Cautiously Optimistic at ‘Cliffside’

• Lenny Sims, VP Business Development/Strategy – Specialty Vehicles for J.D. Power and the MRAA Discuss Insights on the 2023 Q2 Marine Market
Headshot image of MRAA Data Specialist Drew Mick in a collared blue shirt at Top Golf
Drew Mick

Drew Mick, MRAA: April saw a small decline across all boat types in traffic views. Is there any reason for that dip?

Lenny Sims: When we look at the data, there’s all kinds of comparisons and things that jump out at me; reading between the lines. If you compare it to year-over-year or the last 12 months running, there certainly was a lot more interest in the market than before. There has also been a significant number of new boat sales in the last two years. In most cases we were seeing record-breaking paces and record-breaking demand. A good comparison we’d make in this instance is looking at 2019, prior to COVID. There was a huge jump in interest and volume. It’s starting to level, but it’s still ahead of previous levels that were typical.

Mick: Dealer sentiment may not be as optimistic as a year ago, but values are still holding. What are dealers seeing that is leading to less optimism?

Sims: When you and I were chatting at last Dealer Week, I said how everybody wants to know when this recession is going to hit. When is this hot market going to decline? What should we do now to get ready for whatever is going to happen? A year ago, the market was still on fire at this time, so it’s not going to be as optimistic as then. I think anybody who was considering a recession to happen — myself included — would have thought it would have happened by now. But I want to be careful … I’m not saying it still isn’t going to happen. It’s been holding off longer than most people thought.

Dealers are thankful that it didn’t fall off the cliff. A lot of them still have a lot of inventory that they paid good money for. A lot were wondering if they were going to get caught holding the bag. Dealers now have gone through the bigger part of their selling season. I think they’re cautiously optimistic it didn’t fall off the cliff. I think the big goal for them is getting rid of inventory. There’s a lot more negotiating going on with that. They are seeing interest rates are up as well. And they’re seeing consumers getting back in touch with them to see if they can sell their boat for what they owe on it. Chances are a lot of them overpaid because of the way the market was the past few years. Consumer confidence is dropping and that is leading to this less optimistic feeling.

Mick: In marine categories, there hasn’t been a lot of movement between views this past quarter compared to Q1. Do you ever see drastic movement in that at any point in the year?

Sims: If you looked at typical movement in a pre-COVID year, you would see an increase from January 1 to August, peaking there and declining through to the end of the year. Then beginning January again, it would spike back up. What you see here is the general seasonality of things.

Mick: How are you feeling about Q2 and 2023 now that we are halfway through it?

Sims: Overall, I think things are going to continue to gradually decline. It’s not going to be a cliff fall. Demand is down, inventory levels are up. If you look at nothing more than those two things, that generally promotes a decline in used boat pricing. Here we are a chunk of the way into the summer, and I think the bulk of the sales have occurred. It, again, depends on a lot of things, such as the federal reserve and the interest rates. If they leave ratees alone, it’s probably going to maintain itself and prove itself out through the end of the year.

I think we will experience seasonal adjustments in early fall due to school starting and vacation time ending. Often, you see some people trying to sell their boats later in the year since they won’t be using them for 6 months. If the trend still holds for consumers trying to find a way to exit their loans, that will speed things up. However, right now my projection with the team is we need to keep an eye on it. Watch that gradual decline, however I don’t think we will see that cliff fall.

Cover image of 2023 Q2 Marine Market Insights from JD Power Specialty Vehicles Market Data

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