Covid19 and the implications of the world shutdowns will impact the boating market in a huge way. It will impact a lot of other things as well, but from a macro-economic standpoint we all have some very hard times ahead of us.
*This article is a work in progress and will be expanded upon new information arriving. Tips or insights – send them to us!
The “Positives” – Stay close to home vacations
The season will be delayed a lot and for people who are addicted to their boats – this cold turkey will make them lust even more for going on the water. So, when the countries finally open again – the saltiest people will be on the water fast – and possibly stay out longer than initially planned.
People might take a “break” from commercial travel by air – which will push for more local boat usage for holidays.
[Update July 2020] – Seems like my prediction about local boat holidays are spot on at least in Scandinavia. Boat’s are currently selling like hotcakes and Danish harbours are full of Danish visiting boats on holiday. There are a LOT of new boaters going boating around Denmark – so accident stats might go up slightly. But as for boats – all kinds of “local” summer vacation is acting like the market is on steroids. Summerhouses, camping etc. are all in huge demand. This will last until people loose their jobs and income flows stops. So I think the autumn will see an huge amount of boats for sale.
[Update Aug 2022] – well that is so far still holding up with record setting “marina overnight” stays in many parts of Europe. This has been amplified by impacts of lack of airport staff – so many people who was planning to fly on vacation – went boating. But I think we are seeing the tail end of the massive boat holiday expansion. Now it will slowly decline but hopefully a lot of new boaters will have fallen in love with on-the-water holidays.
The Negatives – A recession is coming
But another reality is with all the layoffs and
potentially another recession coming – the boat market will crumble fast. Sadly, people being laid off might have to sell their boats. Other people who wanted to purchase a new boat – might stay with their old one for a bit longer.
I’m already hearing that people are abandoning deposits on new boats already signed for and part paid for.
There will be a lot of special offers for people with cash on their hands as boat prices will tumble. Boats are luxury items and as in all other crisis situations – people will accept huge losses on getting rid of luxury items.
Usually the first to suffer fast is the 2nd hand boat market. When a crisis hits 2nd hand boats are quickly put on the market – leading to a gigantic discount market of used boats. Price drops are often in the 10-30% range very quickly compared to peak prices. In the 2008 crisis we got our old boat at a 35% discount compared to where the market was just a few months before. And I think this crisis will be bigger than the 2008 ever was.
[Update Aug 2022] Seems like the recession took longer to come than I expected. The massive amount of money infused into most economies pushed the problems ahead of us. Now we are seeing the first signs of financial troubles. Interest rates are increasing – and many companies have started redundancy rounds.
Dealers, brokers, marinas and boatbuilders
So, the recession will thin the herd of boat dealers and brokers. It will also put huge strain on boat builders who might get stuck with a lot of inventory – even if already sold but not paid in full. So, we will see consolidation in the boat builder market and some brands will sadly go under.
Marina’s will suffer – and all retail connected with Marina’s will suffer. As people have sudden decline in incomes – Marina fees won’t get paid on time – if at all. The usual summer truism peak will be smaller – so a lot less income. That will lead to marina restaurant’s fold and chandleries to be pushed to the limit.
Boat Yards will suffer too. Boat Maintenance will be put off and delayed. Right now, is supposed to be the absolute peak time of getting boats ready of going into the water on the northern hemisphere. And there is very little business. Boat yards with onshore storage might find it hard to get boats in the water – and harder yet to get people to pay for the extended on-shore stand.
[Update Aug 2022] – the above has not started yet in full – but it will come. In my opinion the marinas, dealers, boatbuilders and brokers need to get ready to “right size” their companies. The other thing I had not appreciated was the material shortage that pushed up all boat prices and delivery times. I think Navico was “lucky” to sell to Brunswick in August 2022. I do not think the valuation of Navico would have been $1.6b in 12 months from now.
The Boat Rental Market and shared ownership schemes
The boat rental market is a bit of a hurdle. There will be a lot of issues as people can’t fly to their boat rentals. Will they get refunded? Will the rental companies survive?
Another branch that will be severely tested is the very popular shared ownership schemes. That is where you “Purchase” a boat with a Rental agency – and the agency rents out your boat with you getting a few “free” weeks of usage of the boat every year. Then after a few years the boat officially belong to you. Many of these schemes have gone with “rental guarantees” – promising that you won’t have to pay anything for the upkeep of the boat due to rental income and their fleet management.
All the shared ownership schemes will be severely tested, and NOW is the time to read the small print in the contracts. Who is liable for boat upkeep if there are nobody renting? What happens if the Rental Agency goes bust – who then have the rights to the boat? Could you be forced to suddenly find the money to purchase the boat out of the contract before contract ends?
We have hard times ahead of us
The sad truth is we have hard times ahead of us. We might lose family to the Corona virus – we might lose our jobs and income. We might lose our boats and favourite spare-time “make me sane” activity.
The way out of this is for people to try and work together on finding solutions. So, I suggest everyone related to any marine industries to talk together. Find some common ground – figure out how people who have lost their income can find a way to stay in their boats. Find a way for agencies, brokers, dealers, marina’s, boat builders and everybody else can stay in business. Support your local marina and restaurants.
Yes, businesses won’t have the same profits they have had the last 5-8 years. But the end users will lose their incomes – and the tsunami of effects will be felt all the way up the chain.
So please everybody in the marine industry and boat lovers – work together and talk together!
Work together to minimize the impacts all around.