PWC Market Holds Strong, Outlook Good

Early indicators are that 2005 is looking brighter than any year in recent history for personal watercraft. While any increase during the winter months certainly has to be put into perspective (sales during these months are roughly a tenth of the volume that will typically take place come June), the early numbers have industry watchers no less than optimistic. Year over year, Info-Link reports that the numbers for the first quarter of 2005 are up an average 14% over the previous first quarter. And while Info-Link Managing Director Jack Ellis cautions these early season numbers are based on too small a volume to promise continued gains, he sees a promising pattern starting to emerge.
“Sales are clearly up,” says Ellis.

BETTER NUMBERS, BETTER PRODUCT
Much of the reason for the industry’s high expectations for 2005 is the strong crop of machines currently on the market. From horsepower to handling to ergonomics, the newest personal watercraft have clearly raised the bar.
And that bar sits highest with the four-strokes, a category that continues to lead the way. In 2005, each of the four major industry players increased their focus on the four-stroke platform, relying on the undeniable appeal of a quiet, gas-saving, environmentally friendly engine. What obviously has made the four-strokes even more attractive is that they also now have a track record. Speeds and performance have easily surpassed the guarded expectations of years past, and the engine’s reliability has proven equally impressive.
In 2005 they even cleared that last remaining hurdle – price. Jumping on the bandwagon that Kawasaki set in motion when it released the more reasonably priced STX-12F, Yamaha released two four-stroke models in 2005 that completely obliterated the idea that a four-stroke is a machine that will empty your wallet to possess. Boasting prices that, in the case of the base VX110 Sport, broke below the $7,000 barrier, the company boldly moved into previously uncharted territory, producing a boat that not only was the lowest-priced four-stroke available by a wide margin, but a boat that was also one of the lowest price PWC overall. In the process, they also picked up coveted “Watercraft of the Year” honors from PSB’s sister publication Watercraft World.
“It’s doing everything we hoped it would do and more,” says Yamaha’s Scott Watkins of the VX. “The results have told us that that was what was needed. In March it was the number one selling boat in the industry, season-to-date it’s number two. Typically the lower-end boats are not even anywhere close to being up there. It’s Yamaha’s number-one selling model for the year; the highest dealer orders we’ve gotten on one model since 1994.
“Our dealers just can’t get enough of them, and they’re pre-selling on everything they’ve got.”
Obviously, the significance of an attractive, reasonably priced four-stroke cannot go overlooked. But as the past several years have proven, there’s a great deal of potential for any standout model that comes in at a more pack-friendly price tag. Take Kawasaki’s 800SXR. While stand-up sales will probably never amount to even a fraction of the numbers they enjoyed in the late ’80s and early ’90s, Kawasaki proved that putting some R&D into an exciting product, and then bringing that product in at a price that is perceived as significantly lower than the going rate, is a recipe for success.
Explains Kawasaki’s Russ Brennan: “The 800 is really bringing some people back into the sport that might have left for a while. The development of that boat has really opened a lot of doors.”

PUTTING OUT THE WELCOME MAT
Indeed, bringing those that may have left the sport back into the mix – as well as enticing the completely new buyer to the market- has become a priority for most manufacturers. The key? To offer a product that finally gets both of those consumers off the fence, and into dealer’s showrooms. But to accomplish that goal, they need not only compete with the latest and greatest, but also with an ever-expanding pre-owned market.
“There’s been a fairly significant decline in the proportion of new PWC sold to first time buyers over the years,” according to Info-Link’s Ellis. “Back in the mid-to-late 90s, first time buyers were far more apt to buy a new unit. But now they’re just as apt to buy a used model. It’s about half and half.
“The interesting thing there is that unlike the rest of the boating market, only about half of the people who buy a PWC this coming year will already be PWC owners. That means the industry is faced with having to draw in the other half.”
Apparently, companies like Kawasaki, and now to an even greater extent Yamaha, have dangled the right bait.
“All you need to do is look at what the other manufacturers have done,” says Kawasaki’s Russ Brennan, alluding to the Yamaha models, as well as recent promotions from Honda that have significantly lowered that company’s price tags. “They certainly seem to be following Kawasaki’s lead in that respect, offering affordable four-stroke boats. And that just opens up the sport to more people, too.”
Says Yamaha’s Watkins of the early-season’s orders: “It’s the first time in nine years that we’ve seen the numbers significantly up.”

POWER AND AMENITIES STILL KING
While both Kawasaki, Yamaha, and now even Honda may have elected to at least begin playing more of a price conscious game in 2005, Sea-Doo continues to rely on their higher-end offerings.
Always near the top of both price and performance, the company continues to push full speed ahead with a more premium-priced line, adding the three-seat RXT to its lineup, a craft that borrows the supercharged, intercooled 215-hp engine from the RXP two-seater. And while several of the company’s competitors argue that a boat like this won’t grow the market, but instead just capture existing performance buyers, the early-season numbers once again prove that power and amenities are still king. As you might expect from a pair of machines with the most horses, the both the RXP and RXT are currently vying for the best-selling boat on the market.
“The people with the money are the people buying the product,” explains Ron Seidner, owner of Bert’s Mega Mall, the largest Sea-Doo dealership for 15 consecutive years. “The average package is $25,000 a package, and the guys that are buying these they want the bells and whistles, and they want all the speed. They want the biggest, they want the baddest, they want the fastest.”
And thanks to attractive finance packages available, many of the higher-end offerings can be had for only a slightly higher monthly payment. As most dealers will testify, it’s just as easy to get qualified on a $12,000 boat as it is one for $7,000. Broken down to a monthly payment, the difference can be as little as $20.
Still, the price issue is likely to be the driving force behind industry offerings in 2006. Nearly every manufacturer is expected to turn their attention to the low-end market. “How much of there is that, I don’t know,” continues Seidner. “There’s only so much you can put on a boat for $7,000. And everyone wants to go fast, that’s the problem.
“That being said, no one’s been in the season yet. It’s just now starting to get ready. There are worries from a lot of people that there’s too much high-end inventory in the market, but what pans out from that we’ll see. I think there’s a lot of people concerned.”
Sea-Doo’s Louis Levesque, however, is understandably pleased with the results, noting that Sea-Doo in fact does have a lower-price offering to entice buyers, the innovative 3D. “We are proud of our Sea-Doo line up,” says Levesque. “We have great watercraft with great innovative technologies. The new technologies like 3D or 4-TEC are pushing consumers to renew their units. Overall PWC is important for us and our dealers and we feel we will see growth in the future.”

REACHING FOR THE SKY
Clearly, the challenge is twofold. To once again thrive, manufacturers must not only produce new craft that are so compelling they cause the current owner to trade up, but also attract an entirely new generation of enthusiasts. A daunting task? Certainly. Those potential buyers, however, are out there.
“In reality, overall PWC sales have remained relatively constant,” says Ellis of Info-Link, disputing the myth that the market went through a freefall. “They dipped from the mid-1990s, but they didn’t take that beating you saw in the news. More and more people just opted for the used market.
“It’s still a popular sport.”
“We’re certainly optimistic that that will be the case,” says Kawasaki’s Brennan. “We’d like to see the PWC industry follow the lead of some of the other segments of the powersports business, and experience the growth we know it’s certainly capable of.”