2023 Forecast- When is the Best Time to Buy a Boat?
An update on today's complex boating industry
The immediate future of the boating industry in North America is not easy to predict. However, past performances and present economics can give us some reasonably accurate predictions. The inflation that we have witnessed over the past 20 months is a direct result of excess money chasing a limited supply of goods and services. Recent efforts to put on the economic brakes by raising interest rates, has left both the industry and boaters themselves in rough seas. In an annual report, Frank Hugelmeyer, president of the North American Marine Manufactures Association recently said: "While overall new powerboat sales decreased 11 percent compared to January through July in pre-pandemic 2019, several categories continue to outpace pre-pandemic YTD sales levels."
Does this mean that 2023 will be a good year to buy a new boat? Perhaps understanding some of the current data on boaters and trends will help us understand the psyche of the marine business and thereby help us answer that question. Reports this month from Coast Guard and NMMA reveal some interesting data:
Wholesale shipments of new powerboats through July 2022 decreased 6% over the previous year.
Used boat sales are outpacing new boat sales by 2-to-1.
Over 400,000 first-time boat buyers entered the market in 2021.
An estimated 110 million North Americans go boating each year.
61% of boaters have an annual household income of less than $75,000.
Boaters come from all ages, walks of life, and areas of the country.
95% of boats sold in North America are American made.
95% of boats in the U.S. are less than 26 feet and trailerable.
Comparing unit to dollar sales for 2021 tells us prices were up considerably. This is a direct result of increased demand due to the 6% reduction in new wholesale powerboat shipments, that resulted from production material shortages.
Wholesale shipments of outboard engines increased 6 percent year over year. In addition to the outboards sold with new boats, this increase would be due to a combination of repowering existing boats and powering new units with multiple engines.
Most recreational boaters that I talk to are confused as to when and where they should look for a new boat. Over the past three years, we have seen some sharp increases in most new boat prices. The major contributing factor to this trend has been a reduction in new boats available, due to shipping delays and shortages of boat construction materials. While there are still some delays in the materials supply chain, it seems that much of this problem has been resolved. Boat buyers today and over the next two years are more concerned with the overall economic effects of inflation in North America and the growing possibility of a recession. For me to explain how I believe this will affect boat sales, I will describe what will happen and when. We have all been impacted by the recent reduction in our purchasing power, which is the definition of "inflation". We have to pay higher prices for the same product. A good example is having to pay $15 for a haircut that used to cost $10, back when you had more hair. People's reaction to this inflation, is to get a haircut less frequently. As business drops, one of the barbers gets laid off. If you are the barber that got laid off, or any other worker in the same situation, your reduced household income will make it a difficult time to purchase a high ticket recreational item, such as a boat. This leads to a spiraling decline in economic activity, which is the definition of "recession".
To predict how a recession will affect the boating industry, it is important to first understand that recessions do not affect all purchases the same way. Buying a boat is not like buying restaurant meals. You can pass on going out to a restaurant to eat and still have food by eating at home, but you can't go boating without a boat. And whether you boat for sport, cruising or fishing, most boaters find it addictive. I mean, you've spent all those years learning 'port' from 'starboard' and you want to put those skills to good use.
Answering the question, "Will next year be a good year to buy a boat?', I will first look at the used boat market. Well, that barber that lost his job and all of his buddies that a recession has placed in the same situation, may not be able to afford the upkeep of their boat. More than likely, many people finding themselves in this situation will find it a good time to sell. So the recession will increase the availability of used boats. With more boats on the used market, prices will have to be competitive. Bottom line -- if you have some discretionary savings and have been thinking of buying a boat with some hours on it, next year should present a strong opportunity.
So what can we predict about new boat sales next year? If you consider that manufacturers were handicapped last year by material supply shortages, Covid-19, and growing inflation, it is understandable that builders will be anxious to get their production numbers back to pre-pandemic levels to prevent factory shut downs, and at the same time, produce enough boats to increase their market share. To do this, they will need to offer value pricing packages to their dealers and, at the same time, encourage their dealers to offer some tantalizing deals to their retail customers. Boats on a "floor plan" will also provide some great buy opportunities. These are boats that the manufacturer has sold to dealers with financing provided for a specified time. Dealers with financed boats in their inventory will obviously want to sell them before their financing term expires and they are required to pay for them. This pressure for dealers to sell will ensure that dealers will offer good pricing to their prospective customers.
The trick for you to catching such a new boat deal will be to watch for them. There are lots of great resources that can help you on your new boat search. Tell your local dealer what type of boat you are considering and pay close attention to special offers and advertisements. A smart first step in buying any boat is to establish your own personal budget based upon your family's economic situation. A reduced budget may require passing on your desire for a "Supremo 30" with quad outboards, but if you watch closely for a boat deal that meets your budget, you should be able to find a fair price on a new boat that truly satisfies you. Whether you are interested in new or used, there will be some good deals in 2023 -- as long as you look for them. #tips