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Go Back   WakeWorld > >> Boats, Accessories & Tow Vehicles Archive > Archive through January 12, 2008

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Old     (attila916)      Join Date: Oct 2005       11-19-2007, 9:37 PM Reply   
I predict that with the busted housing market, a slowing economy, and high energy prices we are going to see a wave of merger, buyouts, and possible bankruptcies in the boating industry? Any predictions or opinions on surrounding the topic?
Old     (curtisco24)      Join Date: Dec 2005       11-20-2007, 5:34 AM Reply   
Yes you are right it is coming. I think boat prices will take a big dive as well. Builders will be offering large incentives, and possibly smaller less expensive models.
Old     (auto)      Join Date: Aug 2002       11-20-2007, 7:40 AM Reply   
depends on the market, some areas seem to do well, no matter what the general economy. It also would depend on which brand and the segment of the market they target.
Old     (azpowerhouse)      Join Date: Jul 2007       11-20-2007, 10:26 AM Reply   
Its all in priorities....
1) Wakeboarding
2) Eat
3) Sleep
4) Everything else
I have mine backwards...If you love the water, thats just how it is.
Old     (hamkj)      Join Date: Apr 2002       11-20-2007, 10:27 AM Reply   
I would agree. I would say that the boat manufacturers will have to become more responsible along with their consumers. Many have taken equity out of their over value real estate to purchase these toys. Manufacturers have captured their attention by offering more bling.. but nothing to improve the performance of the boat.

Manufacturers will ultimately have to reduce proft and revenue expectations.. which no company likes to do... in order to keep their boats at attractive proce points, they will have to reduce some of the bling or electronics on the boat.

The market may also be flooded with an abundance of used boats, thus putting downward pressures on the new boat prices.

If we continue to see a slowing economy, boat companies will have to scale back operations or consolidate.

Only time will tell...

To be realistic...

If you are a typical 50 hr year boat user...

The big question is....

Will a mid 90's MC/SAN/BU ($18-$25k) kick up a nice wake vs a brand new MC/SAN/BU ($60-$75k).

Interestingly enough... most top riders will tell you... you shouldnt be looking at the boat when you are riding... you should watch the wake and spot your landing...

Bottom line is... with the economy the way it is... it will be a very interesting future for the boat market...

Thus allowing some of the new smaller players who have lower production volumes and lower overhead to either make it in the market... or not make it.

Take a look at the economic data.

90 day delinquencies on floating rate and fixed rate mortgages are exponentially rising every month. What are you going to let go first... your boat... or your house?
Old     (hamkj)      Join Date: Apr 2002       11-20-2007, 4:32 PM Reply   
The other thing I find surprising... is when companies come out with special edition or limited edition boats... ie Corvette boat... I wouldnt want to be buying a Malibu knowing they are spreading the cost of these types of ventures across their entire line up...

You may disagree... but thats how companies operate...
Old     (05mobiuslsv)      Join Date: Apr 2006       11-20-2007, 4:45 PM Reply   
^^^^^^^
Old     (ponyh8r)      Join Date: Dec 2004       11-20-2007, 5:34 PM Reply   
The reason for so many forclosures on homes is that mortgage companies were generally lending money to people who shouldn't have been lent money. Low credit scores, introductory and variable interest rates that came mature are a big reason. Most boat loans are much more difficult to get. As Hehateme said, most people will default on a pleasure vehicle before a home. Don't you think lenders know this as well? Boat, RV, Motorcycles, etc. are traditionally looked at very carefully by lenders.
Old     (magellan)      Join Date: Feb 2003       11-20-2007, 5:55 PM Reply   
Very few boat buyers, at least in SoCal, were financing their boats through the dealer. When you home goes from 200K to 500K in five years, the non-smart were pulling 100K out, refinance for a 3 yr arm at 3.5%, and ending up with a smaller mortgage payment when all is said and done and 100K in boats, dune buggies, and fake boobs. Fast forward three years and the reality baseball bat hits you between the eyes as your mortgage payment goes from $1500 to 3K in one month. Then you lose your house, your boat, your dune buggy, and your wife. Also, all of those potential boat customers are gone as the houses aren't skyrocketing in value, the lenders have become less crooked, and gas prices are beyond criminal.
If I had money, I would be investing in cable parks. Indoor cable parks built in warehouses.
Old     (hal2814)      Join Date: Feb 2006       11-21-2007, 6:01 AM Reply   
"The market may also be flooded with an abundance of used boats, thus putting downward pressures on the new boat prices."

I think this will dictate new boat prices more than anything else. When people are getting crunched for money because of their increasing mortgage payment they can't afford to put $4/gallon gas in their boat, they'll dump their gas guzzling boats because it's either that or watch it sit in the driveway while they slowly go broke. And since a lot of people borrowed against their home for their boat, they can sell it at a loss with minimal hassle.

"Most boat loans are much more difficult to get. As Hehateme said, most people will default on a pleasure vehicle before a home. Don't you think lenders know this as well?"

Yes, but when you put your home up as collateral for your boat (either via a cash-out refi or a home equity loan), you can still get that loan easily. The biggest problem lenders are facing right now is that people ARE walking away from their home but still keeping (or selling and pocketing the cash from) their toys (cars, boats, etc). That's never happened before and the lenders aren't quite sure what to do about it.
Old     (byrd)      Join Date: Dec 2005       11-21-2007, 6:28 AM Reply   
When the economy is hurting, people buy less luxury items like boats. With a supply & demand market, as demand goes down and supply goes up, prices fall.
Old     (dunesday)      Join Date: Nov 2007       11-21-2007, 7:18 AM Reply   
"The market may also be flooded with an abundance of used boats, thus putting downward pressures on the new boat prices."

I was offered an 07 Calabria that was LOADED for $46k,, and I still think their was room to negotiate with the dealer. However,,,,

I just purchased an 02 MC Maristar 230 w/85 hrs on it from a guy who was struggling. I got the boat,, in excellent shape,, for $28k.
Old    freefly70            11-21-2007, 7:35 AM Reply   
I have been thinking about this for a long time. I realize certainly that there are people out there that can drop $50k plus on a base model boat. I would say a majority can't. I have always been in awe of you guys that have the kick ass MC,BU,CC. Just always wonder who is buying these boats and Escalades to tow them with.

I know that Moomba gets made fun of a lot on this board but they really have positioned themselves well for selling boats to the blue collar boater or in a slow economy. I think MC (X1) and BU (ride) have failed in producing a real price point boat for the middle income base. Once you add a tower etc they are $45 and up boats. Yes they are price point compared to the X Star and VLX but not a price point to what the regular guy can afford.

Either the big 3 increases their price to go after the true upper portion of the income base and sell less boats and cut dealers, productions etc selling less with less overhead but making the same or more money or they are going to HAVE to come out with a REAL price point boat to keep their product on the water.

After talking with my local BU/Moomba dealer they feel Moomba as far as numbers they sell will surpass their BU sales by double or more. Maybe this is a future the big three need to look at.
Old     (jon4pres)      Join Date: May 2004       11-21-2007, 7:53 AM Reply   
I am a big fan of what skiers choice has done with Moomba and Supra. As these boats get more and more expensive I think other companies are going to have to do something similar.

Something else that is going to change things is the used market. Now you can buy a wakeboard specific Super Air, VLX, X-Star(X1) that is more than 5 years old. All of these are great boats in wake and quality and if taken care of should have plenty of life left in them.
Old     (99_slaunch)      Join Date: Oct 2005       11-21-2007, 8:20 AM Reply   
The new Moomba and supras have really stepped up their game. I was talking with my dealer and he said there were no major changes to the 08's and they are really focusing on fit and finish. The new Moombas look good. Consolidation. I'm sure it will happen at some point or prices will drop.
Old     (05mobiuslsv)      Join Date: Apr 2006       11-21-2007, 8:38 AM Reply   
I think prices are going to have to drop, there is a lot of markup on these boats. Can anyone out there comment on how the boat sales were this year. I mean did dealers still sell alot of boats? Gas prices were pretty high all year, but next year I'm afraid they might be much higher. Maybe they'll start offering their own financing like the auto companies do, 0% interest etc... It's going to get interesting if the dollar gets hammered any more.
Old     (rbeckei)      Join Date: May 2007       11-21-2007, 9:03 AM Reply   
To our American Friends. I hope the boats prices do drop but the Canadian Dollar is very strong and the economy is also very strong. I have talk to a few dealers in Alberta and some of the boat prices have gone up by 2k from last year. I think the American boat builders are trying to cash in on Canada. You would think that the boat prices would also drop in Alberta, Canada because of the dollar but they are not. I guess if you can make a few bucks, why not.
Old     (attila916)      Join Date: Oct 2005       11-21-2007, 9:53 AM Reply   
The original questions was...
"I predict that with the busted housing market, a slowing economy, and high energy prices we are going to see a wave of merger, buyouts, and possible bankruptcies in the boating industry? Any predictions or opinions on surrounding the topic?"

In other words, who do you predict will get bought out, or who will go out of business.

I think there is quite a bid of downward price pressure at this point, so that topic is somewhat mute.
Old     (wakereviews)      Join Date: Sep 2006       11-21-2007, 10:09 AM Reply   
most likely the biggest hit in the boat industry will be taken by the introductory family boat manufacturers like Bayliner, etc. Yes, the inboard makers will take a hit too, but if you had 70k to buy a new boat before, chances are you probably have done something else besides make "on paper" money on your house. Inboard sales in CA certainly will get hit, but i think midwest sales are still growing for the inboard market (but that is hearsay only.)
Old     (jon4pres)      Join Date: May 2004       11-21-2007, 10:17 AM Reply   
There are very few companies that I can see where consolidation would work. The only thing that might work would be if MC, CC, or BU wanted to buy a smaller company to make a price point brand. That being said without seeing finanical statements there is really no way to tell if anyone is in the position to buy or if anyone is in the position that they need to sell.

I do not think we will see any buyouts this year.
Old     (mikeski)      Join Date: Aug 2003       11-21-2007, 11:08 AM Reply   
you are likely to see more activity at the dealer level. Most manufacturers have the ability to scale production to meet the market demand. A struggling dealer on the other hand does not have as much latitude to scale his business back. There are a few newcomers in the marketplace that may feel the crunch harder than others. You might want to watch a few new companies like Sfvara/Wakecraft/Epic. The biggies might see an opportunity to grab a nice product and pull it out of the market. Similar things happened in the 80's, California Skier, Pro-Am, etc.
Old     (coldlake)      Join Date: Oct 2006       11-21-2007, 1:30 PM Reply   
I for one, don't believe the economy is in terrible shape because lenders lent no equity money to risky borrowers, and lots of borrowers took on more debt than they should have. So it;s giving investors a rough ride. But if interest rates come down further business finds borrowing more attractive, generating jobs etc. etc. Admittedly that's only one side and one take

For this to actually affect the boat market (very small segment of the population - boat owners), you would have to presume that a lot of those owners have either hung themselves out on bad home loan situations (ie no equity) , or done the same thing with an expensive boat or both.

I bet the effect is negligible unless the actual economy as a whole really begins to go south...... Wake/ski boat prices have been going up rapidly, maybe they will slow down the pace a bit - that wouldn't kill em to get only 2-4% increase instead of 8%....
Old     (05mobiuslsv)      Join Date: Apr 2006       11-21-2007, 1:43 PM Reply   
"But if interest rates come down further business finds borrowing more attractive, generating jobs etc. etc. Admittedly that's only one side and one take"

Yes and then the dollar tumbles even further.
Old     (cyclonecj)      Join Date: Jul 2001       11-21-2007, 11:07 PM Reply   
This time next year we'll be gearing up for President Nurse Ratchet. Higher taxes and interest rates are fer sher, esp. for us "rich" people. I also think it'll hit boat dealers hardest, going belly up carrying all that inventory.
Old     (rodltg2)      Join Date: Oct 2005       11-22-2007, 8:25 AM Reply   
i may completely wrong, but it seems like the majority of all these foreclosures are happening to people who couldnt afford the house in the first place. so i don't think they were the major buying force in the boating industry. obviously the housing market eventually affects the whole economy , but i don't think its as bad as some of you think. I run a home improvement business ( granite countertops) and alot of people are always asking " hows are you guys doing" are you guys slow" and actually we have had the best last couple months we have had in 5 years. we pride ourselves in excellent customer service and a quality product. if boat dealers keep this same attitude they should be ok. they just need to go a that extra step with their customers and hold on to the ones they have.
Old     (epic1)      Join Date: Oct 2006       11-22-2007, 9:52 AM Reply   
bayliner and sea ray also sell ALOT of upper end cabin cruisers to the upper income levels. I think they will fare better than alot of wake companies. A new bayliner with a fairly eficent out board is more appealing at 20k than a cheap(30k+) wake boat. Even used. Hate to say it, but I think cable is going to explode and market to wakeboarders. Sure you will see peeps behind cheap boats with no wakes riding, but the "core" riders will be at the cable park. First reasonably priced wake boat with a diesel would be my first NEW boat.
Old     (882001)      Join Date: Nov 2003       11-22-2007, 6:25 PM Reply   
i have always wondered how these people own these boats. i see alot of people with a comparable job as mine and like, wow. alot of people are gonna loose there a ss. on a side note, i will stop riding before i switch to cable.
Old     (talltigeguy)      Join Date: Sep 2003       11-22-2007, 9:39 PM Reply   
Much of the price increases in the inboard industry has been due to increasing demand for a better product. The increased prices made used boat prices increase.

So when I sold my 2002 Tige, I almost lost nothing, and could more easily get the 2005 I have now. Now I am looking at 08 and Tige has really stepped it up in fit, finish...and again cost. I am not sure where my boat will sell, but I forecast that this upgrade form 05 to 08 will be much more painful than the 02 to 05 upgrade was. It seems like the downward pressure is affecting used boats more than new...or is that my imagination? On the other hand, I only see quoted prices, and have not yet done any serious negotiating on a new boat.

(Message edited by talltigeguy on November 22, 2007)

(Message edited by talltigeguy on November 22, 2007)
Old     (hamkj)      Join Date: Apr 2002       11-23-2007, 12:21 PM Reply   
Some of the comments above, some think that the loan deliquencies and foreclosures are only happening to those that couldn't afford these homes or toys in the first place. I would say that is true to some extent, but this affects everyone across the board. One other thought is... the bigger you are.. the harder you fall...

Loan delinquencies are up across the board... the heaviest being in the sub prime market.. but even fixed rates are being hit too.

We will continue to see "payment shock" on these mortgages over the next 2 years.

The wave of liqudiations will continue to put downward pressures on housing for the next several years.

Looking at home prices across the USA... Charlotte and Denver are the only two major centers that are up in value. But others like Vegas, LA, Miami, Phoenix, Diego, Tampa... are all off 20%+.

We are seeing an increase in Auto Loan and Credit Card delinquencies.

US Households - 34% have prime mortgages. 31% rent. 22% mortgage free homeowner. 8% subprime. 5% other...

What this information tells me... is... the used market for a "nice" boat can still hold their value...

Boat manufacturers are coming from some record years.. built new factories etc... so in order for them to keep owners or shareholders happy is to keep revenues growing... meaning they have to sell more... or increase profit margin...

If we assume that there will be less new boat buyers in the market... they will have to increase margins...

My opinion, the boats aren't any better than they were 10 years ago... they have more features, nicer esthetics etc... but at the end of the day.. same trailer, same hull, same power plant...

Sorry for the babbling...

BOTTOM LINE IS... IT IS GOING TO BE TOUGH FOR SOME COMPANIES TO ACHIEVE THEIR REVENUE TARGETS OVER THE NEXT FEW YEARS.

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