Boat dealer
Soundings TradeOnlyToday Magazine
A new survey shows that despite shaky consumer confidence and 2016 being an election year, boat dealers who were optimistic about their business outnumbered those who were less optimistic by a 2-to-1 margin. And the confidence does not seem misplaced — the recreational boating industry appears to be more resilient to negative factors in the marketplace, compared with other leisure industries, according to one analyst who covers several leisure industries.
The sixth annual dealer survey done by the investment firm B. Riley of roughly 100 dealers from across the United States and Canada showed that “the overwhelming majority of dealers” reported an increase in year-over-year sales from last year. “If there was one big takeaway or surprise for us, it was how optimistic the dealers were,” B. Riley analyst Jimmy Baker told Trade Only Today. “So despite this being an election year, and there being a more broadly choppy consumer environment, those more optimistic outnumbered those who were less optimistic by 2-to-1. That was a surprising differential.”
That’s in contrast to some other luxury industries, he said, in part because it’s somewhat insulated from foreign competition. “I think the boating industry has really for the last year or so been a real standout performer, versus some other big-ticket leisure categories we cover,” Baker said. “We’ve seen a slowdown in ATVs as oil and gas regions have weakened, and what I would say is the broader commodity market,” Baker said, adding that weakness in agricultural markets, such as eggs, had affected companies. “The ‘ag factor’ hurt companies like Polaris,” he said. “Similarly, we’ve seen a slowdown in motorcycle sales,” Baker said. “Those industries seem to be more subject to foreign competition, which is not as much of an issue in the boat space.”
Only 4 percent of dealers surveyed characterized inventory levels as significantly too high, a “very encouraging number,” according to the report. Baker said the hot summer also has been favorable for boat sales.
“There was a strong March because it was unseasonably warm, and then we took a step back in April, as that month was cooler and wetter,” Baker said. “Then as the summer months entered and the weather improved, it seemed like business improved and continued over the last two months. A lot of dealers were really optimistic coming out of the Fourth of July holiday. What we heard from a number of dealers that surprised us, too, was how much business they expected to do into August, and even September.” Typically dealers would be saying business would start to slow prior to those projections, Baker said.
“It’s hard to say how much the industry is picking up delayed sales due to weather or how much other factors are influencing consumers,” he said. “Gas prices are low, and more credit unions are coming into the [retail] market, offering attractive financing to potential broader audiences. “I wouldn’t say this is by any means the 2005 or 2006 floodgates opening,” Baker added. “It’s just more incremental loans coming through credit unions. There are a lot of factors that positively influence the market, but you can’t discount weather.”
Originally published here.