When will consumer confidence and boat sales rebound?

Now that the election is over and the Republicans will again control the House and have gained a lot of seats in the Senate, all retailers are hoping that consumer confidence will come back. And hopefully it will rebound—fast. I am confident that it will rebound—it always has. But how soon and how fast I am not sure. According to the Conference Board, an index of consumer confidence rose in November to 54.1, up from 49.9 in October. That is the good news. However, 90 is where it should be so it shows that we still have a ways to go.

As one successful and well-known dealer said to me, “Consumer confidence seems to be the big issue for dealers everywhere. Like when the hell will we get some significant business again? And dealers everywhere are asking, ‘how do I order for the immediate and long term future based on current consumer confidence?’”

A sales representative for a major marine industry manufacturer, when asked how business was currently, had this to say: “Dealers this fall were pretty tied up with pulling boats out of the water, and now are winterizing. And they have also been trying to figure out their boat show plans.” Then he added, “Dealers are also avoiding us sales reps as best they can to avoid pressure from us for unit orders.”

He went on with, “And there are still some dealers going out of business. It seems that repossessions of some dealers’ inventory is still happening, and even though retail is up a bit over last year, repos are still taking some dealers down.”

Spending habits have changed, at least for the short term, from what we saw in the recent boom years. Shoppers are now scrutinizing every purchase they make—from shopping for the lowest prices for groceries to buying cars and boats. And Americans who can are trying to save more and spend less. During our recent boom years, the savings rate went down to nearly zero. Now, those who are in stable jobs are saving more and paying down credit card debt. Recent reports are that consumers are using credit cards less this year for Christmas shopping.

The good news is that car sales have been showing some indication of a rebound and if that holds up, boat sales will follow come spring. I have observed over the years that boat sales tend to follow the ups and downs of car sales. Maybe I am too much of an optimist, but I think the changes in Congress as a result of the November 2nd elections will give consumer confidence a boost come January. (And I just hope the “lame duck” Congress doesn’t succeed in passing some bills Americans don’t want.)

For the upcoming boat shows and 2011, I really think a lot of boat shoppers will be looking for rigs that are less tricked out with expensive options than those that have been promoted by dealers and the industry over the past few years. Dealers that are planning on participating in boat shows should consider having some entry level boats in their exhibits. That way they will have options for the new “frugal” shoppers and, when possible, can “sell up” from the entry-level rig.

Lastly, engine and boat manufacturers should work closely with dealers to help them survive. Pressuring dealers to load up with more inventory than they need, can afford, or are willing to stock, can be very harmful to them and the overall industry.

As John Underwood, industry veteran, friend,and contributor to this blog, said, “I think (and I must admit, hope) that dealers take a hard line toward builders that push more inventory than their guts tell them to buy. I hope there is a move in the boat builder community to look for the dealers that make their line look good with excellent customer service in very capable facilities. Note that I said “capable” not necessarily “glamorous.” I also hope these “good” builders revamp production methods to avoid needing forecasts so far out—even if it costs them some “throughput.” Dealers need less in stock and quicker access to exactly what the customer wants.”

I agree with John! Loading dealers up to their eyeballs in inventory that they were pressured to take does the industry more harm than good.

About Ben H. Sherwood

Ben H. Sherwood is a marine industry veteran and a marketing consultant who operates Sherwood Marine Marketing in Pleasant Prairie, Wis. For more info, click About on the main menu.

2 thoughts on “When will consumer confidence and boat sales rebound?

  1. Always good insights, Ben. I read that credit card purchases on Black Friday were at pre-recession levels. Retail spending in November up 6%. New car sales in November up 17%. Employment is up (though so is unemployment). Consumer confidence up. Good reports on boat sales from the Ft. Lauderdale Boat Show. Goldman Sachs predicts GDP up in 2011 by 2.7% and S&P up 22% in 2011. I think the recovery in new boat sales will come sooner and stronger than most people think. Time to start planning for growth. Hope I am right.

  2. Tom – Thanks for your comments. I hope you are right also. We are starting to see a glimmer of light at the end of the tunnel and from every indication so far, it is not a train. Positive reports from boat shows are certainly a good sign. We used to consider early boat show results as a barometer for how business would be for the coming season. Lets hope we continue to get good show results in early 2011.

Leave a Reply