The recession is over – Why aren’t people buying new boats?

In the first quarter of 2010, sales of fiberglass boats 14 feet and up were 10,910 vs. Q1 2009 13,829. That’s a drop of 21%. Bull sessions with disgruntled but thoughtful boat dealers kick out a number of answers contributory to this situation. I’m sure you can think of a couple of additional ones, but here’s what people who should know are thinking and saying to me:

  • The recession isn’t as “over” as we would like to think. Intuitively or deductively, many buyers recognize the possibility of a “double dip” or a long slow rise before prosperity.The car guys seem to be pulling out of it, though. I wonder what they are doing that we aren’t, or is it just that cars are more necessary to most folks lives than boats? If nothing else, it should be a light at the end of the tunnel.
  • Good boats are being built, but there aren’t a lot of vitally interesting new choices on the market. Older boats generally have nearly the same features. This isn’t all bad, but it doesn’t drive sales. Nearly everybody cut production drastically, and new ideas are mostly on the back burner. Also, the offering of “value” models at a lower price point has not moved as fast as the conversations about it. I think most of us recognized, even when boats were selling pretty well, that we were missing a market segment populated by the less affluent or free spending boater.
  • There has been a major sociological shift in consumer attitudes to go along with layoffs and reduced confidence. It is not as socially acceptable, even if you have the cash, to conspicuously spend on major new toys. The quick evaporation of good used boats bears this out. It’s OK to brag about the “steal” you got on a previously enjoyed product, but trading in a 2-3 year old boat for a new two foot longer one is sort of vulgar in the recession molded minds of many. People are still using their boats at near the old rate, but unless there is a major flaw in their current craft, holding on to it is more laudable socially. It’s going to take time for this to go away. Some dealers have hooked up with local banks and are doing surprisingly well peddling repos – and then getting paid to fix them up.

What’s going to get us out of these doldrums?

  • We need to study the auto industry marketing efforts. They have some arguments we can’t use, but I think a lot of what is happening there is transferable. A mutually supportive partnership between dealers, manufacturers and financial resource providers seems to be working for them. In our industry, the “every man for himself” mind set still is rampant. Automotive has lost a smaller percentage of dealers than our industry in spite of the stink about their canning unnecessary ones. Our industry has to address this.
  • The boat manufacturers who seem to be pulling in surprisingly good numbers these days are the ones who have a record of interesting innovation, good dealer relations and supportive marketing ideas. Most seem to have made short term changes that helped get inventory out of dealer stocks (and off floorplans) early. The fact that the leaders have made renewed efforts at “unadorned” or “decontented” entry level craft with lower price points is significant, also. It’s probably more acceptable to flaunt a bargain than an extravagance nowadays, even if it is a new one.
  • We need to run around behind ourselves and give us a kick in the butt to move out of the “hard times” philosophy. Even if our glasses are down to half-empty, the half-full mind set must predominate if we are going to survive. Unfortunately, grumbling to employees or customers creates self-fulfilling prophecy. If we need to get the gloom out of our systems, we can join MRAA and commiserate with other good dealers who might share a good idea or two with us. Remember that we all became dealers at least partially because the trade is exciting and fulfilling. You have put a lot of time and money into building a business that is normally pretty good and usually fun. Don’t let that slip away if you can help it.
  • Grow the best service department you can – if you haven’t already. That area still seems to work for most dealers – at least those who have good service departments. My boat yard friends aren’t suffering as badly as my dealer friends, mainly because their focus is on maintaining their customer base contact rather than making the next new boat sale. Some are hardly suffering at all. See if you can build a business plan for at least a minimal profit around the parts of the business that still work so that you can wait for the rest to catch up.
  • Don’t forget to urge customers to upgrade their older boats. Repowering, particularly, is a good hunk of cash flow. A good renovation on a quality older boat may do more for you profit-wise than a tight new sale, and it keeps the boater coming back for more fun.
  • Look for everything that makes at least a minimally viable business of what is left of the market until it turns around. Pent up demand is a beautiful thing to witness, if you are still in business.

About John Underwood

John Underwood currently serves on the National Boating Safety Advisory Council for the US Coast Guard. He is past chairman of the Marine Retailers Association of America. He owned Lockwood Marine for 20 years. For more info, click Contributors on the main menu.

One thought on “The recession is over – Why aren’t people buying new boats?

  1. John,
    I want to compliment you on the research and especially the thought process that so clearly came through in your article. The points are practical yet compelling.
    There are no quick fixes or silver bullets. Innovation and change will lead both our individual businesses and our industry out of and into a new way of doing business.
    Again, great job on the article.

    Rob Youker

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