Boat sales skyrocketed last year during the coronavirus pandemic as more Americans turned to the lifestyle amid more flexible work environments that allowed people to spend extra time enjoying the outdoors.
Sales of boats, marine products and services across the country leaped to a 13-year high in 2020 to $47 billion, increasing 9% from the prior year, according to the National Marine Manufacturers Association.
The trend, which shows few signs of slowing in 2021, shocked industry players who were certain they were in for rough times as the pandemic shut down the economy. Now, dealerships are struggling to maintain inventory and manufacturers are expanding production capacity to meet demand. Wait times for buyers have jumped from a few weeks to several months. What’s more, first-time buyers are entering the market in larger numbers, a sign that the growth has staying power.
Eric Wold, an analyst at B. Riley, notes that uncertainty remains with new Covid variants popping up even as vaccine rollouts accelerate, concerns that could keep consumers’ interest in boating strong in 2021.
“There’s still not a lot of certainty in terms of when the economy’s going to reopen with the vaccine rollout, so the demand that we saw last year will at least continue into this year, and that’s going to continue to drive production for the manufacturer for at least a couple of years,” he said.
Owning a boat can be a pricey endeavor. With personal watercraft prices averaging $13,000, boating is usually seen as a hobby reserved for the wealthy. But according to marine association President Frank Hugelmeyer, 61% of boaters have an annual household income of $75,000 or less.
First-time buyers
Steve Arnold, a 57-year-old owner of two Maine marinas and a boat club franchisee, experienced a massive jump in sales last year. He said sales across the board skyrocketed, with average sales of new boats up 40%, used boat sales up 45%, rental boats up 65% and Freedom Boat Club memberships up 28%. He said he has never seen those kinds of numbers during his 18 years in the business.
And while he expects sales to dip 5% to 10% this year, that will still be well ahead of expectations.
He said the effects of the pandemic have left a positive impact on the boating industry that will last for years to come. “I think Covid changed society for the better in terms of looking towards your family and your relationships in your discretionary time,” he said.
As new boaters enter the market, a domino effect is taking place, with their friends and families getting into the activity as well.
Last year, the number of first-time boat buyers rose for the first time in over 10 years, up 10% from 2019. Among these new boat buyers, the average age has also decreased for the first time in 20 years, according to the marine association. The entrance of these new young buyers is bright sign for the future of the industry, said Hugelmeyer.
“You never have a lack of friends who want to go out on a boat. You become very popular and then, family and friend groups begin to expand to become boating families,” Hugelmeyer said.
In addition, Americans are finding that their work-from-home schedule allows for more flexibility to do activities when they want to.
“We have these longer-term outcomes of Covid including flexible working arrangements that I think will allow people to engage in boating more flexibly during that week,” Brunswick CEO David Foulkes said. Brunswick is the parent company of popular boat manufacturing brands like Boston Whaler and Sea Ray.
The ‘best year’ for boating
Rick Davis, sales and finance manager at Palmetto Boat Sales, a dealership in South Carolina, experienced firsthand the extent of how high the consumer demand for boats has grown during the pandemic.
“We thought we were done for [last] year, as far as business goes and 30 days later, it’s actually the complete opposite. It was the best year in my 24-25 years, for sure,” Davis said.
Sales of new powerboats in the U.S. increased by about 12% last year to more than 310,000 compared with 2019, the marine association said. Among the categories of boats consumers bought, freshwater fishing boats and pontoons boats were extremely popular, accounting for half of last year’s powerboat sales. Sales of new wake boats, used for wakeboarding and wake surfing, were up 20% to 13,000 units in 2020, the association reported.
Membership-based Freedom Boat Club, which appeals to those who don’t want to fully commit to purchasing a boat, has also seen a surge of consumer interest. The division of Brunswick Corp. saw a 61% increase in membership since May 2019 across 31 states, Canada and Europe.
Brunswick’s most profitable categories during the pandemic were largely its parts and accessories businesses, most notably from the Mercury Marine brand.
“As more and more people come into the boating lifestyle and use boats, overall boat usage drives the need for more parts and accessories,” Baird senior analyst Craig Kennison said.
Keeping up with the demand
Many boat retailers are still fulfilling their backlog of orders going into this year. Social distancing measures are expected to stay in place for the near future in many areas throughout the country, so people are still purchasing boats as a way to safely enjoy the outdoors, especially in the more temperate months.
Arnold said that prior to the pandemic, the average wait time to get a boat was four to six weeks. Now, he says it can take up to eight months for customers to receive their boat.
Brunswick announced last year that it expanded its boat production capacity in three of its manufacturing facilities to meet the increased consumer demand. Still, Foulkes said it will be at least two or three years until it can fully restock its boat dealers.
“Dealers are looking for boats from us and we’re ramping up production as fast as we can, not just to satisfy retail demand, but all sorts of demand to fill the pipeline, which became very depleted of field inventory,” Foulkes said.
Source: Business - cnbc.com
