Business & Real Estate

Underwater during the recession, boating/marine industry is riding a wave of sales gains

Sally Mello and her husband, Mike, were in a partnership that folded during the recession, but they started again in 2010 as Mello Marine in Rancho Cordova and business is again booming.
Sally Mello and her husband, Mike, were in a partnership that folded during the recession, but they started again in 2010 as Mello Marine in Rancho Cordova and business is again booming.

Sales of boats and marine products plunged deep underwater during the recession, but the industry has roared back in the past couple of years in the Sacramento area, throughout California and nationwide.

Experts cite various factors for the rebound: an improving economy, looser credit, increasing numbers of baby boomers making big-ticket purchases and a surge in the popularity of on-the-water activities enjoyed by younger generations.

“We fell off a cliff about five years ago,” said Dave Geoffroy, vice president for the western region of the National Marine Manufacturers Association. “Homes were going into foreclosure, and people were making hard choices. On top of that, manufacturers didn’t build many boats in those years. But we lived through it.”

Geoffroy said industry sales have improved for the past several years across the nation. In California, he said, the rebound started in earnest a little more than a year ago.

NMMA said sales of powerboats totaled 161,130 units nationwide in 2013, the most recent year for which full statistics are available. That was up 2.4 percent from the previous year. The association is projecting a 5 percent to 7 percent year-over-year increase in 2014, once all the numbers are tabulated.

In California, NMMA said sales of power boats, engines, trailers and accessories in 2013 totaled $451 million, up a nation-leading 23 percent over 2012. Total boat registrations in the Golden State in 2013 were 820,490, up 6 percent over 2012.

It’s a big change from the doldrums of the recession. Some Sacramento-area boat/marine operations went out of business from 2008 to 2010. Others suffered mightily.

Sally Mello, co-owner of Mello Marine at 2504 Mercantile Drive in Rancho Cordova, remembers the downfall.

Mello and her husband, Mike, were part of a partnership of stores, and she said “we were making money hand over fist” before the recession. By 2008, the bottom had dropped out of the economy and the boating/marine market, and the partnership subsequently folded.

Mello said she and her husband worked hard to save money and other assets, which enabled them to reopen in 2010 as Mello Marine in a closet-size space across the street from their current location.

The new business was helped along by an emerging on-water recreation activity that captured the attention of increasing numbers of water sports enthusiasts across the nation – paddleboarding. Mello Marine stocked paddleboards and related accessories of all stripes as the craze gained steam. The store also touted expert instruction for those who wanted to take up the activity.

It paid off. New paddleboard sales went from a handful in 2011 to about 300 last year. Paddleboards generally cost between $700 for a basic version up to around $4,000. Lightweight carbon fiber boards and paddles have opened the wallets of serious paddleboarders. Mello herself is a top-flight paddleboard racer.

One of the best things about paddleboarding is that it covers a wide age group, from 16 to 75 by Mello’s reckoning.

Powerboats are another ballgame. Mello said the age demographic for powerboat buyers is about 50 to 70. Mello Marine sells Centurion-brand powerboats, and the price range for a new boat is about $70,000 to $120,000. Even so, sales have boomed of late.

Mello said she sold five new boats in 2013, but that jumped to 22 last year. Used boat sales went from 40 to 60 year over year. Two months ago, Mello Marine moved into a 10,000-square-foot space, where colorful boats and paddleboards are exhibited side by side. The shop also includes a freshly stocked accessories room.

She said powerboat sales have been aided in part by greater interest in wakesurfing, where a surfer trails behind a specially designed boat, surfing in the boat’s wake. Mello also noted that comparatively older buyers of powerboats are not necessarily purchasing them solely for their golden years: “We’re seeing grandparents who are buying boats for the kids.”

Most significant, Mello said, “banks are lending again. I can’t stress that enough.”

She said getting a loan for a new boat was virtually impossible in 2010, and it continued to be a struggle into 2013, with perhaps 20 percent of prospective buyers able to get financing. In 2014, Mello said that jumped to around 50 percent.

Craig Larson, who oversees sales at Larson Marine at 11361 Folsom Blvd. in Rancho Cordova, agrees that economic conditions have improved dramatically “and business right now is good … that 2008-09 period was a disaster.”

The family-run Larson operation has been around since 1969 and is marking its 20th year at its current site in 2015. Craig Larson, 43, says that established presence helped the business stay afloat during the tough times.

“No question that repeat customers were a huge deal for us. Our customers stuck with us, and that really helped,” he said.

While the current weather is not ideal for boaters, the boat show season has kicked off, and the prime boat-buying season in California will run from now into early April. At last weekend’s San Francisco Boat Show at Pier 48 and McCovey Cove adjacent to AT&T Park, organizers said crowds and exhibitors were up 20 percent over last year.

Jorgen Bateman, show manager of the March 12-15 Sacramento Boat Show & Off Road Exposition at Cal Expo, said dealers in San Francisco “were selling products, not just talking.”

Bateman said “we’ve already outgrown our footprint” for the March show in at Cal Expo. Consequently, he said a 22,000-square-foot tent will be erected on the grounds to accommodate the overflow of exhibitors.

“I think there are several things going on now,” Bateman said. “Low gas prices have certainly helped, and the economy is a little better. People are not as cautious as they were two years ago. They have some disposable income and are more confident about going out and making that investment in a lifestyle.”

The NMMA’s Geoffroy agrees: “I think we’re seeing pent-up demand, and customers are getting more confident as times have gotten better … We’re seeing more people starting out with the smaller items, paddleboards, maybe a kayak or a canoe. That’s the nice thing; there’s a lot of product available for even younger buyers.

“For older buyers, there’s a lot of new green technology coupled with more fuel-efficient boats. And with gas prices being so low right now, that has helped.”

Call The Bee’s Mark Glover, (916) 321-1184.