Ripples: Boat Makers Ride the Market Waves, Good and Bad

Feature image: The overall picture shows a market still adjusting to post-pandemic realities, according to a recent report. (Photos provided)

Even as the COVID-19 pandemic’s headline-grabbing days recede farther into the distance, its impacts continue to ripple through industries, sometimes in vastly different ways. While the hospitality and travel markets can breathe a sigh of relief at recovering numbers of holiday jetsetters, that enthusiasm cannot be found in every corner. Luxury items and lifestyle investments ideal for passing the time away from crowds just a few years ago — that in-ground pool, for example, or home gym setup — enjoyed a spike in demand during the pandemic that has since been on a sharp correction course. For boat manufacturers and dealers, the recent past has been a similar tale of souring demand and economic headwinds, though it seems there is still reason for positivity in the coming years.

“I think that the industry is holding steady as a whole,” said Mark Copley, marketing director at Xpress Boats, which produces all-welded aluminum boats in Hot Springs. “Obviously, everybody would love for it to be like it was during COVID, but I think we understand that that now is an abnormal situation, not a normal situation.”

Xpress Boats manufactures all-aluminum boats from its plant in Hot Springs.

According to boating marketplace operator Boats Group, 2023 marked “full normalization” of the boating market, showing similar trends taking place between 2023 and 2024. High interest rates and inflation kept consumer demand low, and global searches related to boat purchasing dropped by 7.6 percent in the first half of 2024 compared to the same time frame last year.

“Despite some positive indicators,” such as an increase in new boat sales, “the overall picture shows a market still adjusting to post-pandemic realities and changing economic conditions,” the report states.

“Everything comes in cycles, and with every downturn of the economy, there’s going to be an upturn in the economy,” Copley said. “Now how quick will it be? We don’t know, but we’re cautiously optimistic that we’re seeing interest rates come back down. Hopefully, we’re seeing buyers having a little more confidence, and the stock market has responded well to the new administration coming in, but we also know those things can change, as well.”

Of course, not all products — nor consumers — are equal, and the aggregate data consists of everything from megayachts to skiffs. That makes for different outcomes depending on both the particular customer and the product they are after. High-end buyers might not be looking at interest rates when shopping for their next craft if they plan to pay in cash, but the average consumer, who will likely be financing the purchase, is all but sure to keep it front of mind.

Vexus manufactures its boats in Flippin.

“The credit buyer has been forced to withdraw from the market during the rapid rise,” said Keith Daffron, president of Flippin-based Vexus Boats, which produces both fiberglass and aluminum boats. “It’s not that rates are historically high, but the shock of the current rate versus two years ago prohibits many purchases.”

With that in mind, Copley and Daffron agreed that lower interest rates are a crucial development and good news for both manufacturers and their dealers.

“It’s been very positive to see the rates start coming back down,” Copley said. “I think that’s going to have a positive effect not only in the boating industry but anything else where people are borrowing money. It frees people up. They can spend a little more, or they can let go of dollars they thought that they couldn’t let go of once the rates come down.”

While the stock market has reacted positively to the idea of a second Trump administration, some of the president-elect’s promised economic policies have the potential to complicate matters for manufacturers and, as a result, consumers. Economists across the political spectrum have noted that Trump’s proposed blanket tariffs — potentially in the double digits on imports from Mexico, Canada and China — threaten to throw an entirely different wrench into the equation.

“It’s beginning to become a concern,” Daffron said of the potential for new and increased tariffs. “Simply raising the cost of components flowing into this country will have a negative effect on demand, as the consumer ultimately pays this tariff. It appears to us that it will simply add to the inflation that we have fought these past two years.”

The current supply chain still has slightly longer-than-usual lead times but has mostly normalized since the pandemic and remains manageable, Daffron said, adding that “having a healthy distribution channel is critical, and we continue to have sales turns that outpace the market and lower levels of distressed inventory.” While both boat brands benefit from being made in Arkansas and utilize many U.S.-made parts, sourcing materials such as aluminum depends largely on where the best prices can be found, making it hard to know exactly how much of the supply chain would be impacted by tariffs.

“I think one of the things you have to do is you have to be smart as far as your supply chain and how you purchase,” Copley said, “if you can afford to purchase parts that you know you’re going to need down the line and when you can get a better price on things, you get them in. … We have a really good supply chain of people in charge of that, that makes sure that we’re making the right buy on things. That helps us keep the cost down for the consumer.”

Boat sales are not entirely beholden to the whims of economic policy, however, and Copley noted other cost-saving measures that can entice customers, such as opting for a less expensive motor.

“We’ve been very blessed in that our No. 1 selling boat is actually a bay boat,” he said. “It’s a 20-foot bay boat. We’re in a little unique position in that with aluminum, you’re not going to pay as much as you would with a fiberglass, so there’s a cost saving.”

“As a matter of fact, we released a new boat this year, the H210 Bay, which is a 21-foot bay boat that has all of the necessary things of a more expensive boat, but we’ve saved money where we could. It’s an economically priced boat, as well. We’re trying to do things to make it more affordable for people, but we still offer for those who want to spend more that opportunity if they want to upsize on a boat.”

Rig staging at the Xpress plant in Hot Springs.

Copley and Daffron also emphasized what might be the most important piece in stoking demand: the quality of the product itself. Interest rate reprieves are certainly welcome, but remaining a sought-after product in the minds of consumers regardless of the economic outlook is an almost volatility-proof way to encourage sales.

“One of the things that we pride ourselves on is innovation,” Copley said. “We want to be that company that is constantly innovating and not just standing still and saying, ‘Here’s the same old boat we made 15 years ago.’ We want to continue to be the best brand out there.”

“We’re seeing greater demand for our fiberglass product, much being the result of new and innovative models introduced in 2024,” Daffron said. “We predict 2025 to show a slight increase in demand for the premium product we produce.”

Regardless of what the next four years and beyond might bring, both manufacturers stand to do well in the long term thanks to the strength of the industry in their home state. The Natural State’s place as a recreation and hunting destination with year-round opportunities for catching a variety of fish makes for a nearly built-in demand for the watercraft manufacturers that make it possible.

“We’re trying to build the things that people want,” Copley said. “We’re trying to be innovative, but we’re trying to be affordable. One thing that we’ve learned is that people want to fish. You get out on the water, all you’re thinking about is water. It’s a great stress release, so that’s what we’re hoping for, that people are going to continue to want to do things in the outdoors. We give them opportunities, from all kinds of different price ranges, where they can afford that.”

“The fishing industry as a whole is in a healthy place,” Daffron said. “Conservation efforts by the states, particularly ours, ensures that the fisheries are healthy. Coupled with the excitement around high school and college level fishing tournaments and a genuine desire to be outdoors, we feel good about the future.”