U.S. boat sales, which surged during the pandemic, have reached a decade low this year due to higher interest rates. Sales soared during the pandemic as Americans spent money on boats, using stimulus payments and savings to buy big-ticket items. Over 1.4 million new and used powerboats were sold in 2021, up 16% from 2019. However, this year the industry is projected to sell 269,000 new powerboats and around 900,000 used ones, the lowest level for pre-owned vessels since 2011.
The decrease in sales is attributed to the tight supply of new boats during the pandemic and reduced demand for new and used boats as people bought them when they had cash during the pandemic. Loan rates have doubled since early 2020, increasing the monthly payment on a 20-foot fiberglass boat, motor, and trailer package. Higher interest rates have also contributed to lower sales, with loan rates doubling since early 2020. Manufacturers like Brunswick Corp. and Malibu Boats Inc. have seen lower sales due to higher rates. The boating industry is experiencing a significant disconnect from the economy, as Americans are pulling back on large and luxury purchases. Economists predict a slowdown in consumer spending, with Americans pulling back on large and luxury purchases.
Sales of superyachts dropped considerably in 2023 due to sanctions imposed against Russian oligarchs at the start of the Russo-Ukrainian war. Superyacht sales dropped by 17% for both new and old vessels, with the sharpest reduction in number noticeable in superyachts larger than 200 feet. However, sales are still better than before the 2020 international health crisis, with 203 completed deals. Russian presence in the new-build segment was near-zero, as their cash is no longer any good due to sanctions. American superyacht owners are picking up the slack, with the number of owners and preference for bigger vessels growing. The US economy, particularly in Florida, has been doing well. The ripple effect of sanctions is expected to impact the high-end market for years, along with the Israeli-Palestinian war and upcoming US elections. [7de55355]
The small boat market in Asia Pacific is set to experience significant growth, driven by increasing interest in recreational and competitive boating activities. The market is segmented based on product type and application, with major players in the industry adopting various strategies to remain competitive. However, the growth of companies like MasterCraft Boat Holdings, a manufacturer of recreational power boats, is heavily influenced by cyclical headwinds in the industry. The company's operating performance has been impacted by the pandemic, with a decline in earnings and sales in FY20, followed by a rebound in FY21 and FY22. However, higher borrowing costs and restocking of dealer inventories have led to a decline in momentum in FY23. The company's FY24 outlook is abysmal compared to expectations, leading to a downgrade and reduced price targets by analysts. The article suggests that an investment decision on MasterCraft Boat Holdings stock depends on the belief in the current state of the U.S. economy. If the economy is believed to be at or near the bottom of the cycle, the stock may represent reasonable value. However, if the economy has another significant leg down, the stock may continue to decline. [f995388a]
The revised story text goes here...