Americans panic-bought boats, jet skis, campers, UTVs, ATVs, and anything with a motor that could be ridden in the great outdoors during Covid. Lakes and oceans were flooded with shiny new pontoon boats and +$100k wakeboarding boats. Much of the boat panic-buying was seen in 2020-21, when interest rates were at rock bottom. Now, the high-rate environment has frozen the industry as new and used boat sales are expected to plunge to a decade-low this year.
Bloomberg cites new data from the National Marine Manufacturers Association (NNMA), the leading trade association representing boat, marine engine, and accessory manufacturers, which states that 1.4 million new and used boats were sold in 2021, up 16% from 2019. This followed several years of low single-digit growth.
Fast forward to 2023, NNMA expects the industry will only sell 269,000 new powerboats and about 900,000 used ones, the lowest dating back to 2011. The vicious slowdown in demand is a function of an interest rate shock produced by the Fed.
Michael Prince Jr., who sells pontoon and fishing boats in Atlanta, expects the industry to normalize after two years of a buying frenzy.
"I don't think interest rates have killed this industry yet, but if they go up more, they could," said Prince, managing partner of boat dealer Grass Shack.
He noted, "It's just coming off such a high that it feels like an incredible downturn."
Bloomberg pointed out how several boat manufacturers have cited interest rates as one of the factors for a slowdown in demand:
Higher rates were a factor for lower sales at boat manufacturers like Brunswick Corp. and Malibu Boats Inc. in their latest quarter. It was also an issue for Robalo fishing boat manufacturer Marine Products Corp. — which saw sales slump 22% — citing a moderation in demand after the Covid surge as well as a hit to production from Hurricane Idalia, which struck the southeast US in August.
And it's not just boats. The RV industry has been suffering a downturn due to high interest rates. If you took a road trip this past Thanksgiving, traveled on a major interstate, and, out of boredom, looked at any of the businesses that lined the highway, you would've noticed some companies selling RVs - and those lots were completely full.
The good news for the patient consumer who did not buy into the hype during Covid and still has buying power - is that the deals on boats and RVs look pretty good and probably will get much better next year.