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Dec. 1, 2008 – Could it be just a temporary setback?

By Jeff Hemmel
Contributor
By now, the numbers are well known. PWC sales are down sharply in 2008, as much as 40 percent in the worst hit month of August, and currently more than 25 percent for the year. That’s not too comforting a statistic to those in the business.
PWC, however, are not alone. The entire boating market is suffering, suffering from the high prices of gas this summer, from customers’ inability to get loans, and from the general malaise that has gripped the country as economic bailouts and unemployment rates fast become regular headlines on the nightly news.
Is there hope for a spring turnaround, or should we instead brace for 2009? Powersports Business recently contacted random dealers in three key states — California, Texas and Florida — for their thoughts. Their answers show both serious concern and surprising hope.

Fear Factor,/b>
“People are afraid,” sums up Joe Ponza, sales manager at North Miami Yamaha & Sea-Doo. “Unemployment’s at a high. We’re still selling bikes, but people are buying bikes for transportation. They’re not buying for fun. PWC, you can’t ride those to work.”
Ponza estimates the hard-hit Florida market is down a minimum of 30 percent, and notes the typical domestic business is the worst. Wealthy customers are still buying PWC for yacht tenders, and exporters are working their way around the system to take advantage of the low dollar and get craft to South America.
The core family buyer, however, all but vanished as summer wore on, Ponza says. In the past, customers would buy two at a time. Now, Ponza finds himself trying to trade a stack of double trailers for singles, as units typically go out the door solo. He’s also seeing an increase in calls for preowned craft.
“The other part of the problem is you have these special payment plans — $49 a month, $69 a month — but because the economy is so screwed up, the banks are not approving the loans,” he said. “So even if somebody does come in here with a decent credit score, you can’t get him or her approved. For $69 a month!
“It’s a combination between the banks not approving, and the people being afraid and hanging on. I believe that people have it…they’re just holding on to it.”

Upside Down
Not every area of the country, however, is singing that tune. Take Buzz Watkins, sales manager at the three-store Sail & Ski Center in central Texas.
“We’ve had a good year,” said Watkins. “We have our stores in Austin and San Antonio, and they were way up on the list of Forbes list of most recession-proof cities. And that’s definitely consistent with what we found the last two years. There’s no doubt we’ve sold less units this year than we did the year before, but it’s not a big difference. We’re not way down. We are, as everyone is I’m sure, worried about what is going to happen the next year. I planned for a little decrease, but I didn’t plan for a big decrease.
“I try not to watch the news too much. Things are still out there happening. As long as people have jobs and are secure they’re going to keep them, they’re pretty comfortable buying stuff.”
Watkins also voices the hope of many, that as larger boat sales suffer, the PWC market might begin to pick up as an attractively priced alternative for those not willing to leave the water.
Additional reason for hope can be found in, surprise, the price of gasoline. A frequently cited reason for people turning away from the recreational boating market, gasoline peaked well over the $4 mark by summer’s end, but in recent months has plunged as low as $2.30 in many states. In some, the price has even done what many felt was unheard of just three short months ago — broken below the $2 barrier. That’s the greatest decline in the price of gasoline in more than a decade.
While consumers are rightfully concerned about how long that decline will last, many analysts are predicting the lower prices will be around for a while.
“Gas prices affected sales a lot this year, but the market’s not totally wiped out,” said Greg Guthrie, sales manager at Huntington Beach Honda in Huntington Beach, Calif. “We’re definitely off, but we’re still selling some, it’s not like it’s over. Now that gas is coming back down, hopefully for spring time we’ll be back to selling.
“It will be flat, but we’ll still sell some.”

What Now?,/b>
As the saying goes, hope springs eternal. Or maybe that should be, dealers still have hope for spring.
“I honestly think consumers are waiting until the spring,” said Ponza, who admits he has been no fan of the current Washington, D.C. administration. “We have a new president, and people are waiting to see what he does. If he does the right thing, which I believe his intentions are, I think the people are going to start coming out, stocks are going to go back up again, people are going to start spending more money on toys.”
In the meantime, what can dealers do to weather the storm? Exactly what they’ve always done, argues Guthrie. Like many dealers, Huntington Beach Honda has noticed the slowdown. According to Guthrie, it’s about a 20-25 percent decrease, substantial numbers for sure. Still, he argues that staying the course is the best strategy.
“Dealers need to do what they always do when it works,” said Guthrie. “You advertise and you promote and you have a good attitude about it. It can’t be all doom-and-gloom at the dealership. That starts from the managers and trickles down to the salespeople. It’s mostly attitude; attitude and enthusiasm will definitely help with things.”
Yes, planning ahead is key. Guthrie says the dealership took advantage of a deal on noncurrents to be in a good position for those looking for a deal. Overall, however, he suggests what can only be called a strategy to look on the bright side.
“Our season starts late February, early March. We’re going to have a positive, upbeat attitude and that’s going to make a difference. It may not change everything, but negative thinking leads to poor sales, and positive thinking leads to good sales.
“That’s the main thing dealers need to do — just do what they’ve done when it’s been good. You advertise, you get out there and you do demos, you get excited, and you sell what you can.”

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