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After 26 years of selling new boats here, 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," says Zimmer, owner of Alpine Haus Marina, at 12710 E. Indiana, 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 says. "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 aboutlocally and nationallylike 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 and possibly longer.
Ray Ericksen, co-owner of Carstens Marine, at 123620 E. Indiana, which sells Crownline brand boats, says, "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."
Ericksen says, "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. Hopefully, once the sun comes out, things will begin to swing."
"It's all about consumer confidence," Zimmer says. "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 of this year, while used boat sales by dealers shot up 33 percent, to 488 boats, says John Thorburn, spokesman for the Seattle-based Northwest Marine Trade Association. Total boat sales in the state by all sellersincluding by private partiesshot up 27 percent, to 6,357 boats, he says.
Meanwhile, the value of the first-quarter sales also increased sharplyby 30 percent to $23.2 million for new boat sales by dealers, 76 percent to $14.5 million for used boat sales by dealers, and 24 percent to $85.4 million for all boat sales in the state, Thorburn says.
"It's the first significant increase we've seen in quite awhile" in sale values, he says.
While those overall gains are uplifting to see, he adds, "It's all relative, because last year was one of the worst years this industry has faced."
For all of last year, dealers in the state sold a total of 5,936 boats last year, 3,147 new and 2,789 used, which is down from 12,649 boats in 2006, 8,114 new and 4,535 used. Despite the improvement in the first quarter of this year, the total of 951 new and used boats that dealers sold compares with 2,119 sold in the first quarter of 2005, when the market was humming, "so we still have a long way to go to get back to where we were," Thorburn says.
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 that were 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 registrations of boats that were new or not more than a year old.
"There were a number of dealers hit very, very hard," particularly those that weren't diversified in their product lines and that didn't have service departments that could provide an underlying revenue stream, Thorburn says.
Industry shudders
"There's definitely been a kind of shudder in the industry," he says. "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, including some in the last couple of months, Thorburn says. 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, which "caused a huge shift" in the industry regionally when it shut down in 2008, he says. He adds, "I think for the most part the dealers that are around now will remain. They've weathered the worst of it, they've weathered the storm."
One of the trends that worried dealers last year was a sharp rise in the number of boats that Washington residents bought from brokers and dealers outside of the state, showing that boat buyers were willing to travel to get the best possible deal.
Though that remains a concern, the number of new-boat purchases in the state made in that fashion last quarter fell 15 percent, Thorburn says.
Some dealers have taken steps to diversify the boat lines they carry to boost sales.
For example, in the fall of 2008, Trudeau's Marina, a longtime Sea Ray and Boston Whaler boat dealer here, added the Bayliner, Trophy, and Meridian boat lines formerly sold here by Olympic, giving it an expanded mix of products across a broader price range.
Similarly, earlier this year, MasterCraft Inland Northwest, a Liberty Lake boat dealership, broadened its inventory mix by adding the Centurion, Supra, and Moomba boat lines, the latter two previously having been carried by Alpine Haus and all of which have lower starting price points than new MasterCraft models.
Zimmer, of Alpine Haus, says 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 says is coming off a record year.
The record volume he did in his service shop last year also was "a sign of the economy," he says, as more consumers chose to put their discretionary dollars into maintaining older boats they own or bought rather than buying new boats.
"The good thing is, people are boating," he says. "Even though it's raining, our lot is totally full. I'll bet we've got 80 boats in the lot waiting to get serviced."
His marina business currently employs five people full time and, although that work force is about half the time it was three years ago, he says he plans to add another full-time employee soon. Also, he says, strong sales over the last couple of years at a ski and snowboard shop he owns on the South Hill have helped offset the downturn in the boating operation.
Like other local boating industry representatives interviewed for this story, Zimmer says boat 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 any more" 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, which is one of North Idaho's largest boat dealers and part of the Hagadone Marine Group, says, "There's no doubt that last year was a tough year for everybody in the business. 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 says.
Along with Cobalt, the Yacht Club sells new Marquis, Regal, Carver, Malibu, and Axis brand boats and yachts, ranging in retail list price from around $40,000 to $1 million.
"Most of our boat brands are premium boat brands," built by solid, private companies, "and they've been in the business a long time and are not going to go away," which is reassuring to customers, Brosenne asserts.
The used boat market still is where the 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, he says.
"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," Brosenne says. "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 says, "but I see signs that it's continuing to improve."