Halftime Review of 2022; Dealers’ Second-Half Outlook
It’s easy to feel beat up and exhausted, especially when faced with long, hot summer work days with uncontrollable influences putting chinks in your amor! Throw in the inescapable change that keeps peeping around the corner, and it’s no wonder operating a dealership can be as challenging as it is rewarding.
Here’s an example: “It seems negative consumer reaction to the tremendous increase in boat prices is starting to have an effect. Our customers are in total shock about new boat prices. The manufactures we represent have raised prices over 35 percent in three years! We are heading to major recession I am afraid.” — Anonymous marine dealer response.
While some may describe this quote as a “The sky is falling” outlook and mindset, one has to listen earnestly to understand not all dealers are experiencing the exact same things, nor are they set up to harvest the same level of success or take the same approach to managing these challenges and their customers’ demands.
That’s why in the July Pulse Report — a monthly look into the health of the marine retail and industry trends with Baird Research & “Trade Only” — the goal was to call a timeout to gain some perspective from you! After all, July is month seven in the 12-month calendar, so it made sense to do a halftime review, find out what’s working, or not working. Here’s a highlight of some responses on each.
• “Manufacturers who are able to deliver what they say when they say are winning.”
• “Web based marketing continues to provide solid leads for follow up. Web page generating solid leads.”
• “Service is performing at an all-time high and we are still four weeks out.”
• “Taking time with the customer. Getting back to a slower, personalized, relationship-based sales approach.”
• “We strive for high CSI and customer service above what customers expect. That is paying off on us and we are doing very well.”
• “Unrealistic pricing.”
• “Lack of qualified and willing applicants makes it impossible to fill open positions.”
• “If staffing issues can be resolved, we could increase revenue over last year. If staffing stays the same, we will continue to have more demand than we can satisfy.”
• “Aluminum fishing, fish-n-ski, used aluminum fish.”
• “Gas prices aren’t working, interest rates aren’t working, inflation isn’t working, this administration isn’t working. The legislative branch, both sides, isn’t working. That should about sum it all up.”
Dealers also contributed their in-the-trenches feedback to the question: “How did the first half of 2022 compare to your budget and expectations?” Nearly two thirds of responding dealers reported that the first half met their expectations or exceeded them. However, 36 percent indicated the first six months of 2022 were below expectations. (See chart)
“We still have significant backlog from pre-sold units that will deliver in the second half that will impact our budget, but the new activity will be more challenging moving forward.”
Some dealers also shared openly about their wins, struggles and concerns moving forward through ’22 and into 2023, when responding to our request for their outlook for the second half of the year. The marine retailer sentiment index actually saw a slight uptick in June, but didn’t raise above the 50 percent neutral line, hinting that opinions and view for the near future and 3-to-5-year outlook remain negative. Retail demand factors (weather, access to credit, OEM promotions, government action/inaction, et al.) all continued their negative trend as well.
Dealers responses also showcased an ongoing concern moving forward, with inflation taking hold and the disposable income diminishing. “The glory days of COVID and unrelenting demand are now over. We started noticing demand dropping about 120 days ago and, sure enough, we are back to normal business.”
One dealer painted a clearer picture that this is simply the cycle of the boat business. They predict the market will have less buyers and therefore less demand as supply rebounds and grows. This, they add, will impact pricing and margins and rather naturally “weed out” dealers unprepared for a slowdown. To learn more about the changes in the boating customer, be sure to read the Kevin William’s (NMMA) guest blog here.
Despite the somewhat negative or authentic viewpoints from some dealers who point to continued marketplace uncertainty, some of them remain optimistic and carry a positive mindset in the latter portion of the year.
“Expect continued demand for new and used boats, but perhaps not at the rate we’ve seen over the past two years. We will remain busy delivering boats that are retail sold but not to the dealership yet. Continued parts shortages and lack of engine availability are keeping the pace from going any faster than it currently is. Overall, business levels may not be as strong as last year but still very respectable all things considered.”
If you’re team is unsure about your second half or wants to give your dealership a mid-season check up, be sure to download this free resource: MRAA Mini Guide – Dealership Owners: “Time for a Mid-Season Checkup”