In each monthly Pulse Report survey sent to dealers, one question we ask is, “What’s working?” We also ask the flip side, “What’s not working?” This month, with the MRAA’s Spotlight focus on the pre-owned boat market, we also added two questions to gauge their approach to the used boat market in terms of sales and resources. Below I’ll summarize what we learned.
This month’s report (MRAA Member link) showed that 86 percent of survey participants described their pre-owned inventory as too low. However many responses conveyed the demand still out there, with sort of a “if you build it, they will come” approach to boats. “Just having boats creates business” and “If you have the product, you can sell it” were two responses that indicated demand is still strong for both new and used. This statement reinforced what’s working: “Anything new or used in stock and ready to sell.”
What’s Not Working?
It’s rather clear from the high percentage of participants who said their pre-owned inventory was too low that just getting enough boats (new and used) has been a challenge in and of itself. Additionally, pre-owned boat values have jumped recently and at least one respondent wasn’t shy about calling out this trending hurdle to boat sales. “Inflated values on pre-owned boats are pushing people to sell their boats privately before trading.” We know this is an issue and spoke with Lenny Sims of J.D. Power (N.A.D.A.) about it.
Sales Ratios and Marketing
The vast majority of survey respondents revealed that they typically operate on a 1:1 ratio of pre-owned boats to new units sold. The second highest response was for the 5:1 ratio! (see chart at left) However, one dealers admitted to selling “15 new boats to every used boat.” While that may seem like the complete opposite ends of the spectrum for responses, many of MRAA’s sales experts say your ratio should favor pre-owned.
AND, to be clear, every one of these industry pros, and us at the MRAA, is a big proponent of new boats. In fact, Sam Dantzler and Tony Gonzalez of Garage Composites have shared numerous times that your pre-owned sales ratio should be growing. In fact, Sam even addressed that 5:1 ratio in his pre-owned article here, when you adjust for market conditions. And Tony shared in his MRAAtraining.com video “How to Seek and Sell More Pre-Owned Units Profitably” (MRAA Silver and Gold Members) that only 25 percent of total boat sales are pre-owned despite that number continuing to grow due to global supply chain disruptions. Additionally, Bob Armington of Buckeye Sports Center in Ohio — who is featured in the May TNT course “Buying and Selling More Pre-Owned Boats,” which originally debuted at Dealer Week 2021 in Austin, Texas — revealed that his store plans to operate at a 3:1 ratio. He also confessed that he didn’t give much thought pre-owned boats, especially trade-ins. But after becoming pro-active in his approach and changing his mind set about used boats, reached a high-water mark of 4:1 ratio (used to new) at one point in 2021.
Nearly 70 percent of our Pulse Report respondents said they’ve allocated more budget and/or resources to enhance their pre-owned inventory, so it’s clear they also see a strong need to add more pre-owned vessels to improve their inventory levels. Some have created boat-buying messaging socially, online and in ads. Others have contacted their current list of customers to see if they’re ready to trade-in, trade-up or sell, even though they may seem perfectly happy with their current boat. Again, pro-active efforts can pay off!
Outside Drivers Influence Decision Making
Not only has the high demand for boats in general and higher pre-owned pricing made it more challenging to find used vessels, but the current economy with inflation rates soaring, fuel prices climbing, turmoil in the stock market, and war overseas have also all contributed to consumers approaching or viewing boat buying differently. This shows in smaller boat show attendance and a more cautious approach to boat buying, especially when customers factor in pre-ordering for new boats, supply chain issues and production delays. On top of the economic and political hitches, another recent obstacle specifically named by survey participants was the cold, windy and wet (read: extended) spring weather.
While many of these things listed within this blog could read as like a top 10 list of boat ownership deterrents, it is not meant to. That’s why we made the pre-owned boat market our focused topic for May. It’s also why the MRAA has been building and sharing resources like our Pre-Owned Boat Market Article Series, showcasing proven processes and formulas for more success and, on Wednesday, May 25, is hosting a webinar with an actual dealer who has shifted his approach to pre-owned. And the MRAA Certified Pre-Owned Boat Program is designed to not only improve your bottom line, but also give both you and your customer peace of mind and confidence in boat buying and selling. With determined effort and the proper processes in place, your team can enhance your pre-owned inventory as a way to diversify your business and provide some short- and long-term stability.