Buyers ready to get on board for `boat show prices'

Accessory packages often included for free as way to lure customers

Sellers `going a little deeper'

October 07, 2001|By Joel McCord | Joel McCord,SUN STAFF

If you think the country's declining economy has hurt the markets for luxury items - sailboats and powerboats in this case - think again. And again, and maybe one more time.

Because in the weeks leading up to the United States Sailboat and Powerboat shows at the City Dock in Annapolis, there seemed to be as many opinions on the effects of a plunging stock market on the pleasure boat market as there are people in the industry. The Sailboat Show opened Thursday and runs through Monday. The Powerboat Show runs Oct. 11 through Oct. 14.

The conflicting stories and uncertain markets, and the aftermath of the terrorist attacks in New York, Washington and Pennsylvania, do not seem to have affected ticket sales, nor have any of the nearly 600 exhibitors canceled, says spokeswoman Lisa Lewnes.

"We began talking about an economic downturn a year ago, but we've not felt the crunch at all. We wonder when it's going to come."

Lewnes says a few customers have asked for refunds, but ticket sales are "way up" over last year and the show is almost sold out.

The one fear that organizers have, she says, is the affect of the terrorist attacks on the travel plans of visitors who come from all over the world.

"We get people from Canada, Ohio, Britain and Australia and we don't know what impact the events of Sept. 11 may have on them that are out of our control," she says.

No one in the industry will admit he or she is hurting, but some boat manufacturers say they have cut back production to deal with declining demand and others say they've cut prices or thrown in free accessory packages to make the purchases more attractive.

The contradictions are perplexing to Meg Forsberg, product manager of Yacht Trader magazine. Advertising in her company's publications has fallen off, she says, but boat dealers say they still are selling yachts.

"When the economy slows down, people cut their advertising budgets. It's one of the first things they do," she says. "But I was at the boat show in Norwalk, Conn., last week and I saw some of the dealers at dinner and they said they were selling boats left and right. One guy said he sold six new boats that day."

But those who were selling boats also conceded they were "knocking off as much as two and three grand" from the price of the higher-end boats and buyers were "taking advantage of those opportunities," she added.

Most manufacturers come up with "boat show prices," says Eric Macklin, Northeast regional sales manager for Hunter Marine, which has nailed down about 24 percent of the national sailboat market.

"This year, we're probably going a little deeper than we have in the past. And we're offering options packages."

Hunter and most other manufacturers will throw in electronics gear - generators, chart-plotters, GPS systems and such - cockpit cushions, maybe Bimini awnings for the cockpits for free to entice buyers.

"In situations like this, you go back to your suppliers and you say things are getting a little tight, what can you do for us if we can beef up sales," Macklin says.

Sharon Day, vice president of marketing for Catalina, another popular sailboat, says a declining economy will at some point hurt sales, but doesn't seem to have had an effect yet.

"We're a pleasure item and that's really driven by the economy," she says. "But we've been in shows and done well this fall. The type of product we make is a family-oriented boat and we look at it as people continue to buy them because they want to have good, quality time with their families."

Paul Matrangola, sales manager for Tidewater Marine, an outlet for Hunter and Catalina sailboats, says the demographics of the boating crowd are helping to sustain the market, at least for now.

Most of his customers are "empty-nesters who have gotten their obligations out of the way," he says. "They're in their late 50s and they're gonna play now before it's too late."

Some companies cut back production when they saw the economy begin to soften a year ago.

"We felt it in September and October a year ago," says Mike Collins, president of Marine Holdings, which builds Donzi and Pro Line powerboats. "We made adjustments to our overhead and our stock and to where the market was going to go. Some people didn't and ran into trouble, but we avoided it."

One thing most in the marine industry seem to agree on is that the market for higher-priced yachts - $200,000 and up - is holding its own while the market for smaller boats priced under $15,000 is not doing as well.

"The high end of the market is there and growing," says Jim Barthold, general manager of the shows. "That's a result of the fact that people who can afford those kinds of boats are not wedded to what the stock market does on a given day. They're the dot-com millionaires who made it and cashed out and it doesn't matter to them."

In addition, manufacturers are bringing new boats to the shows to entice buyers who are teetering on the edge of a decision.

"Our whole product line on the high end is new and fresh," says American Marine's Collins. "We have a 60 mph family cruiser with a real new look, cherry wood interior, state of the art design. If it's the same money [probably $500,000] as the competition's, people will buy something that looks new."

But tighter financial markets could eventually put a dent in that rosy outlook, says John Peterson, director of sales and marketing for Hunter. Even those buying half-million dollar yachts rarely pay cash and "trying to get people approved" for loans can be difficult, he says.

"As interest rates go down, loans become tougher to get because lenders don't want to make any mistakes. In the last 90 days, it's been tough for us to get loans for buyers. It will be interesting to see if it comes back."

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