Latest Economic Developments and Blue Skies Ahead …
In this issue of the Northpoint Navigator, we’re pleased to share an economic snapshot from the past two quarters, coupled with more promising news and projections ahead.
A PERIOD OF CHALLENGE AND DECISION
First, here are some general comments we’ve heard over the past few months from colleagues throughout the industry …
• We’re in the mist now, living in a moment of opportunity and loss.
• Some marine businesses were well prepared, and some were not.
• We’re living in a time when every choice has a consequence, every dollar earned or spent has meaning.
• We’ve been struggling through an unrecognized economic recession since the end of 2022.
• We can finally see the light … but the days in between are long and we’re tired.
Every day, our colleagues at Northpoint speak with industry colleagues who are deciding between staying in business and living their dream or letting go and beginning the steps toward exiting. As we know, there is no play book to going out of business; every business eventually ends. Legal entities are finite, just like the people who own and run them. During this past cycle, we’ve lost (or will have lost) approximately 10 percent of our retail dealer base.
Whatever your situation, please know that our team is here and available to listen. We are all part of the same community and ecosystem. Other than the farmer who shares similar seasons and cycles, marine dealers are the most courageous of entrepreneurs. We’ve felt your indomitable spirit and witnessed your hard work and effort firsthand.
GOOD NEWS ON THE HORIZON …
There IS good news on the horizon. We will have a new president in office this January who has earned the support and endorsement of the American people. No matter who you individually voted for, we all discovered that the sun came out the next day. We returned to work. We continued to make a living for our family. The democracy/republic goes on … and will survive yet another change.
From the retail boating perspective, this change may very well be a good thing.
On the marine industry front, healing has begun. The Fed has continued to reduce the short-term rate. Inventories are shrinking. Production capacity is reduced. There is new optimism in our industry.
Relatively, we will continue selling the same volume of boats annually into 2025, which should clear out the older boats through this model year sell-off. The full benefit of this turn won’t be realized by most OEMs until the next model year’s orders are placed. Our industry has shifted to a more conservative approach when it comes to stocking inventory.
In the last issue of the Northpoint Navigator, we noted that towboats, pontoons, runabouts and freshwater fish have been impacted the hardest through this recent recession, with saltwater feeling the impact this past summer as the presidential election cycle gained momentum. As we approached the Ft. Lauderdale International Boat Show, we expected that consumers would continue to postpone purchases, but to our amazement, every OEM / dealer we spoke with during and after the show reported successful sales results. The phrase “pent-up demand” is the latest buzz. In addition, retailers who were waiting for election results are now more positive and have begun ordering boats.
As we look into our crystal ball, we believe January through March will see boaters back in the market armed with confidence to buy again. Hopefully, the credit buyer will be back as well, as rates have dropped, and consumers have adjusted to the new norm. We anticipate dealers will begin to rebuild their liquidity and cash flow to balance curtailments and interest payments for inventory. We fully expect these boats will be the first to go.
The fall / early winter season may still feel long at the moment but hang on … the January and first quarter boat shows are right around the corner and the light we’ve all been waiting for is coming.
