May 14, 2007 – PWC: Minimal growth, but above all, healthy
May 15, 2007
Filed under Features
By Jeff Hemmel
The once-beleaguered personal watercraft industry, which only a few short years ago seemed to be battling troubles on all fronts, continues to show signs of the sustained comeback hinted at in 2005.
Sales are once again slightly up, legislative battles continue to be settled favorably and a solid base of product — from inexpensive starter machines to high-performance performance models — continue to target a wide variety of consumers.
In an industry that has seen both a dizzying spike, as well as a humbling fall, that’s all good news. Numbers now appear to be both realistically stable and sustainable, providing the market a solid base upon which to build for the future. Four-strokes are now the standard, clean operation is a given and legislative tussles typically are settled in favor of continued access.
Here’s a look back at just how the industry got here, as well as insight from key industry executives as to where we might be heading.
Tale Of The Tape
Powersports Business turned to Statistical Surveys Inc., a Michigan-based company dedicated to providing detailed reports regarding the marine, manufactured housing and RV industries, to get the first glimpse of how the industry fared in 2006. While those early numbers fail to show any explosive growth taking place in the PWC market, they should be of comfort to most dealers, as well as to manufacturers and the aftermarket.
For yet another year, the industry has continued to hold its steady ground, and even chart a relatively modest upward path along the sales curve. According to Statistical Surveys, which charts retail registrations, 80,586 craft were ultimately sold in 2005. That number appears to show a minor increase for 2006, with 80,608 craft moving out of dealerships.
Looking at the so-called key states of California, Florida, Texas and Michigan, only Michigan showed a downturn in overall PWC sales, a fact that many attribute to the state’s hard-hit automobile-based economy.
California recorded 9,612 sales, a 2.1 percent increase over 2005; Florida had 10,893 sales, an 8.5 percent increase; and Texas tracked 6,408 sales, nearly a 2 percent increase.
Michigan, meanwhile, noted a nearly 20 percent reduction compared to 2005, with sales declining to 3,283 in ’06 from 4,078 in ’05. States to post significant gains were Alabama, up 13 percent to 2,237 units; Arizona, up 15.5 percent to 2,033 units; Louisiana, up 48.6 percent to 1,168 units; and Nevada, up 12.7 percent to 1,274 units. States showing significant losses included Indiana, down 38.4 percent to 649 units.
The industry also should take comfort in the fact that preliminary numbers through
Feb. 28 show gains as well, with a 4.5 percent increase year-to-date over 2006. Again, the key states might prove crucial. Michigan has rebounded off 2006’s sub-par performance with an early 116.6 percent increase, more than
doubling the sales until that point last year. Arizona is also showing gains early on, up 44.2 percent year-to-date compared to 2006.
“The PWC industry is strong and stable,” noted Yamaha’s Mark Speaks of the market’s now solid and slowly rising sales graph. “Boat show sales were favorable for Yamaha year-over-year, and we believe there are a number of key market drivers in place for this growth to continue throughout this year and in years to come.”
Echoes Sea-Doo’s Louis Levesque: “We are excited with the PWC business, and our dealers are also excited. The business is healthy.”
As to where that healthy business will go, or should we say grow, from here is up for debate. Certainly the affordable, entry-level four-stroke will continue to hold strong.
“Our VX Series was the best-selling PWC in the industry,” Speaks said. “New and first-time buyers are showing growing interest in the PWC lifestyle, and new value-oriented products make it easy for them to enter. This is a trend we expect to see continue in years to come.
“We’re seeing tremendous growth among new and first-time buyers. It’s never been easier and more cost efficient for families to begin enjoying the PWC lifestyle, and these new market entrants are great for the long-term stability and growth of the industry.
“Growing the first-time-buyer market has been a focus for several years now, and we’re beginning to see these consumers who came in two and three years ago showing interest in trading up to more full-featured watercraft. So it’s clear that once people come into the market, PWC become an important part of their lives.”
As to what those buyers might trade up to, the touring segment continues to show perhaps the greatest potential for long-term growth. Thinking this segment’s buyers are solely interested in long-distance cruising, however, might be missing the big picture.
“Some PWC usage has changed in recent years, and will continue to change,” explained Kawasaki’s Croft Long. “One change might be called ‘touring’ or ‘long distance,’ but we really see this as more of a ‘comfort’ trend. Folks don't just stay in their cove, or their part of the lake. They want to explore and see it all. We positioned our new Ultra series to be more comfortable for longer riding times, whether just taking another lap around the lake or navigating the Mississippi. Our focus on ‘comfort’ doesn’t mean adding a fat-padded seat on a hull that slaps the water. It’s ride comfort, where the Jet Ski has a nice smooth ride in rougher water conditions. It doesn’t beat up the rider physically, and that adds to the rider confidence and lets them ride longer.
“Most users are day riders, carrying gear for a day on the water, rather than overnight campers or those riding cross country.”
“We’re seeing considerable interest in touring,” Speaks agreed. “Today’s high-end, luxury performance PWC offer a combination of comfort, fuel efficiency and space that enable riders to go farther and do more. We believe PWC usage will continue to evolve, leading to increasing interest in the luxury performance segment.”
Levesque can see the potential in both areas.
“We believe in an industry increase. Most of this increase will be fueled with recreational buyers, people who are looking for new hobbies,” the Sea-Doo leader explained. “For sure a category like musclecraft will always be important for enthusiasts, but newcomers might be more attracted by luxury or recreational models.”
Return Of Performance
With the new Ultra series, Kawasaki has effectively hedged on both bets. The Ultra LX might lack the cushy touring seat of its luxury competitors, but the boat is big and comfortable, offering up a solid feel on the water. Both Ultras also are pushing the boundaries of stowage and fuel capacities, far surpassing the industry norm.
“Riders want to be able to ride as long as they want to, not feeling limited by the machine,” said Kawasaki’s Long. “Our Ultras have industry-leading fuel capacity to keep the ride going if the rider chooses. Our class-leading storage capacity lets the riders bring an extra cooler, sweatshirt or beach ball.”
The Ultras also, however, mark a renewed commitment from Kawasaki to the performance market. The company admits the 250X is an attempt to lure back former customers who have wandered to other product lines in search of more performance than the company previously offered. Suddenly boasting the industry’s most powerful vehicle, expect Kawasaki to gain back significant market share in this segment.
While company officials might be playing things close to the vest, early indications are that the Ultras have been moving quickly off showroom floors. The boats have already displayed real world dominance in early offshore races, and those who must have the fastest thing on the water have lined up at dealerships to take the boats home shortly after their arrival.
“The new high-performance Ultra models are being received very well, but it is still early in the season to make any predictions,” explained Kawasaki Senior Media Relations Coordinator Jeff Herzog.
Look To The Future
As to where we can expect to see the industry go in the near future, optimism continues to rule the day. Industry officials cite everything from the installed base of enthusiasts with older machines, to the new technology available, as all valid reasons for increased sales potential.
“We believe the industry will experience growth because the PWC park is getting older,” Levesque said, referring to the abundance of older model vehicles already in consumers’ hands. “New PWC technology will attract new customers, and baby boomers are looking into new lifestyle experiences like RV, PWC, boating, etc. They have disposable income, and kids or grandkids to entertain.
“We are investing heavily in marketing for building the PWC category this summer. The season is already off to a strong start with a great boat show season.”
“The industry is strong this year and the forecast for coming years is encouraging,” Speaks agreed. “We think this is reflective of a number of key trends. First, consumers are beginning to see the benefits of PWC and the impact of PWC on their lives. Quality family time together is hard to find, and personal watercraft offer a unique way to bond and grow as a family. Second, the value for the first-time buyer is unprecedented in the history of the industry. This is driving industry expansion and creating more consumers who will remain in the market for long-term growth.
“Lastly, the versatility of PWC makes them attractive to a wide range of consumers for many different activities. We’re seeing WaveRunners used offshore for pulling surfers into large waves. Adventure trips and long tours are becoming more common. And people are even beginning to fish from PWC, as they can take you places no other boat can.
“We are, in essence, at an inflection point with the combination of these trends, and it’s why we’re seeing, and why we expect to continue to see, positive signs for the market moving forward.”