Q&A: GE Capital’s Bruce Van Wagoner on today’s marine industry, Part I
As part of a recurring series where Boating Industry interviews industry leaders, we recently sat down with Bruce Van Wagoner, president of the marine group at GE Capital Commercial Distribution Finance. Van Wagoner provided a look into today’s boating industry, as well as his outlook on what he deemed encouraging times ahead.
The following is part one of a two-part series with Van Wagoner.
What is the current state of marine dealer inventory?
We feel very good about it. Dealer inventory is currently about 1/3 of the peak that took place in 2006. That is a pretty dramatic reduction, but frankly, shipments and retail are in real good alignment today. What is being built is being shipped and eventually being turned.
The dealers are currently carrying approximately 13 percent of their product in excess of one year. They are paying curtailments in line with the program so the industry inventory out there is very healthy. Dealer performance and profitability are also being reported as very good.
What is the current state of aged inventory in the market?
Aged inventory peaked in excess of 50 percent in the market in about 2009. Since then, it has gradually come down and during all of 2012 we were hovering right around 13 percent, which is extremely healthy. You don't want it to go too far below that because you will find that dealers are not carrying adequate inventory at that point.
How have dealers adjusted their inventory mindset since the recession?
We all look at the challenges that we have in running a business and learn from them. The industry was built to unprecedented levels due to consumers feeling real-estate rich or stock-market rich. Combining that with the overly aggressive retail programs, the market got built up bigger than it should have.
In the current environment, slow growth will be the norm. Dealers and manufacturers learned some tough lessons during some economic stress. For those that survived, they are in much better condition and position to be profitable.
Do you think we’ve reached that “new normal” or do you think people can expect further industry growth?
We are in a slow growth period. I see this as a “new normal.” Anybody who thinks there is going to be this explosion of boat sales is mistaken. We will see slow growth, and most manufacturers and dealers are acting very responsibly. They want to see improvement and they constantly strive to do more business, but they are realistic and are running their businesses in a manner that is to their benefit.
What was your reaction to the 10-percent growth in new boat sales, as estimated by the National Marine Manufacturers Association?
We were very happy, but that is across the entire industry. When you look at it by segment, some were stronger, like the pontoon, aluminum, and ski boat segments. They had product go in and out a lot faster than others.
The sterndrive segment was a little more challenged, so those dealers and manufacturers had to adjust to flat-at-best results. There is exception to that where manufactures created new product that was appealing in the marketplace that did better. Overall, being up 10 percent was great for the market.
Note: Look for part two of our interview with Bruce Van Wagoner on Monday at www.boatingindustry.com.