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Bump's World - January 2011
January 4, 2011
HAPPY NEW YEAR
The beauty of the New Year is the opportunity to look back at the old year, 2010, and look forward to the New Year. There is no doubt that 2010 will be remembered as a very trying year for the boat business. The economy, lead by continued high unemployment and a struggling housing market, showed little hope of short-term improvement. This means consumer spending on non-essential high-end items is going to continue to struggle. I often hear that people with money have it with or without a recession so therefore high-end items are not affected. This could not be farther from the truth. If you just laid off 100 workers you will be lynched at the Christmas party if you just bought a new boat. It also becomes fashionable to be frugal. You now brag that you just paid off your home equity line, at the Christmas party, not that you just bought a new boat.
2010 saw several boat builders shut down or consolidate. Many boat dealers went out of business and most downsized to minimize expenses. Boat shows were reduced in size or just did not happen. Many boat builders and dealers worked hard to offer incentives to become as competitive as possible.
What will 2011 bring? No one has a crystal ball, but I will give you my best prediction. The panic of 2008 and 2009 is gone. Most sellers have adjusted their pricing to reflect the current demand. With so few new boats having been sold in the last 20 years, the brokerage market will continue to struggle will a supply of good current listings. There is a long list of used boats in the 1980s and a much smaller list in the 1990s. The list is very short if you are looking for a boat newer than 2006. Remember that a 2006 boat today is still a 5-year-old boat.
I know there is 10% unemployment, but that also means that there is 90% employment. No one is predicting the 10% will get larger, only that it will take a few years to get back to the 5% level. That means a long slow recovery. The important thing here is a recovery. The 90% are getting tired of the recession and since many were not affected personally at all, they want to get back to their spending ways. Right now interest rates are at an all time low and appear to be staying low for a while. Many people complain that you cannot get a loan. This is not true. You cannot get a loan if you cannot show that you can pay it back. I know many are not use to this, however I sounds right to me.
So going into 2011 we have a stable economic situation with hope on the horizon. We have low interest rates and suppliers working hard to give good deals. We have pent up demand due to years of low demand. We have sellers of used boats adjusting to current market pricing.
I believe that 2011 will be a significant improvement over 2010. I'm not going out to buy a new Ferrari, but I might get to go to the movies and go out to eat for a change.
People in the boat business have been talking about the baby boomers for a long time now. Not only are the homes getting empty of baby boomers kids, but also most of the kids are out of college. Nothing makes you feel better than that last college payment. Many boomers are retiring and have the time to really use a boat. They also want a new or almost new boat since they don't want to be fixing it all the time. They are getting to old to hang upside down in the engine compartment any more.
I'm excited about 2011 and believe she will be a great year.
Please mail comments to me at Bump@newwaveyachts.com
Bump Wilcox
Bump's World - January 2011
January 4, 2011
HAPPY NEW YEAR
The beauty of the New Year is the opportunity to look back at the old year, 2010, and look forward to the New Year. There is no doubt that 2010 will be remembered as a very trying year for the boat business. The economy, lead by continued high unemployment and a struggling housing market, showed little hope of short-term improvement. This means consumer spending on non-essential high-end items is going to continue to struggle. I often hear that people with money have it with or without a recession so therefore high-end items are not affected. This could not be farther from the truth. If you just laid off 100 workers you will be lynched at the Christmas party if you just bought a new boat. It also becomes fashionable to be frugal. You now brag that you just paid off your home equity line, at the Christmas party, not that you just bought a new boat.
2010 saw several boat builders shut down or consolidate. Many boat dealers went out of business and most downsized to minimize expenses. Boat shows were reduced in size or just did not happen. Many boat builders and dealers worked hard to offer incentives to become as competitive as possible.
What will 2011 bring? No one has a crystal ball, but I will give you my best prediction. The panic of 2008 and 2009 is gone. Most sellers have adjusted their pricing to reflect the current demand. With so few new boats having been sold in the last 20 years, the brokerage market will continue to struggle will a supply of good current listings. There is a long list of used boats in the 1980s and a much smaller list in the 1990s. The list is very short if you are looking for a boat newer than 2006. Remember that a 2006 boat today is still a 5-year-old boat.
I know there is 10% unemployment, but that also means that there is 90% employment. No one is predicting the 10% will get larger, only that it will take a few years to get back to the 5% level. That means a long slow recovery. The important thing here is a recovery. The 90% are getting tired of the recession and since many were not affected personally at all, they want to get back to their spending ways. Right now interest rates are at an all time low and appear to be staying low for a while. Many people complain that you cannot get a loan. This is not true. You cannot get a loan if you cannot show that you can pay it back. I know many are not use to this, however I sounds right to me.
So going into 2011 we have a stable economic situation with hope on the horizon. We have low interest rates and suppliers working hard to give good deals. We have pent up demand due to years of low demand. We have sellers of used boats adjusting to current market pricing.
I believe that 2011 will be a significant improvement over 2010. I'm not going out to buy a new Ferrari, but I might get to go to the movies and go out to eat for a change.
People in the boat business have been talking about the baby boomers for a long time now. Not only are the homes getting empty of baby boomers kids, but also most of the kids are out of college. Nothing makes you feel better than that last college payment. Many boomers are retiring and have the time to really use a boat. They also want a new or almost new boat since they don't want to be fixing it all the time. They are getting to old to hang upside down in the engine compartment any more.
I'm excited about 2011 and believe she will be a great year.
Please mail comments to me at Bump@newwaveyachts.com
Bump Wilcox