• by Karl Greenberg , July 1, 2008

There has been a lot of ink and tears spilled over how gasoline prices are affecting the automotive market. But there is at least one other corner of that market where gasoline hikes and consumer confidence declines are also having a major effect this year: recreational boating.

Across the board, from kayaks to cabin cruisers, the industry is seeing sharp declines in sales this year.

"I don't think there's any segment that won't be affected," says Thom Dammrich, president of the Chicago-based industry trade group, the National Marine Manufacturers Association (NMMA). "Basically, new boat registrations were down about 20% for the quarter; 9% for a rolling 12-month basis, in basically every category," he says.

Dammrich says that the largest segment of the market--outboard-motor boats--are suffering less than other segments, but are still down by around 17% in the first quarter versus the quarter last year. He says the second and third quarters are the two biggest sales periods for boats.

But, says Dammrich, the problem isn't just gasoline prices. "In fact, that's the smallest part of it. The big impact is coming from the decrease in wealth people feel in the decline of the value of their homes."

Indeed, the industry began feeling the pinch last year. According to NMMA's "2007 Recreational Boating Statistical Abstract"--which culls data for the organization's roughly 1,700 boat, engine and accessory member sellers--the industry generated $37.5 billion last year, a decrease of 5% from 2006.

Traditional powerboat unit sales last year were off 8%, which was actually a lot less than the 15% drop the industry had predicted. Gasoline prices by themselves don't appear to have had a major influence on actual boat usage by owners. This year, NMMA and Michigan State University's Recreational Marine Research Center conducted a joint survey of 2,400 recreational boaters to determine how fuel prices might change their behavior.

The study found that only 1% of boat owners don't plan to use their boats in 2008 due to the high cost of fuel, and that 3% of boaters didn't use their boats last year due to the same reason. But overall usage has not changed, based on respondents. The groups say boaters used their boats as often as ever, with the average usage in 2007 remaining steady with that of the past three years.

If there is good news, it's that Americans aren't exiting boating as an activity. Per last year's data, the boat population increased by 60,000 to 17 million. The abstract reports that Americans bought 395,200 boats last year, and that over 74% of boats are owned by individuals or families with a household income under $100,000.

Dammrich says boat sales are concentrated on coastal states, including the Great Lakes states--accounting for about 25% of boat sales. "But the biggest markets are Florida and California, and those are the states hardest hit by housing issues and decline of housing values," he says. He says Texas, with its strong energy markets, has been buffered from some of those declines.

The NMMA launched an industry promotional campaign in 2006, "Discover Boating," to promote the boating lifestyle, including DiscoverBoating.com, which includes a feature that allows one to compare the cost of a marine hobby versus activities like golfing, motorcycling and going to pro sports events. "We are continuing to promote the boating lifestyle," say Dammrich. "And manufacturers are pulling out every stop that they can think of to promote their products."