Boat dealers anchored by sputtering economy

After 26 years of selling new boats, Vince Zimmer is getting out of that wave-tossed business for awhile so he can focus instead on service work and used-boat consignment sales. He isn’t alone in feeling buffeted by the changing market.

“I just decided to take a short-term hiatus until the market turns,” said Zimmer, owner of Alpine Haus Marina, at 12710 E. Indiana in Spokane Valley, which until recently was a dealer for Four Winns, Supra and Moomba pleasure and ski boats.

“There just wasn’t enough profit in the boats we were selling,” he said. “I’ll just wait. I’ll put my finger on the pulse and see when the market changes.”

Zimmer’s adjustment to market forces is just one local example of a boating sales industry that is being tossed about – locally and nationally – like a skiff on frothy seas. Sales declines triggered initially by surging gas prices have been compounded and prolonged by the recession, job losses and an uncertain outlook, causing consumers to put off boat purchases or to opt for used and less pricey models.

Dealers here say they’re hopeful that sunny summer weather, combined with recent modest signs of economic recovery, will bring more prospective buyers back into their showrooms and onto their lots. But most don’t expect new boat sales to return to former robust levels for at least another year or two, possibly longer.

Ray Ericksen, co-owner of Carstens Marine, at 12620 E. Indiana in the Valley, which sells Crownline brand boats, said, “2009 was a hard year, there’s no question. Obviously, there’s less of us now, so that would indicate that it’s hard out there. There’s been some improvement, but not much.”

“The interest right now is the used market, and usually when we get a used boat in here, it goes pretty quickly. You do what you can to make it through,” he said.

“It’s all about consumer confidence,” Zimmer said. “Boats are an item you don’t have to have, and when times are bad, you cut back on luxuries.”

In an encouraging sign, though, new boat sales by dealers in Washington jumped 19 percent to 463 boats in the first quarter this year, while used boat sales by dealers shot up 33 percent to 488 boats, said John Thorburn, spokesman for the Seattle-based Northwest Marine Trade Association. Total boat sales in the state by all sellers, including private parties, went up 27 percent to 6,357 boats, he said.

Meanwhile, the value of the first-quarter sales also increased sharply – by 30 percent to $23.2 million for new boat sales by dealers, by 76 percent to $14.5 million for used boat sales by dealers, and by 24 percent to $85.4 million for all boat sales in the state, Thorburn said.

“It’s the first significant increase we’ve seen in quite awhile” in sale values, he said.

While those overall gains are uplifting, he adds, “It’s all relative, because last year was one of the worst years this industry has faced.”

For 2009, Washington dealers sold 5,936 boats – 3,147 new and 2,789 used – less than half the number sold in 2006. Despite the improvement in the first quarter of this year, the 951 new and used boats that dealers sold compares with 2,119 sold in the first quarter of 2005.

“So we still have a long way to go to get back to where we were,” Thorburn said.

Similarly, state Department of Licensing statistics show that 13,060 boats were registered for the first time in Washington last year, down nearly 30 percent from the 18,537 registered for the first time two years earlier. In Spokane County, 1,102 boats were registered for the first time last year, down from 1,404 three years ago, the data show. The decline was much steeper, though, for original registration of boats that were new or less than a year old.

“There were a number of dealers hit very, very hard,” particularly those not diversified in their product lines and lacking service departments that could provide an underlying revenue stream, Thorburn said.

“There’s definitely been a kind of shudder in the industry,” he said. “Some of the manufacturers across the country weren’t positioned well to what’s happened over the last year and a half, and that’s trickled down to the dealers.”

A number of them have shut down. One of the most noteworthy closures involved the Redmond, Wash.-based Olympic Boat Centers chain, one of the largest boat dealers on the West Coast. That 2008 closure “caused a huge shift” in the industry regionally, Thorburn said.

He added, “I think for the most part the dealers that are around now will remain. They’ve weathered the worst of it.”

Some dealers have taken steps to diversify their boat lines to boost sales. In fall 2008, Trudeau’s Marina, a longtime Sea Ray and Boston Whaler dealer here, added the Bayliner, Trophy and Meridian lines formerly sold locally by Olympic, giving it an expanded mix of products across a broader price range.

Earlier this year, MasterCraft Inland Northwest, a Liberty Lake dealership, added the Centurion, Supra and Moomba lines, all of which have lower starting price points than new MasterCraft models.

Zimmer, of Alpine Haus, said he’s doing well selling used boats on consignment, for which demand is fairly strong and growing, and relying on the recession-fueled volume of a service department that he said is coming off a record year.

The volume he did in his service shop last year was “a sign of the economy,” he said, as more consumers chose to put their discretionary dollars into maintaining older boats rather than buying new boats.

“The good thing is, people are boating,” he said. “I’ll bet we’ve got 80 boats in the lot waiting to get serviced.”

Zimmer said sales should begin to improve partly because “the pipeline of distressed models is starting to dry up. There’s not that many screaming deals out there for new boats anymore” that over the last two years have undermined dealer sales volume and margins.

Craig Brosenne, general manager of Coeur d’Alene’s Yacht Club Sales & Service, one of North Idaho’s largest boat dealers and part of the Hagadone Marine Group, said, “This year I’m seeing great signs. We just sold a 40-foot yacht” and a flurry of premium Cobalt brand boats.

A lot of last year’s excess inventory caused by the tough market conditions has dried up, and, “I think the weak went away” for the most part, allowing supply and demand to begin to come back into a healthier balance, Brosenne said.

Along with Cobalt, the Yacht Club sells new Marquis, Regal, Carver, Malibu and Axis brand boats and yachts, ranging in price from around $40,000 to $1 million.

The used boat market still is where sales activity is strongest, and the market for 40-foot and larger new boats is still “a little soft,” but “everything from $40,000 to $100,000 is pretty good” for the Coeur d’Alene dealer, Brosenne said.

“Boating is about family and kids, and the kids are never going to remember high gas prices, and they’re not going to remember Bernie Madoff, but they’re going to remember time they spent with Mom and Dad in the boat,” he said. “I see families getting back to that, whereas last year everybody was so concerned about things they weren’t focused on family.

“I think it will take another year” for the market to get back on more of an even keel, he said, “but I see signs that it’s continuing to improve.”