The boating industry in Canada has seen its fair share of challenges in recent times, and from the viewpoint of a would-be boat buyer or owner looking to upgrade, these challenges are significant. In this blog post, we’ll explore some of the key obstacles facing the industry and how prospective boat buyers can make the most of the current situation. Despite the hurdles like higher interest rates, inflation, oversupply of inventory, and seasonality, there are ways to find the right boat at a reasonable cost.

The Impact of Higher Interest Rates

One of the foremost challenges in the boating industry is the rise in interest rates. For consumers, this may seem like a discouraging factor, as it can potentially increase the cost of borrowing for a luxury like boats. Or the increased cost of borrowing elsewhere like car loans, lines of credit and mortgages can leave minimal room in your budget for such a luxury. While you can take the ‘wait and see’ approach toward interest rates, some dealers might be able to help find or offer special term interest rates to help weather times of higher interest rates. Dealerships can sometimes ‘buy down’ the banks interest rates to something more reasonable than the current 8-10% we are seeing today, which makes your boat ownership that much more affordable. Buy downs can ‘lock-in’  a lower rate anywhere from 12 to 36 months. Plus, boat financing is open-ended for the most part which means you can make large or small sum payments whenever you want without penalty or term change. That way if you’re able to negotiate a short-term lower interest rate with your dealer, it allows you to pay off or refinance the loan when rates are lower for a better long-term financing solution. 

Over Inventory Saturation

One of the significant challenges currently facing boat dealerships is the over-supply of 2023 inventory. This issue stems from the unique circumstances of the COVID-19 pandemic. During the pandemic, there was a surge in demand for boats coupled with supply chain slowdown, ultimately leading to a shortage of boats. While some segments were worse than others, there was an overall inability to meet the demand of the market. Dealers responded by ordering more boats for 2023 to meet this demand. However, as the market corrects itself post-pandemic, the demand is not as high as expected, leading to an oversaturation of boats in dealers’ inventories meaning more carryover of ‘last years models’ than normal. This is beneficial to the consumer as it turns to more of a ‘buyers market’ with dealers trying to move through their older inventory units to make room for new. But still, do your research! A deal is not a deal if it’s not on the right boat. It’s still important to buy the right boat with the right options, colours, etc. to suite your family’s needs. And don’t rule out a 2024 boat just because you ‘think’ it will be more money, some dealers will be able to offer a comparable price on a 2024. Plus if your boat is ‘1-year newer’ when you buy it will be ‘1-year newer’ when you sell it which can get you up to 15% more resale value. 

Understanding Inflation’s Role

Inflation, too, plays a role in making consumers apprehensive about big-ticket purchases like boats. We’ve all felt the impact of inflation whether it’s at the gas pump, grocery store or buying a car. Not only do the luxuries in life get more expensive but higher costs of everyday items leaves limited room in your budget for the ‘fun stuff.’ The combination of rising prices, reduced supply and increased demand created the ‘perfect storm’ in the marine industry for unprecedented price increases.  It was costing manufacturers more to build, dealers had to pay more for stock and ultimately customers were paying more for their products. With that said, now that the years of low-supply and high demand have corrected to more normal levels, some manufacturers and dealers are offering rebates to help combat the higher prices of goods and production so consumers can still get a reasonable and fair price on the right boat. Look for dealerships that have adopted transparent pricing strategies so you know exactly what you’re getting for your money and if it’s worth the investment.  

How Currency Exchange Effects Boat Prices

This is often overlooked by many boat buyers because it’s seen as something outside of their control. But did you know that not all boats are bought equally? Most boat manufacturers are based in the US which means they are invoiced to dealers in USD so depending on what the exchange is at the time it will change what price the dealer pays for the boat but ultimately will affect what the consumer pays! If you’re getting quotes for a new boat this year, ensure your dealer is transparent in what exchange rate they are using and how it affects your final price. 

What Buyers Should Look For

To make the most of this situation, prospective boat buyers should keep a few key points in mind:

1. Seek Fresh Inventory: Dealerships that have a limited number of 2023 models left and are introducing more 2024 models are likely to offer fair pricing. They understand the need to move inventory and adjust their prices accordingly. Remember your resale value is up to 15% more on a boat that’s one year newer! 

2. Current Incentives: Buying from dealers with up-to-date inventory means you’ll have access to the latest incentives from both dealers and manufacturers. This can help you get more value for your money.

3. Transparent Pricing: Look for dealerships that are open about their pricing and financing options. Transparency helps buyers make informed decisions and ensures they are not overpaying for their boats.

The challenges facing the boating industry in Canada are real, but with the right approach and assistance, prospective boat owners can turn these challenges into opportunities to get a good deal on the right boat. Seek out dealerships with fresh inventory, transparent pricing, and flexible financing options. By doing so, you can still fulfill your dream of owning a boat and enjoy the open waters sooner than expected without breaking the bank!