This is marketing research on the Boating industry and can include information on the background, market structure, definitions, competitors, trends and developments of boating and is related to other topics such as boat dealers, watercraft, marine, powerboat and recreation.

Table of Contents

Table of Contents

 Background 
2 Market Structure 
3 Industry Definitions 
4 Market Metrics 
5 Industry Players 
6 Recent Trends and Developments 
7 Sources

Background

The boat building and boat dealers industry consists of manufacturers that produce primarily pleasure boats, including motorboats, sailboats, rowboats, and canoes. The industry does not include ship building and repairing, inflatable boats, or marine engines. Although this industry also includes small commercial and military craft, this discussion will center on trends in leisure craft.

This article includes information on boat dealers as well as boat building. Boating is a very popular form of recreation globally. At the end of the last decade, there were approximately 18 million boats in the U.S. alone. This market included about 8 million bots with outboard motors, 5 million boats categorized as small craft, over 1.5 million sailboats and another 600,000 boats with inboard motors.

Market Structure

The boat dealership industry comprises traditional powerboats, personal watercrafts, kayaks and sailboats.

The U.S. pleasure boat industry has had several years of growth, with real domestic shipments growing 3 percent annually from 1992 to 1998 (see Table 39-12). Over that period, real apparent consumption also rose, growing 5 percent annually, thanks mostly to an annual growth rate of 22 percent in U.S. imports of pleasure boats. The boating industry has kept pace with the national economy, which grew 3 percent annually from 1992 to 1998 as measured by real GDP. Growth in personal income and consumer spending have been the highlights of GDP growth, and those factors are key indicators of growth for the boating industry. Real disposable personal income grew 2 percent annually from 1992 to 1998, while total real personal consumption expenditures grew 3 percent annually over that period. Real personal consumption expenditures on boats increased 15 percent annually over that period.

However, in 1999, the boating industry saw growth slow down while the national economy continued to have strong growth. In the first 6 months of 1999, GDP and disposable personal income each increased 4 percent compared with the first 6 months of 1998, while personal consumption expenditures increased 5 percent in real terms after double-digit annual growth from 1992 through 1998. In 1999, real domestic shipments increased an estimated 1 percent, totaling $6.2 billion in current dollars. Fueled by an estimated 10 percent growth in U.S. boat imports, apparent consumption increased 2.3 percent in real terms. Several indicators for the boat industry began to slow or decline. While consumers continued to spend, they began to dip into savings in 1999. Savings as a percentage of disposable income averaged -1 percent in the first half of 1999. The ratio of consumer debt to personal income also remained high, above 18 percent, for the fifth consecutive year. In addition, interest rates increased modestly throughout the first half of the year. These indicators made consumers more concerned about taking on the significant additional debt associated with the purchase of a boat. This consumer wariness can be measured to a degree by consumer expectations surveys. According to a University of Michigan survey, consumers’ expectations dipped in the first half of 1999, down 3.8 percent from 1998. Indicators such as consumer expectations were at or near record highs. It is likely that the negative growth may only slow growth in the industry rather than signaling a decline. In addition, some manufacturers are reporting a shift of consumer preferences toward larger, more expensive boats, offsetting any negative growth trends in the industry. Industry shipments were expected to increase almost 1 percent in 1999 in 1992 dollars.

A further concern of the boating industry in regard to today’s consumers is whether they continue to enjoy boating. Participation in boating and boating activities declined over the last 10 years. According to an NSGA survey, 25.7 million people participated in power and motor boating in 1998, down from 32.5 million in 1988. Participation in sailing decreased from 6.7 million to 3.6 million individuals from 1988 to 1998. Several activities associated with boating also declined, such as water skiing and fishing. Over that period, participation in water skiing dropped from 12.8 million to 7.2 million individuals. Fishing lost 2.1 million individuals from 1988 to 1998, when it had 43.6 million participants. Overdevelopment of water locations, higher participation costs versus those for other recreational activities, and a lack of a concerted effort to promote the activity are the reasons most commonly cited for the decline in participation.

Global Industry Trends

Despite the potential of international E-commerce, foreign market demand has been weak over the last several years. U.S. exports of pleasure boats fell 1 percent annually from 1992 through 1998. In 1999, U.S. exports were estimated to lose over 1 percent. Overall economic conditions in many overseas markets have not been as strong as those in the U.S. market. Real GDP growth in the top 20 overseas markets, as weighted by U.S. total manufacturing exports, increased only 2 percent in 1998 and an estimated 1.8 percent in 1999 compared with 3.9 percent and an estimated 3.5 percent for the U.S. market in 1998 and 1999, respectively. As was the case more recently in the United States, this probably meant that consumer confidence and disposable income growth were lower, making consumers slightly more apprehensive about buying a boat. In addition, it is likely that less was spent on capital investments, particularly marina development. Furthermore, overseas pleasure boat markets are smaller and therefore typically have fewer dealers and distributors that are willing to take risks when the economy is weak or unstable.

The U.S. pleasure boat market is the largest in the world. U.S. consumption of pleasure boats and marine accessories accounts for an estimated 60 percent of the worldwide market for such products. Typically, U.S. manufacturers hope for a strong U.S. market to bolster sales and profits. A strong U.S. market also helps exports to a degree, as economies of scale are an important factor in the production of boats. If U.S. manufacturers are able to produce a large number of boats for the U.S. market, prices will decline for domestic and international buyers, making the U.S. firms more price-competitive overseas.

An additional concern for the boat industry is the increased cost associated with new legislation regulating and taxing the boating industry. The U.S. Environmental Protection Agency (EPA) and the industry have begun implementing stricter emissions standards that will be gradually phased in over the next 6 years and probably will add noise standards over the next several years. These stricter emissions standards require a large capital investment by marine engine companies such as Brunswick and OMC. Similar outboard engine emissions standards are being drafted in the EU. The engine industry has been negotiating with the Europeans for a phase-in period similar to the EPA phase-in. If emissions regulations have no phase-in, they will cause a severe disruption in the supply of outboards to the EU. Other regulations being considered, including operator licensing, upgraded standards for boat components, marine wildlife protection laws, and various user fees and taxes, also may have a significant impact on the boating industry.

Although dollar volume was up, wholesale unit shipments for the traditional powerboat segment declined, down 5 percent for 2005. Outboard boat wholesale unit shipments for the year were down almost 8 percent, which is similar to the decline seen in outboard engine shipments, down 7 percent for the year, according to the association. Sterndrive boats also showed a 2 percent decline in wholesale unit shipments in 2005.

NMMA's MSR tracks manufacturers' shipments to dealers for both boats and outboard engines using a control group of boat and engine manufacturers. The 2005 boat control group represents about 77 percent of the overall boat marketplace while the 2005 outboard engine control group represents about 95 percent of the market.

Industry Definitions

• Boat – watercraft that provides transportation over water, can be propelled by human power, wind or engine

• Boat dealer - a business that sells new boats and/or used boats at the retail level, based on a dealership contract with a boat maker or its distributor.

• Boat park – an area that has a boat ramp, usually picnic areas, recreation facilities etc.

• Bow – the forward part of the boat.

• Inboard – an engine fitted inside a boat which is the opposite of an outboard.

• Outboard - A detachable engine mounted on a boat's stern, this is very popular for family boats in the US.

• Starboard - right side of a boat when looking toward the bow.

• Stern – the rear end of the boat.

Market Metrics

Until the recent economic recession of 2008, this and related industries had enjoyed very strong growth. Figures gathered by the U.S. Department of Commerce indicated that boat building in the U.S. increased by 51% in the five year period measured from 1997 to 2002 to hit over US $8 billion on value of boats shipped while boat dealers had over US $12 billion in shipments(see chart below).

At the same time, the boat building category had seen an increase of 8.3% in the number of firms in the industry and a further rise of 21.3% in employment (see chart below).

In the boat dealers sub-category, between 1997 and 2002, the Commerce Department calculated that the number of establishments in the industry rose 5%, while employment increased 13.6% (see chart below). The bulding and selling of boats has been a small, but rapidly expanding segment of the total recreation market.

About 5,000 retail dealers sell boats and related products and services in the United States, with combined annual revenue of about $12 billion. MarineMax, the largest retailer, has only a 2 percent market share in this fragmented industry. The 20 top dealers collectively have about 20 percent of the market. Most dealers operate a single location, are privately owned, and have less than $3 million in annual sales. Larger dealers can have more than $10 million in annual sales.

Industry Players

In 1997, more than 40% of dollar sales in the recreational boating market was controlled by six producers—Brunswick, Outboard Marine, Genmar, Yamaha Motor, Bombardier, and McAndrews & Forbes. The top two companies, Brunswick and Outboard Marine, alone account for over 27.5% of recreational boat sales and approximately 40% of the engine market, expressed in terms of value of shipments

Name                    Headquarters              Operations           Sales (2006)

MarineMax               Clearwater, FL             Public               $1.2B
West Marine, Inc.       Watsonville, CA            Public             $261.0M
Rogriguez Group         Golfe-Juan, France         Public             $567.4M (2005)

Recent Trends and Developments

Important Factors Affecting the Future Growth of U.S. Industry

Consumer spending has been the key to the growing U.S. economy. However, most economic experts believe that consumer spending will slow in the year 2000. One of the first items households typically would cut back on would be a boat, as consumers typically are not willing to take on additional debt that can be avoided. U.S. shipments of boats often have fallen before a slow or declining year in the general economy. From 1989 to 1991, annual real GDP growth slowed, reaching 2.5 percent in 1989, 1.2 percent in 1990, and -0.6 percent in 1991; meanwhile, real industry shipments declined annually over that period, falling 9 percent in 1989, 16 percent in 1990, and 30 percent in 1991.

U.S. Industry Growth Projections for theNext 1 and 5 Years

U.S. apparent consumption is expected to increase 0.5 percent in real terms, totaling $6.5 billion in current dollars in the year 2000. U.S. imports are expected to total $950 million, up 1.6 percent. U.S. product shipments of boats will grow to a forecast $6.2 billion, increasing 0.6 percent in real terms in 2000. Meanwhile, U.S. exports of boats are expected to grow a modest 3.1 percent for the first time since 1997 to reach $675 million.

The top 20 trade-weighted economies, based on U.S. exports of total manufacturing products, are expected to grow faster, recording an estimated rate of 3 percent. The overall U.S. economy as measured by GDP and total consumption is expected to grow 2 to 2.5 percent in 2000. This slowdown in growth will prompt the decline of the U.S. boating market as real industry shipments for boats will decline an estimated 1 percent. Consumers probably will start reducing their debt burden before seeking additional credit to purchase a boat. Also important in regard to the forecast will be consumer confidence. Greater declines in industry shipments will be avoided if consumer confidence does not fall dramatically. For consumers who lose confidence in the economy, a highly discretionary purchase such as a boat probably will be deferred.

Five-year growth in the market will be dependent on demographic trends and the continuation of favorable economic trends. More and more baby boomers are preparing for retirement. With retirement comes additional leisure time to participate in boating. However, this group is passing its peak wage-earning years and may be wary of taking on the additional debt burden of a boat. From 1999 through 2004, the 55- to 64- year-old age group will be the fastest-growing population segment. This age group, according to the 1997 Consumer Expenditures Survey of the Bureau of Labor Statistics, spends 56 percent less than does the age group 45 to 54 on boats with a motor. However, the latter age group also will be growing and is much larger, about 10 million, than the age group 55 to 64. According to the survey, consumers between the ages of 45 and 54 are the most likely to purchase a boat with a motor. With some mixed demographic trends, boat sales also will be dependent on factors such as the growth of real personal disposable income, interest rates, consumer confidence, and the consumer debt ratio. If these indicators remain positive as forecast, constant dollar industry shipments are expected to grow 1.7 percent from 1999 to 2004. Imports and exports probably will grow about 5 percent each annually over that period. As a result, real apparent consumption will grow at an estimated 1.7 percent annual rate from 1999 to 2004.

Global Market Prospects

Despite the fact that U.S. exports of boats are declining, export opportunities are still important factors in U.S. manufacturing trends. Foreign consumers are discovering the pleasure of boating. Their governments and land developers are trying to respond to that desire by building the proper infrastructure. The ratio of exports to shipments for boat building and repairing was an estimated 11 percent in 1998. The U.S. boat building industry is the world’s largest supplier of recreational craft. Supplying the sizable U.S. market gives U.S. manufacturers many advantages in overseas markets, including economies of scale and product innovation insights. Many consumers in overseas markets look for the “made in the USA” label because they believe that U.S. manufacturers provide the highest-quality products. U.S. manufacturers are competitive overseas and produce high-quality products. Overseas markets are typically volatile from year to year, as managing the proper amount of supply can be tricky, particularly for many small dealers and suppliers.

In 1998, Canada was the largest market for U.S. exports of boats, with those exports totaling $203 million, a 15 percent increase over the previous year. Canada’s proximity to the United States and its numerous navigable lakes and rivers provide many opportunities for U.S. manufacturers. U.S. exports of boats to Canada account for 31 percent of all U.S. boat exports. The Netherlands was the next largest market for U.S. boat exports, with exports totaling $51 million, growing 24 percent in 1998 and accounting for 8 percent of all U.S. boat exports. The Netherlands also has many navigable canals and rivers and the North Sea, which can be used for recreational purposes. In 1998, Japan was the third largest market for U.S. boat exports, with exports totaling $42 million. U.S. exports of boats to Japan fell 28 percent as declining real GDP growth (-2.8 percent) affected the boating market. Japan has numerous inlets and coastlines that could be used for recreational boats. However, currently there is a lack of adequate marina facilities as expected development projects have been delayed by the weak growth of the Japanese economy. The United Kingdom was the fourth largest market for U.S. exports of boats, with those exports totaling $39 million and increasing 12 percent. The fifth largest market for exports of boats was Germany, where U.S. exports decreased 6 percent to $34 million in 1998.

U.S. imports of pleasure boats grew 5 percent in 1998, thanks in large part to the high value of the dollar against other major currencies. The ratio of imports to apparent consumption was almost 14 percent in 1998. The largest foreign supplier of pleasure boats to the United States was Canada. U.S. imports from Canada totaled $345 million in 1998, a decrease of 23 percent. Weak demand for personal watercraft probably was the major cause of this decline, as one of the major suppliers of these boats produces in Canada. The United Kingdom was the second largest foreign supplier in 1998, with U.S. imports from that country climbing 32 percent to reach $91 million. U.S. imports from the United Kingdom experienced double-digit growth from 1992 to 1998. Italy was the third largest foreign supplier to the U.S. market; U.S. imports from that country totaled $80 million, up 10 percent in 1998. Italian manufacturers produce primarily large yachts and sailboats. Taiwan and Germany were the fourth and fifth largest foreign suppliers, with imports from those countries totaling $72 million and $56 million, respectively, in 1998. U.S. imports from Germany increased exponentially in 1998, possibly as a result of a temporary surge in the sale of large yachts, possibly previously owned craft. U.S. imports from Germany were down 93 percent during the first half of 1999 compared with the same period in 1998.

Sources

• U.S. Department of Commerce
• Company websites