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The Boating Industry's Pandemic Recovery

A deep dive into Australian boating in 2020

Australian industries have had a tough time in 2020. The pandemic forced lockdowns, severe limits on travel and economic uncertainty with widespread job losses.

In the boating industry, consumer demand has fluctuated wildly, dealerships have closed, importers wrestled with uncertain delivery timelines and manufacturers stalled.

Every Australian state and territory has had its own experience as measures dictated by respective governments differed. Millions of Australians were home-bound, unable to use their pride and joy or purchase a new one, and businesses wondered which way the wind would go once restrictions finally eased.

Wayne Park, a Relationship Manager with finance broker Credit One, works directly with boat brokers and customers around Australia, and has seen firsthand how marine companies have fared across the board. Here, he and Trade-A-Boat Editor Tim van Duyl offer their perspectives the last few months, and look ahead to see how the industry is likely to fare in the near future

INTO LOCKDOWN

Back in March when coronavirus first flared up, the effect on Australians’ way of life was immediate. Non-essential workers were sent to work from their kitchen benches, schools and businesses shut their doors and travel plans were left in disarray. Terms such as ‘hand hygiene’, ‘social distancing’ and ‘community transmission’ entered our vernacular, and toilet paper became more precious than diamonds.

The ‘Rona, as many Aussies call it, has caused a roller coaster effect for the boating industry, with an initial slump, then later a tremendous boom in demand as international (and even interstate) travel was off the cards and people needed another leisure pursuit on which to splash their cash.

Park says initial closures were challenging for businesses, and many were left scrambling with minimal cash flow and trying to survive on government subsidies. 

“People were sticking to the rules and not going out, so naturally during the COVID-19 period there was a level of decline because customers weren’t coming to the dealerships,” he tells Trade-A-Boat. “They had a downturn.”

Uncertainty created around rising unemployment left financial lenders feeling nervy and many Australians unwilling to make large financial commitments amid such economic uncertainty. Without a steady stream of customers, some businesses sadly couldn’t make it through the lockdown periods to see better days.

“There are definitely some yards that have gone since this has started,” Park says. “Naturally, many others had downturn in their staffing levels during those tough few months too.” 

Manufacturers had to endure shutdowns, and marine companies that rely on imports had their challenges too, says Park.

“There have been supply issues, not so much from the shipping but from the COVID-19 screening at the docks — and that can push out the lead times for customers.”

BUSINESS DEEP DIVE

Without consistent income and people through the doors, Park says brands and dealerships had to get creative about how to stay in business, and many have done a ‘deep dive’ into their business models.

They examined their staffing levels and operations, and looked for other opportunities to reach potential customers sitting at home craving new ways to spend their leisure time — whether they were existing boat owners or newcomers who may have thought of buying a boat after they’d paid off that next trip to Bali. 

Many marine companies invested in their online marketing and amped up their social media presence.

“The silver lining is that a lot of the businesses have now become a lot more streamlined, a lot slicker in their operations,” says Park. “They have become a lot more aware of online marketing and how they actually get their brand out in the marketplace.”

OPENING THE DOORS

The easing of lockdowns across the country spurred an unprecedented growth in demand for boats, as Australians sought ways to revel in their newfound freedom (the notable exception are Melburnians who went into an extraordinary second lockdown).

Park says this was kicked off by government financial incentives, particularly the option to obtain early releases of superannuation in two separate $10,000 amounts.

“Sales of jet skis or PWCs have gone off the rails,” he says. “I was talking to one jet ski dealer and he said when they first released the option to access $10,000 of your superannuation, they couldn't keep up with the demand for everything priced under $10,000. 

“When they announced there would be another $10,000 release, a lot of people were coming in to say, ‘I’ll take the $20,000 model, and I’ll give you $10,000 now and I’ll be back in another few weeks with the other $10,000’.”

Trade-A-Boat Editor Tim van Duyl says the pandemic has caused a massive upswell in demand — which is great news for the industry.

“It has given it a shot in the arm — better than anything seen since 2008,” he says. “Back then, the tanking of the US dollar meant importers could drive down the cost of vessels which increased competition, but this is bigger. 

“We have people prioritising their time on the things they enjoy as well as being ‘forced’ to spend money once set aside for holidays locally. The result is that states not in lockdown have seen the best sales in over a decade.”

Van Duyl says Australians are clamouring for boats of all configurations, brands and price tags.

“All types of boats are in demand — tinnies for fishing in-close are hard to find for sale and those with the ability to invest in a multimillion-dollar vessel to explore the oceans seem more energised on the idea than ever,” he says.

“People have prioritised leisure time, they are making the most of what they have and that's flowed onto all boat types.”

DEMAND VS SUPPLY

While a big jump in demand is a bonus for manufacturers, importers and dealerships, there will inevitably be a lag in delivery time for customers, says Park.

“I was at the Maryborough show recently and there was a boat dealer there who mainly sells small tinnies with outboards,” he says. “I was chatting with him and I asked him how his supply was going. He looked across his stand where he had about 20 boats up to around $30,000 and he said, ‘See all these boats here? Every single one of them are now sold. I am actually just displaying customers’ boats.’”

Van Duyl says the dealers he speaks to are experiencing something very similar.

“Oh yeah, all are run off their feet,” he says. “Trailer boat retailers are struggling to get stock from overseas fast enough to keep up with demand and locally made boats are booked out for months.”

Park says the number of enquiries from potential buyers who need finance to purchase a boat has risen sharply, for both new and second-hand models. And they remain committed even though there is a wait time in many cases.

“We have seen extraordinary times with sales,” he says. “With Credit One, the inquiry this has spurred for financing has been huge, from smaller items around $10,000 right up to $1.5 million purchases.” 

SECONDHAND MARKET BOOM

As the supply of new vessels runs thin until it can catch up, many Aussies are looking to the second-hand market in order to get out on the water quicker. Anyone selling a boat in this climate is going to do well, says Park. 

“The prices for second-hand boats, everything from tinnies to your family type bowriders and beyond, have gone ballistic,” he says. “They have jumped significantly since COVID-19. It is good for the boat industry, and good for those selling boats. 

“I think people want to get out there and start to go boating — whether they are upgrading to a bigger vessel or getting into it for the first time — but they should be aware that they will be paying higher prices than they would have 12 months ago.”

GET SET FOR A SHOWSTOPPER

After a year of disrupted events, the upcoming Sanctuary Cove Boating Festival is set to be a ripper, says van Duyl.

“Talking to the organisers, I think they are underselling how popular it will be,” he says. “There is talk of a successful show bringing in 15,000 visitors over the weekend. 

“Given that it is free to enter, at the same location that hosts the country’s best boat show, that people have been bunkered down reassessing priorities and that boating popularity is soaring, I think they'll out-do expectation in every way.” 

Park also suggests the show will be a success given Australians’ increasing appetite for leisure spending, and that signals very positive things for the industry over the next 12–18 months.

He advises attendees of the Sanctuary Cove event, and anyone in other states interested in buying a boat, to consider pre-approval for finance.

“Getting pre-approval will give you confidence that you have the money ready to go,” he says. “It is a really simple, cost-free process. It’s not set in stone either — you might find a boat that is $10,000 more expensive and, whilst there are certain criteria, it doesn’t necessarily mean that you can’t be tempted. Of course it is a very good way to also stick to a budget!”

Interested in climbing aboard the boating bandwagon? Credit One has access to a large number of financiers that can tailor a loan to suit your individual needs. Having flexibility inside the loan to make extra repayments or to terminate the loan early is fast becoming the preferred option for many borrowers while keeping costs down. The Credit One team has a strong history of getting more people into this great lifestyle as they deal with industry professionals’ day in and day out. 

For more information about financing your dream or to obtain a pre-approval prior to negotiating with a dealer or private seller, call the Credit One team on 1300 273 348, (07) 3420 7030 or visit boatloansfinance.com.au by clicking the link on the right hand side, towards the top of the page.