Boats and recreational vehicles | After the boom, sales fall

During the pandemic, Quebecers eager to escape turned en masse to boats, ATVs and other recreational vehicles. The result? Significant shortages and corresponding price increases, both for new and used vehicles. Four years later, the fervour has died down, inventories are on the rise again… and prices are falling. Here’s a look at the situation.

The boats are taking on water

There is no doubt that the period of excitement and record overbidding experienced by the leisure vehicle market (camping caravans, water sports, motor sports) during the health restrictions crisis is well and truly a thing of the past.

“It’s one of the quietest years in 35 years of experience in the boating market,” says the president of a major recreational boat retailer in southern Quebec.

Flashback. Four years ago, when most leisure and vacation establishments were paralyzed or saw their activities greatly slowed by health restrictions linked to the pandemic, many families had turned to recreational vehicles to satisfy their desire for escape and vacation.

Demand for products and services in this market had surged while supply from vehicle manufacturers and service providers was then severely hampered by difficulties in sourcing parts and labor.

This sudden disconnect between supply and demand had led to an escalation in sales prices and an unprecedented lengthening of delivery times.

“In the recreational boat market, while there was a shortage of new inventory, we saw a lot of used boat transactions at prices up to 25% higher than the usual prices for comparable boats,” says Chantal Arrelle, co-owner of Marina Lennox in Saint-Paul-de-l’Île-aux-Noix, on the Richelieu River, near the American border. M^me Arrelle is also a member of the board of directors of the Alliance de l’industrie nautique du Québec.

In 2024, the nautical market will be completely different.

“After two exceptional years in the new boat market, 2024 is one of the quietest years in 35 years of experience,” says Patrick Picard, president and co-family shareholder of Mathias Marine Sports. “But in the used boat market, things are still relatively good, particularly due to a sharp drop in resale prices, which greatly benefits buyers looking for a bargain.” It is one of the largest dealers in boating and small motorized sports vehicles established in the Richelieu Valley, south of Montreal.

Mountain biking and motor sports: preference for low-cost models

While his business is feeling the effects of the sharp decline in the nautical market, Patrick Picard says he is satisfied with the relative good performance of his commercial activities in motor sports: road and off-road motorcycles, electric bicycles and small all-terrain vehicles (ATVs), snowmobiles.

“In the overall recreational vehicle market, the segment of small vehicles, which are less expensive than boats or RVs [caravanes]is often the most resilient in times of economic slowdown and higher interest rates,” explains Patrick Picard.

“That’s what’s happening this year in our business. Sales of motorcycles in the $15,000 to $20,000 range are good, but it’s more difficult for models in the $30,000 range. In addition, demand is very, very strong for mountain and all-terrain bikes with electric assistance that were developed by motorcycle manufacturers that we were already dealers for,” says Mr. Picard.

“Since the beginning of our fiscal year in November alone, we have sold at least 200 of these e-bikes, ranging in price from $2,000 for entry-level models to $7,000 for higher-end models.”

Still. Looking at the recent financial results of manufacturers of small vehicles and motorized recreational boats, such as Quebec’s BRP (small ATVs and motorcycles, personal watercraft and small pleasure craft, snowmobiles), downward pressure is strong between the main market segments.

For example, in its most recent financial results statement, BRP reported a sharp decline in the market for personal watercraft and small “pontoon” type boats, in the order of 30% to 50% less in annualized comparison.

In the small land-based recreational motorized vehicle segments, BRP reported a decline in the ATV and motorcycle market of around 5% to 10%, also on an annualized basis.

Such an observation of the motorized leisure market by BRP has also prompted analysts to reiterate their warnings to shareholders of the company with 9.9 billion in annualized sales and approximately 6.5 billion in stock market value.

“Powersports market conditions will remain weak in the coming quarters, and the possibility that BRP will have to reduce its guidance further cannot be ruled out,” wrote analyst Cameron Doerksen of National Bank Financial in Montreal in a note to investor clients regarding BRP’s most recent earnings release.

Brakes on RVs

Meanwhile, the state of the market for large recreational vehicles (RVs, including towed caravans and motorhomes) is also proving to be very slow after the period of record growth during the pandemic.

“After the record craze during the pandemic, the trailer market has fallen back to the advantage of buyers who do not have financing issues, and who can take advantage of surplus inventory discounts at several retailers,” notes the general manager of a large recreational vehicle retailer long established in Montérégie, on the southeastern outskirts of Montreal.

According to sales figures compiled for the RV Dealers Association of Canada (RVDA Canada), after peaking at around 45,000 to 52,000 units sold during the peak pandemic years (2020 to 2022), the number of units sold in 2023 has fallen below the 35,000 unit threshold.

Furthermore, for a glimpse of the state of the market in 2024, preliminary data collected by RVDA Canada for the first three months of the year suggests a second consecutive year of marked decline in sales, perhaps below the 20,000 unit threshold.

“In the RV market as a whole, it is the segment of small trailers under $40,000 that is most affected by the decline in sales after the exceptional period during the pandemic. The decline in this segment is not very surprising if we consider that their buyers were mainly middle-income families, who could afford to buy and use a small trailer for their leisure activities before the surge in inflation and the sharp rise in interest rates,” says Marc Rémillard, CEO of Roulottes Rémillard, in Saint-Jean-sur-Richelieu, on the southeastern outskirts of Montreal.

“On the other hand, in the market for larger RVs, such as fifth wheels, large travel trailers and motorhomes, sales are still relatively good. We are seeing a slight drop in demand, but older and more financially secure buyers remain active in the market. In fact, they are best placed to take advantage of the return of price and financing cost promotions in the new RV market. They can also take advantage of the very good discounts on RVs from model years 2021 and above that are now in surplus inventory at dealers.”