The recreational boating industry’s growth engines sputtered in March amid inclement early spring weather as overall sales dropped for the second month in a row after a year of recovery and consistent gains.
Soundings Trade Only reported that sales of aluminum pontoon boats rose just 1.3%, or 18, to 1,386 from the same month last year in early reporting states and sales of 11- to 40-foot outboard fiberglass boats were virtually flat, dropping by 15, or 0.5%, to 2,767, according to Statistical Surveys Inc.
Both categories were sales leaders in 2012 as the industry began to turn its fortunes around after the recession ended.
Sales in the industry’s main powerboat segments, which consist of five fiberglass and two aluminum categories, fell 5.9% to 7,257 and industrywide sales dropped 10.7% to 10,564 in 27 states that represent about 63 percen%
A year earlier, with all 50 states reporting, main-segments sales rose 16% while industrywide sales climbed 14%
The industry is at the midpoint of the spring selling season, which runs through May. March sales represent 11.4 to 12.6 percent of the year’s retail activity.
Statistical Surveys National Marine Sales Manager Ryan Kloppe said chilly, wet weather limited sales in March.
“I don’t think the recovery is in jeopardy,” he said. “In March last year it was 82 degrees in the Midwest and sunny. This year it was 42 degrees and it was raining and snowing.”
Kloppe said builders and dealers told him they’ve seen good attendance at boat shows, but that poor weather, particularly in the Midwest, has discouraged people from buying.
“They expect slight growth as soon as the weather warms and people start purchasing boats,” he said.
The superb performance of the U.S. stock market continues to offer optimism that the so-called “wealth effect” could continue to boost boat sales in 2013.
The most recent good news was last Thursday’s record close of the Standard & Poor’s 500-stock index, the most widely followed barometer of the U.S. stock market, at 1,569.19, topping its previous peak, which had stood since Oct. 9, 2007.
The current performance of the U.S. stock market would have seemed improbable during the depths of the financial crisis after the October 2008 market crash, given that the nation led the global economy into recession, according to a report in The New York Times.
Economists credit the relative speed with which the U.S. government and the corporate sector responded to the causes of the 2008 crisis for the current measured rebound.
“The U.S. addressed the problems of the financial crisis faster and with much more ferocity than the rest of the world,” Edward M. Clissold, a market strategist at Ned Davis Research, said in the Times article.
Beyond the stock market, the marine industry can take heart in reports that U.S. consumer spending in February climbed by the most in five months as incomes rose, signaling that an improving job market is spurring demand. The term “wealth effect” refers to an increase in consumer spending that accompanies a rise in perceived wealth.
“The economy is in a very good place right now ahead of the fiscal restraint,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. In New York, said in a Bloomberg article. “This recovery is sustainable. Consumers are in the driver’s seat.”
A report today by CNBC notes that the two strongest equity sectors that have fueled the S&P 500′s recovery are stocks based on consumer staples and consumer discretionary spending. So-called discretionary and staples stocks have posted 14 straight quarters of earnings growth, the longest streak among the 10 S&P 500 sectors.
A year ago, spring arrived early in many parts of the country and the recreational boating industry rode a large and early wave of customers to strong results in February. This year, the industry appears to have caught a chill.
Soundings Trade Only reported that in the industry’s main powerboat segments reversed course. Rather than the double-digit gain of a year earlier, the group that consists of two aluminum and five fiberglass categories saw a 9.5% decline in sales to 4,013 boats in February from 4,434 in the same month a year earlier, Statistical Surveys Inc. said today.
Industrywide, sales dropped 9.8% to 5,853 from 6,491 a year earlier.
Statistical Surveys national marine sales manager, Ryan Kloppe said the 2013 results suffered by comparison with the sharp sales gains the industry had in 2012.
“We had a heck of a February last year,” he said.
The February 2013 data in the Statistical Surveys report are based on information from 27 early reporting states that represent about 63% of the U.S. boat market. Reports of sales of documented vessels were complete only through November because of data entry delays at the Coast Guard, creating an incomplete report for boats larger than 31 feet and understating the cruiser and yacht markets.
“Obviously we know how far the Coast Guard is behind and that is part of [the reason the sales figures appear so low],” Kloppe said.
A year ago, when reports from all 50 states were in, main-segments sales rose 34% in February to 5,662 from 4,228 in February 2011. Industrywide sales climbed 28% to 10,119 from 7,814 in the previous February, Kloppe said.
February sales typically amount to 4.4% to 5.5% of the year’s retail activity. The month represents the start of the spring selling season, which runs through May.
Among the main segments, the only category that showed a gain in February this year was aluminum pontoon boats, where sales rose 10.6% to 636. Categories that declined did so in double digits, except for 11- to 40-foot outboard fiberglass boats, where sales were off by a slight 1.8%, or 32, to 1,745.
Recreational boat sales topped 200,000 last year for the first time in three years, marking a milestone in the industry’s continued recovery from the Great Recession.
Soundings Trade Only reported that with all 50 states reporting, Statistical Surveys Inc. said 2012 sales industrywide totaled 202,403 boats, an increase of 9.6% from 184,627 a year earlier. The industry last topped 200,000 in 2009, when 209,215 were sold.
“I think it is significant for the industry to eclipse 200,000 boats,” said Ryan Kloppe, national marine sales manager at Statistical Surveys. “It is a nice plateau to reach.”
For the year, sales in the main powerboat segments gained 11.4% to 125,544, and leading those segments were two aluminum categories, fishing boats and pontoons, and 11- to 40-foot outboard fiberglass boats. Fishing boat sales rose 9.3% for the year to 37,623, pontoon boat sales climbed 20.4% to 33,798 and sales of 11- to 40-foot fiberglass outboards gained 13.1% to 36,222.
Two segments that lagged throughout the year — 31- to 40-foot cruisers and 41- to 62-foot yachts — ended 2012 with lower sales than in 2011, but the declines were in the low single digits as the Coast Guard began to catch up on sales of documented vessels.
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In light of an improving consumer outlook, more than half of marine industry survey participants say now is the time to increase inventory levels to be fully stocked for the spring selling season.
That’s according to results released by GE Capital, Commercial Distribution Finance (CDF), which reported that 51% of respondents said it was the best time for dealers to increase inventory.
GE Capital’s survey was conducted Feb.13-15, according to The Wall Street Journal’s Market Watch. The respondents are a variety of marine industry participants, including manufacturers, dealers and distributors.
“Overall, our data indicate sales are improving, costs are down and earnings are up at the dealer level,” Bruce Van Wagoner, president of CDF’s marine group, told the paper. “We believe that 2013 will look a lot like 2012 — slow and steady growth in a smaller, healthier market.”
Forty-three percent of survey respondents said they expect sales to increase 5% to 10% this year, and 30% said they expect sales to increase 10% to 15%.
CDF’s forecast calls for the marine industry to grow about 8% in the United States in 2013. “Of course, positive news on some of the most critical economic factors could kick up consumer demand and drive industry performance beyond current expectations,” Van Wagoner said.
Forty-two percent of survey respondents said consumer demand was their greatest business concern, down from 64% in 2012.
Asked which trend will have the largest impact on the boating industry this year, 32% of respondents pointed to the popularity of low-cost or “base” models, up from 23% last year. Thirty percent of respondents expect long production lead times, compared to 21% last year.
Last winter, reports in January of rising sales of pontoon boats and small to midsize outboard fiberglass boats were a pleasant surprise in the U.S. boatbuilding industry.
Soundings Trade Only reported that such results since have become the norm, and sales figures that Statistical Surveys Inc. released today (Feb. 22) show that the industry is continuing to build on the momentum it created last year.
January sales in the main powerboat segments, which include two aluminum groups and five categories of fiberglass boats, rose by 374, or 14.7%, to 2,910, in 29 early reporting states, from 2,536 in the same month a year earlier. Industrywide sales rose by 487, or 12.8%, to 4,287.
“2013 is off to a positive start, a good kickoff,” said Ryan Kloppe, national marine sales manager at Statistical Surveys. “It’s a nice, moderate increase.”
Kloppe is confident that the data accurately portray the state of the industry, even though January is traditionally the second-lowest sales month for boats. It typically produces just 2.6% to 3.5% of the industry’s annual retail activity.
The states in Statistical Surveys’ January report represent 64% of the national market.
Kloppe said dealers who spoke with him at the Miami International Boat Show last week “feel they’re in a good position. I saw ‘sold’ stickers on boats throughout the show, which was good to see.”
The aluminum pontoon category had the highest sales increase within the main powerboat segments on a percentage basis in January, just as it did a year earlier. Group sales rose by 75 boats, or 28.1%, to 342, from 267 a year earlier. Sales in the 11- to 40-foot outboard fiberglass category rose by 288 boats, or 26.1%, to 1,392.
It’s official: 2012 was a comeback year for the recreational boating industry.
Soundings Trade Only reported that industrywide sales rose 9.4% to 196,519 boats, and sales in the main powerboat segments climbed 11.2% to 121,789 compared with the previous year. The totals represent 26 early reporting states that represent 64% of the nation’s boat market, according to Statistical Surveys Inc.
Sales were weak during the traditionally slow month of December, but that did little to dispel the notion that the industry has forged a potentially enduring recovery. For the year, sales of 11- to 40-foot outboard fiberglass boats rose 12.9% to 35,257 in the early reporting states and sales of aluminum pontoon boats rose 20.9% to 32,934.
Pontoons and aluminum fishing boats were sales leaders throughout the year. Fishing boat sales rose 9.1% to 36,402.
Unless the economy suffers a shock in 2013, “I really think we’ll continue this slow, moderate growth,” said Ryan Kloppe, national marine sales manager at Statistical Surveys.
Slowed by the aftereffects of Hurricane Sandy, Kloppe said, the industry didn’t have much to celebrate in December. Industrywide sales rose just 1.1 percent to 3,351 in the early reporting states and sales in the main segments rose only 1.3 percent to 2,285.
“The full amount of relief hasn’t come to [the areas affected by Sandy],” he said.
December sales traditionally represent only about 2 percent of the year’s total volume.
More evidence that the U.S. economy is climbing out of the recession: Sales of new recreational powerboats are estimated to be up by 10% in 2012, according to the National Marine Manufacturers Association (NMMA).
“We are pleased to see the industry growing,” NMMA president Thom Dammrich said. “Our projection is the industry will grow in 2013 by another 5% to 10%.”
The Miami Herald reported that Dammrich said the level of growth depends on conditions like consumer confidence and the housing market — and sustained increases in Americans’ participation in outdoor recreation.
The 2012 projections represent the first signs of steady growth across the powerboat market since the economy hit bottom in 2008-09 and new boat production dropped 80%. Even now, Dammrich, said production and retail sales are only about half of what they were during the peak in 2007.
Fueling the growth in new boat sales are purchases in the 15- to 26-foot range, which make up 96% of the 12.4 million boats registered in the U.S., according to the NMMA. While the numbers are up in almost every segment of the industry, the toppers are pontoon boats.
“Twenty-five percent of all boats sold today are pontoon boats,” Dammrich said. “They’re a very versatile boat, very stable. They can be large and roomy. You can fish. You can swim. You can get the family out for the day.”
Dammrich said the only category that has not turned around is stern-drive inboards over 30 feet. Larger and more expensive than the typical family boat, these models are often purchased through home-equity loans, he said. Another factor is this year’s requirement that stern-drive inboard engines have catalytic converters, which increases the cost significantly.
In 2011, boating participation rose 10% to 83 million — the largest proportion of adults who went boating since 1997, according to the NMMA. Those boaters who liked the sport enough to buy their own watercraft found very few late-model, pre-owned boats for sale because of the drop in production during the recession.
“Those people are going to end up buying a new boat,” Dammrich said.
Editor’s Note: Following the release of the boating retail report from Statistical Surveys Inc., the investment firm of Robert W. Baird & Co. distributed a routine advisory note to its investors. Highlights of that note follow.
October powerboat retail bounces. U.S. powerboat retail jumped 22% in October, according to Statistical Surveys. October typically represents 4% of annual sales. Stronger growth continues in lower-priced areas of the market, with aluminum powerboats and fiberglass outboard (both +25%) drive the increase. Through October, retailers are on pace to sell 156,000 powerboats in 2012 (+12%).
• U.S. powerboat retail up 22% in October. U.S. powerboat retail jumped 22% in October — the most robust growth in over six months. The month of October falls in the offseason for boat sales, and accounts for 4% of the annual market. U.S. powerboat retail remains up 12% YTD in 2012.
• Smaller fares better. Smaller boats continue to perform better than larger boats, consistent with our expectations. Notably, sales of 14-30 foot fiberglass sterndrive units grew 18% following several months of declines. We believe consumers have more equity (or less negative equity) in smaller boats, driving better trade-in activity.
• Sandy destruction. Early assessments indicate as many as 65,000 boats were damaged in the wake of Hurricane Sandy, one of the most destructive storms on record.
To subscribe to this and other Baird reports, contact Craig R. Kennison at email@example.com.