Boat dealers remain on shaky ground at the beginning of April as the nationwide shutdown of non-essential businesses forces them to consider cash position and expense structure, according to the monthly Pulse Report, published by the Marine Retailers Association of the Americas, Soundings Trade Only and Robert W. Baird.
The report, which was published today, shows that nearly a quarter of marine industry dealers have less than a month’s worth of cash on hand to help them navigate today’s economic challenges. Twenty-one percent of the 120 respondents suggested they had one to three weeks’ worth of cash, while three percent suggested they had less than one week’s cash. Forty-four percent noted they had enough cash for 1 to 2 months, while 32 percent said they had enough cash for 3 or more months. The insight came from their responses to the question of “Given your cash position, how long could your dealership/retail location afford to shut down amid the coronavirus outbreak?”
Nearly a quarter of boat dealers report having less than a month’s worth of cash on hand.
“We are on a giant, ticking clock, waiting to see how long we can all hang on to current employees with COVID conditions,” wrote one respondent.
“We are hopeful that the Paycheck Protection Program will get us through without having to lay off about 10 staff,” wrote another.
The survey also asked dealers to characterize their expense structure at this time, noting how much of their cost base they would still incur if their dealership was forced to close for a period of time. More than 50 percent of the survey’s respondents suggested that the majority of their monthly expenses were fixed expenses – mortgages, floor plan loan payments, insurance, etc. In all, 33 percent said that 50-75 percent of their expenses were fixed, while 20 percent of the respondents noted that more than 75 percent of their expenses were fixed.
“The relief act is a help, but nothing the government does will make up for the loss of two of the largest [boat sales] months of the year,” wrote on of the respondents. “Gross profit will be off and when it does open up, manufacturers will not be able to reload inventories quickly enough. Hopefully dealers have enough cash to make it a year without any income. If not, it should be their goal.”
An MRAA Ask The Expert Webinar held today noted that dealers need six to 12 months of cash on hand in order to have the best chance of surviving the current economic environment. The program, which will be available here later today, featured noted industry expert John Spader and offered a series of cash flow resources for dealers to tap into. The webinar series continues tomorrow and Thursday with more insights for dealers to use.
During the month of March Marine Retailer Sentiment, which is measured via the Pulse Report, plummeted to levels not seen since the report was created in December of 2013. The report outlines the steep drop in boat sales retail trends and corresponding increases in discomfort with inventory levels, the net effect of which caused short-term marine retailer sentiment to fall sharply on current conditions (4 vs. 47 in February and 70 in January). The respondents’ 3- to 5-year outlook remained neutral (50 vs. 56 in February).