In the midst of the global pandemic in recent years, the yachting industry has experienced one of its best times. New boat sales are at their highest level in decades, and first-time buyers of new boats have soared to record highs. But the post-coronavirus recession – coupled with global headwinds – has left the United States recreational yacht market facing a very challenging time in 2024.
Speaking at the State of the Industry Breakfast presented to 900 delegates at the United States Yacht Accessories Show (IBEX) in Tampa, Frank Hugelmeyer, president and CEO of the United States Marine Manufacturers Association (MNNA), noted tough times, but strong measures are needed. "I don't think I need to tell anyone here that the industry is struggling with some headwinds," Hugelmeyer said. "Interest rates are falling, but they are still high. Sales of motor yachts fell by about 12%. While consumers feel slightly more optimistic, consumer sentiment remains volatile. ”
However, during the IBEX showroom and presentation, Hugelmeyer pointed out the positives. He marked the September 2024 FOMC meeting, when the Fed cut interest rates by 50 basis points, easing monetary policy for the first time in four years due to progress on the Fed's dual mandate. While the downward revision is higher than most expectations in financial markets, it is unlikely to save the fourth quarter of this year for dealers and OEMs. The rate cut is welcome news in several ways, as it lowers the cost of carrying dealer inventory, lowers government spending on debt interest payments, and should lead to stronger economic growth. Further rate cuts are expected and will continue to help ease the pressure.
Hugelmeyer
Exhibitors are cautious but optimistic – the general consensus is that the industry recession bottomed out earlier this year and the leisure yachting market is recovering, with positive growth expected in 2025.
"While there have been significant changes, there are also great opportunities, and the recreational yachting industry is ready to capitalize on them," Hugelmeyer said. ”
Major electoral issues
The upcoming United States election in November 2024 has brought more resistance and reluctance to the market. The uncertainty over the outcome of the election has led to consumers being more conservative in their spending. With United States elections evenly matched, spending has stalled at best.
Trump's tax cuts are set to expire in 2025, and it remains to be seen whether they will be extended or allowed to expire. United States' large spending deficit may require higher taxes. Higher taxes will reduce the discretionary income of consumers. In addition, the candidates of both parties are talking about increasing tariffs.
Tariffs can trigger inflation and also reduce consumers' discretionary income because the products they buy cost more. It remains to be seen how the election results will affect military conflicts in Eastern Europe and the Middle East, which in turn will affect government spending and the global economy, adding to the question.
With the November election just around the corner, dealers and OEMs are hoping to see signs of recovery and more consumer confidence.
The current decline in the United States recreational yachting industry is expected to continue into 2024. The industry should keep a close eye on its potential impact, but there is still hope for an increase in positive shifts until mid-2025.
Retail yacht sales will resume first, possibly in the first half of 2025, which will lead to an increase in new yacht production in Q2 or Q3 2025 as dealer inventories return to more normal levels.