March 8, 2010: A $30 billion marine market
March 8, 2010
Filed under Features
By Jeff Hemmel
MIAMI— National Marine Manufacturers Association (NMMA) president Thom Dammrich chose to paraphrase Mark Twain during his recent state of the industry address in Miami, closing out his speech by noting the “rumors of the death of the boating industry have been greatly exaggerated.”
Dammrich’s comments came at the start of the show’s annual Valentine’s Day weekend stint in Miami Beach.
Dammrich’s comments echoed a definite feeling of optimism that seemed to be prevalent at this year’s show. Boating manufacturers from every niche were represented, including PWC and jet boat manufacturers Sea-Doo and Yamaha, both of which won awards throughout the weekend.
Dammrich noted the boating business as a whole is still nearly a $30 billion market. He added the NMMA was initially predicting retail sales of 135,000 units in the 2009 model year, but actually had to up that forecast after a late surge in sales. The association is now predicting the final number will be 145,000-150,000 units in retail.
Of course, the NMMA head noted the industry still has a long way to go. The obvious challenge is consumers are facing declines in wealth and discretionary income, but recent boat shows have given the entire industry hope, as consumers appear to be looking to buy once again.
“We’re clearly beginning to see that consumers are tiring of deferring their purchase,” noted Dammrich, “and we’re seeing more buyers coming to the shows.”
Dammrich noted some interesting statistics about the current boating market that should particularly grab the attention of PWC and jet boat dealers.
Surrounded by the lavish yachts along nearby canals and pricey models on the showfloor, he commented that boating is still, in reality, all about middle-class America. Seventy-five percent of all owners have household incomes less than $100,000 a year, and 95 percent of all boats in use are less than 26 feet in length, meaning they’re readily trailerable on the roadways. He went on to point out that there are currently 17 millon boats in use in the United States, and 70 million American adults go boating every year.
“That’s a tremendous installed base, and a clear sign that boating is not going away.”
For dealers, Dammrich noted the availability of credit at the wholesale level continues to be problematic, but retail credit is becoming less of a problem for the industry. As to what dealers can expect in the future, Dammrich first revisited the past, noting that sales peaked around 400,000 units a year from 1969-1991, dropped to 300,000 a year between 1992-2004, and hit 200,000 by 2008.
“The industry will rebound, but it will take time,” Dammrich suggested. “No one knows where the new ‘normal’ will be.”
Those looking for a clue as to those new “normal” numbers can find some indications in related markets. For starters, new boat sales tend to — no surprise — correspond with consumer confidence. The latter has risen for the past three months. New boat sales also tend to track well with light vehicle sales, and while car sales are still below normal levels, they too have begun to rebound.
Dammrich also noted the boating market tracks closely with the RV market, which actually has historically led boating sales by about six months. Given that the RV industry started picking up several months ago, that could be a strong indication that boating sales will soon follow.
The industry also is getting a handle on its inventory situation. Dammrich notes manufacturers built about 75,000 total powerboats in 2009, but sold as much as 150,000. Assuming 2010 sales will remain mostly flat, that’s still another 150,000 units moving out the door.
“The good news is that we’re going to have to build almost as many as we sell at retail,” said Dammrich. “So we should see production of powerboats go from 75,000 to almost 150,000 in 2010.”
New Reality, New Buyer
The question now turns as to how to prepare the industry for future success, and compete with strong competition from other leisure activities.
One strategy Dammrich notes is to continue to show the value of the boating lifestyle. Another is to continue to “green” the industry, making boating more environmentally friendly and promoting that fact to consumers.
Some numbers, however, should just come naturally. Dammrich noted the U.S. population is expected to grow from its current 300 million to 440 million over the next four decades.
“That’s a pretty dramatic increase. If we can just maintain the same level of penetration of the American population for boat ownership that we have today, we will sell an awful lot of new boats over the next 40 years.”
Most of those consumers, however, will not be the white males that make up the existing majority, but instead other ethnic and minority groups that may be ignored by current boating campaigns.
“It’s going to be very important for us as an industry to help these minorities and ethnic groups see themselves in boating,” concluded Dammrich. “To see themselves in our catalogs, in the photographs of our magazines, in the photographs of our advertising.”