Riding the towboat sales wave

By David Gee

The NMMA recently reported that retail unit sales of new powerboats in February 2021 were up 34% compared to the same time period last year. Segment leaders included wakesport boats, one of many categories seeing double-digit increases YOY.

These latest sales figures for the towboat segment follow a strong 2020, with NMMA reporting unit sales around the 13,000 mark, representing a 20% increase over the previous year’s low double-digit increase. In fact, towboats have enjoyed double digit sales increases YOY since the recession of ’07-’08.

Joining us to talk more about those sales figures, as well as what’s new in the space, is Correct Craft CEO Bill Yeargin.

Boating Industry: The towboat segment has had a good run here for the better part of a decade. Recount the highlights if you would and tell us what the first four months of 2021 have been like.

Bill Yeargin: People talk a lot about the towboat segment and strong sales but the thing they often miss is how far towboat unit sales dropped during the recession. And 2020 was the first year that we actually got unit sales back to the point where they were pre-recession. So even though sales have been increasing, they have been less than they were. Pre-recession there were a couple of years where we bumped up slightly over the 13,000-unit mark, and that’s the level we hit last year, so we finally made it back.

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BI: It would be a bit of an understatement to say 2020 was an interesting year, wouldn’t it?

BY: It became very clear last spring that people wanted to spend time outdoors engaged in all forms of recreation. Of course, it was nice for our dealers and nice for us people were buying lots of boats. The challenge the industry had though was that manufacturers were simply not able to increase capacity as fast as dealers were selling boats. That means customers are waiting for product from all of the major manufacturers, and it has left dealers with less inventory to sell than they would like. So it’s been a great problem to have, but it has also been challenging for the industry.

Yeargin

BI: When we did our annual proprietary Boating Industry dealer survey for the February issue, it was certainly clear at the time that dealers saw inventory – or lack thereof as it were – as the biggest challenge for 2021. When do you see supply aligning with demand?

BY: That’s a great question! And one we’re all trying to figure out. The short answer is certainly not this year. Many companies have back orders for months, or longer. We have done all we can to increase production and capacity. At Nautique we bought a new 300,000-square foot facility across the street and are increasing production there. At Centurion/Supreme we acquired access to a factory in Georgia. We’re doing all we can but most of the boats on back order are customer sold units. So even though we are increasing the number we are shipping, they’re not going into dealer inventory. It will take a while to build up and right size that inventory and my guess is we will be well into 2022 before that happens. On the other hand, we can all hope that never really happens! 

BI: I spoke to a wakesports-centric dealer principal back in January who told me he was sold out for 2021 and had taken a surprising number of deposits for 2022. Considering that buying a boat is a very emotional and discretionary purchase, is that long wait a concern for the industry in your mind?

BY: The bottom line is people want boats. They understand the value of them, and how great they are when it comes to spending time outdoors, safely, with the family, and we have seen they are willing to wait. We understand everyone wants their boats right away and we are doing our best.

BI: For the first time in more than a decade, the industry saw an increase in first-time boat buyers. Is that an encouraging sign for the future as everyone has been concerned with finding enough new and younger boaters to replace those ageing out?

BY: I am very encouraged by it, and we talk about this issue all the time. Families buying boats and exposing their kids to boating bodes well for the future and could have a great long-term positive impact on boating. As an industry though we just need to make sure these people are having good experiences. Providing a great experience to each and every customer these days at the dealer level is so challenging because everyone is so busy selling and delivering boats. There may not be time to give the one-on-one attention we would like to for these thousands of new customers who are coming into boating. That’s a big challenge. If they have a bad experience, and they are struggling with towing their boat, or launching it, or they don’t know how to use it properly when they do get out on the water, they’ll just get frustrated and sell the boat. If we’re smart about this and we do a good job, I do believe we will have customers for many, many years. To add to the discussion, I also believe there are going to be lots of these first-time buyers who will be looking to trade up into bigger boats very quickly once they get into it and really start enjoying boating. We have been given a great opportunity and we have to make sure we take advantage.

BI: The last time I saw you in person was in your booth at the Miami International Boat Show. And we talked about the rising prices of towboats, among other things. Where are we on that today?

BY: First of all, who would have guessed at Miami that we wouldn’t see each other for over a year! Here’s where we are. It’s customer demand. Customers are demanding bigger boats, with more features, more innovations, and all of those cost money. You learn in Economics 101 that competition is supposed to drive down prices. But that’s not always true. We have seen competition drive up prices in our segment. Not because we are increasing our margins, because we’re not. But because people want more and more content on their boat. People ask us all the time if we can build a less expensive towboat. We have tried that several times in the 14 years I have been here, and people don’t buy them. Decontented towboats don’t sell. When people say they want a more basic, less expensive towboat, what they really mean is they want to buy a $150,000 boat for $75,000. We’d love to be able to do that, but we can’t.

BI: I want to conclude our conversation on a subject I know is important to you and that’s electrification. Tell us where you are with that.

BY: We’ve spent millions of dollars on it already and are completely committed. We’ve formed a separate company, Ingenity Electric, to develop more sustainable boating solutions. We’ve sold a number of Nautique zero-emission GS22E boats both here and in Europe. And we feel there is no question this is the future of our industry. Technology and time will take care of all of the issues and challenges we have today. We’ll all have electric boats in 10 years.

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