Looking ahead to 2025
August 13, 2024
My admiration for the people in the boat industry who manage to navigate the incredible ups and downs that we experience has no bounds. I truly feel that this is a very challenging business to succeed in and one of the most difficult aspects, is to order boats for inventory. Typically, dealers are asked to order months ahead and through the supply chain problems and labour shortages of the COVID era, the order cycle stretched to well over a year for many builders. So, a year out, how can a dealer determine what boats and models will be popular? What colours and features will attract buyers? What new engine options will be hot?
Some segments are clearly more driven by style for example, the wake sport boats that seem to reach further and further for extreme or radical styling as well as radical performance. What is hot this year may be dated in 12 months. I recall a couple of conversations in the fall of 2023 with dealers who were agonizing over what to order and how many units. Their orders were not going to be filled for a year or more and the question is, what will be selling in a year? What colours will people want? What features will they be willing to pay for?
I was interested in a market overview story written by one of our associates, Craig Ritchie for International Boat Industry magazine. The question he was mainly addressing was what the interest rates are, and will they be an impediment to purchasing?
He made the very interesting point that in the United States, back in 1988, Bayliner achieved the amazing sales milestone of $1-billion US in sales. The 1980’s were good times for American boat builders, but Ritchie noted that at that time, the interest rate in the US was 9.64%. For comparison, Ritchie wrote that the prevailing US interest rate in May 2024 was 5.33% or roughly half that level. The important point here is that our interest rates are not dramatically different than the historical averages but what stalled the market in 2023, was the rapid rise of interest rates.
Here in Canada, we’re seeing interest rates come down in small increments and the direction is probably reassuring to many buyers. To all of the dealers who have unsold inventory, the market conditions may be more favourable as we had into the fall and the winter boat show season. Both the Vancouver and Toronto boat shows have now offered early bird pricing discounts on show space. Exhibitors will have already made their decisions about how much space they will need and shortly, they will again need to commit to orders from their boat builder partners.
Overall, Craig Ritchie’s IBI story predicts that things will settle down for the 2025 season, but I can’t help wondering if there’s a way of shortening the timeframe for the order cycle that makes life easier for dealers.
Andy Adams – Editor
