectations. Still, March trends improved relative to February, consistent with our recent dealer checks, supporting our view that underlying trends are better.
U.S. powerboat retail flat in March. U.S. powerboat retail was exactly flat in March. Growth in outboard, aluminum fish, and custom yacht categories (small unit base) was offset by declines in pontoon and most fiberglass categories. Not surprisingly, the late spring continues to weigh on demand, although we are encouraged by the sequential improvement from February to March, which is consistent with our dealer checks.
Mixed retail demand. Relative strength in outboard (+5%) and aluminum (+1%) was offset by a decline in pontoon (-4%) and smaller fiberglass categories. Encouragingly, the largest fiberglass sterndrive category posted a gain, though we note that the total volume in the custom yacht category was only 16 units during March – so the growth is off a small base. Weather aside, we think a growing wealth effect will trigger the release of pent-up boat demand.
For the second month in a row, new boat sales rose by double-digit percentages in the main powerboat segments and industrywide, helping builders continue a recovery from the effects of a cold, wet spring.
Soundings Trade Only reported that led by aluminum pontoon and fishing boats and outboard fiberglass boats, sales in the main segments rose 11.8% in August, or 769 boats, to 7,286, from the same month in 2012 in 26 early-reporting states representing about 60% of the U.S. market, according to figures compiled by Statistical Surveys Inc.
Statistical Surveys National Marine Sales Manager Ryan Kloppe said the August report is further evidence of a boating season that bloomed late because summer weather was slow to arrive in many parts of the country.
“With no spring, people who wanted to buy a boat waited until it got warm and then went out and bought one,” he said.
Industrywide sales in the 26 states totaled 12,732, an increase of 12.8%, or 1,445 boats, from August 2012. Warm-weather states Florida and Texas were the best performers, reporting 1,989 and 1,977 sales, respectively, but Michigan ranked third with 922.
“Those are great numbers for the month of August for Michigan,” Kloppe said. “It’s a great boating state.”
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Recreational boat sales slipped in April for the third month in a row as the spring selling season continued to disappoint the industry.
Sounding Trades Only reported that even the aluminum pontoon category, a standout during the recovery that began last year, lost ground. Pontoon sales fell 3.6% to 2,522 boats from the same month a year earlier in 30 early reporting states that comprise 67% of the national market, according to figures compiled by Statistical Surveys Inc.
Sales of aluminum fishing boats were up 3.8% to 3,365, helping to balance the decline among pontoons and typifying an up-and-down April pattern among the industry’s main powerboat segments, a group that consists of two aluminum and five fiberglass categories. Sales for the group were close to flat, falling 0.7%, or 70 boats, to 10,610.
Industrywide, sales in the early-reporting states were 5.2 lower for the month at 15,824 boats. A year ago, with all 50 states reporting, sales totaled 26,130 in April, up from 22,415 in the same month in 2011.
“There’s no way to sugarcoat [the April results],” said Ryan Kloppe, national marine sales manager at Statistical Surveys, noting the uneven category-to-category results.
Builders blamed poor March sales on chilly, wet early spring weather and Kloppe agreed that April was still a cold month in the Midwest, but he said the weather was improving by the end of the month, leaving no easy answer for why sales continue to lag.
Kloppe said he has spoken to dealers who told him they have made sales that haven’t been reported because the boats have yet to be delivered.
“I’m eagerly expecting the [50-state] quarterly numbers to see whether we can even out [some of the inconsistencies],” he said. Those figures will be available by mid-June.
With one month to go in the spring selling season, sales were down 3.9% for the year at 29,272 boats in the main segments and 8.1% industrywide at 42,710.
In recent years the marine industry has battened down its hatches in an effort to survive the economic storm.
Beach Carolina Magazine reported that depressed housing prices, stock prices and employment levels placed the economies of the world in the doldrums. Elections, the Euro-crisis, taxation, healthcare, the fiscal cliff, created negative attitudes, and all impacted consumer confidence. The boat and yacht business was no exception. By mid-2008, potential boat-buyers seemed to ban together with a common attitude of “Why buy now, when tomorrow you can buy cheaper?”
But times are changing and so is the public psyche. The industry is starting to realize strong economic data, and evidence of a domestic growth environment. We see signs of the most optimistic times for the US boating industry since 2008. Overall boat sales rose 10% in 2012 according to the National Marine Manufacturers Association’s recent report. Today’s activity shows every indication of continued substantial improvement in 2013 & 2014.
“We are experiencing increased activity in listings and sales, which, with the rising employment we see in the marine industry, are very encouraging signs to those of us at MYB,” said Michael Hannon, CEO of Merritt Yacht Brokers, Inc.
New brokerage sales in 2012 were up 2% in boat value and up 3% in sales volume over the previous year. Year-over-year January 2013, sales were higher than 2012. Pre-owned boat sale volumes increased by 1%, while at the same time average resale values increased at a rate greater than 20%.
Consumer borrowing in January added $16.2 billion to a total of $2.8 trillion – over 200,000 jobs were created in each month from November through January. The Dow Jones Industrial Average reached an all time high of 14,413 on March 8. Worldwide share prices exceeded their peak of mid June 2008. Surging stock prices, mending housing and labor markets as well as a booming energy sector are among the tailwinds propelling the U.S. economy. The mix of new jobs is also changing, as we create higher paying jobs.
“The climate for boat sales and boat prices are the most robust which we have viewed since 2008. We are experiencing very strong pent-up demand for pre-owned boats and yachts,” said Hannon. “We are receiving substantial inquiries for superior quality and extremely well maintained boats in the 30- to 80-foot range.”
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When the Great Recession hit, potential boat buyers headed for safe harbor – and stayed there.
Now a few are venturing out, as consumer confidence has strengthened somewhat, according to a report in the Star News, Wilmington, N.C.
“We have been seeing an uptick and slow recovery for the industry,” said Ellen Hopkins, spokeswoman for the National Marine Manufacturers Association (NMMA), a Chicago-based trade group.
“Last year was the first time we started to see some growth,” Hopkins continued. She said the group anticipates a 10% increase this year over 2011.
Figures from the marine manufacturers association show just how far sales had fallen. Total spending on power boats, trailers and accessories in North Carolina totaled $504.3 million in 2008, but by 2010 had plunged to $360.9 million, according to the industry group’s figures.
Last year saw an 11.6% rebound in the state, however, to $402.8 million, ranking North Carolina No. 7 in the nation in expenditures.
“It’s been difficult but we’re certainly coming back,” said Tricia Bennett, president of Bennett Brothers Yachts, which does restoration and repair of craft ranging all the way up to Coast Guard cutters.
“There’s been an increase in sales, which started about mid-year. The low point was about two years ago, and it’s been slowly coming back. People put projects on hold.”
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Editor’s Note: Robert W. Baird & Co. issued a client newsletter to investors following the September boat sales report from Statistical Surveys Inc. The following offers a summary of the results.
September powerboat retail flat. U.S. consumer purchases of powerboats were unchanged in September versus last year, according to Statistical Surveys. Demand for aluminum powerboats (+4%) outpaced demand for fiberglass boats (-3%), continuing the trend of better performance in the lower-priced segment of the market. Retailers are on pace to sell 156K powerboats in 2012, up 12%.
• U.S. powerboat retail flat in September. U.S. powerboat retail was roughly flat in September. Sales trends decelerated to +6% in Q3 after growing 12% in the first half of 2012. The month of September falls in the offseason for boat sales, and accounts for 6% of the annual market. U.S. powerboat retail is up 12% YTD in 2012.
• Mix still favors smaller boats. Smaller boats continue to perform better than larger boats, consistent with our expectations. We believe consumers have more equity (or less negative equity) in smaller boats, driving better trade-in activity.
This summary of a Baird research report is not intended as investment advice. To participate in Baird surveys and receive research reports, contact Craig R. Kennison, CFA, at firstname.lastname@example.org.
Recreational boat sales improved in August with increases among aluminum fishing and pontoon boats and smaller fiberglass outboards and declines among smaller fiberglass sterndrives, cruisers and yachts.
Soundings Trade Only reported that the industry’s growth lagged the pace it set earlier in the summer, but sales in the main powerboat segments gained 4.7% compared with August 2011 and industrywide sales rose 1.9%, according to figures compiled by Aarn Rosen, national sales manager at Statistical Surveys Inc.
“You’re past the backbone of the season and I’m sure the dealers are getting a little lean on stock, especially this year,” Rosen said. “Fortunately, you’re still seeing growth,” he added, encouraged by the trend as the typically lower-volume fourth quarter nears.
Through August, sales in the main segments, which consist of the two aluminum boat groups and five categories of fiberglass boats, are up 13.3%. Industrywide sales are 11.2% higher.