Favorite Summer Toy of the Rich Is Getting Downsized

Is it safe to go back in the water, so to speak, of boat ownership? Boat sellers are attempting to win over cautious consumers with cheaper, smaller models.

There are plenty of phrases about boat ownership—nearly all of them arguing against it. There’s one about how a boat is essentially a hole in the water, in which you pour your money. Another holds that “BOAT” is actually an acronym that stands for Break Out Another Thousand. You get the gist: A boat is a money pit.

So it’s no wonder that powerboat sales fell off a cliff (or waterfall, if you prefer) when the Great Recession hit and disposable income shrank or disappeared for millions of Americans. Countless owners eagerly tried to unload the boats that they rarely used, could no longer afford, and regretted buying, flooding the used market and causing prices to crater. The abundance of less expensive gently used boats for sale—plus the generally accepted knowledge that owning a boat is expensive, and therefore is an especially dubious proposition during times of economic uncertainty—has resulted in an especially dramatic collapse of new boat sales.

Before the recession, around 800,000 used powerboats sold annually, compared to 300,000 new ones, according to data cited by the Milwaukee Journal Sentinel. While the number of used boats has remained fairly flat, sales of pricier new boats have tanked, dipping to about 150,000 in 2010. The number of new units sold annually in the U.S. remains well under 200,000 still. Things have been so rough that the Minneapolis Star Tribune reported that 35% of boat dealers closed during the recession.

As Bloomberg News noted, powerboat sales have seen some recovery lately. Last July, sales were up 19% compared to the same month in 2012. But there’s something different about the typical boat sale nowadays: It’s smaller and cheaper than the average pre-recession model. “What really stands out in the economic recovery thus far is that demand for smaller boats is coming back pretty nicely,” Michael Swartz, a Sun Trust analyst, told Bloomberg.

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After conducting a 15,000-person survey, the Brunswick Corp., which is the country’s biggest recreation boat builder, has committed to the idea that every new model it introduces should cost less than the old one it’s replacing. “People still want to boat, and they’re always looking for a different boat, but they’re not buying new right now because they think the cost vs. the value they receive is out of whack,” Brunswick chairman and CEO Dustan McCoy explained to the Journal Sentinel.

Because people are wary of spending too much upfront for what they hear ad nauseum is just the tip of the iceberg in terms of the costs of boat ownership, “consumers want more but expect to pay less,” McCoy told the Star Tribune. “They want more standard features without a higher price. It’s happening across the industry.”

While consumers want some bells and whistles with their summer toy, it’s more important that they feel like they’re getting good value on what’s frequently bashed as a poor use of discretionary cash. Pontoon boats, which appeal to first-time buyers and 99%ers, have been selling well, as have personal (one-person) watercraft like the Sea-Doo Spark, which starts at $4,999—around the same price of the typical used boat.

The upscale boat market has come down to earth as well. In the same way that Mercedes introduced a lower-priced line of cars last year, MasterCraft, a high-end brand that has been selling boats starting at $80,000, is rolling out a new entry-level model starting in the high $50s.