Fresh off the boating industry's first significant sales increase since the recession, dealers are seeing a boost in traffic in the aftermath of super storm Sandy's destruction as consumers begin their search for replacement boats.
"We had a rush right after Sandy because there were people who were actively starting to look to replace their boats even though they had not been actually called a totaled loss, but they anticipated that, so they started shopping early," said Dick Curry, a salesman at Staten Island Yacht Sales. "And we are feeling a surge of people making phone calls to replace their boats."
The flurry of Sandy-related traffic comes as the U.S. boating industry has finally started to see the tide turn for sales growth. Last year, sales grew an estimated 10 percent after a tepid three-point rise in 2011, according to the National Marine Manufacturers Association.
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This increase follows a sharp decline in new boat sales during the recession when sales dropped by nearly half. Pre-owned boat sales fared better, resulting in only about a 15-percent sales drop during the period.
In response to the sales decline, manufacturers began to place more emphasis on building boats only when dealers ordered them to cut back on inventory.
"Last year, dealer inventories were pretty lean," said Thom Dammrich, the association's president. He added, they will probably increase inventories following a good 2011.
"This year I think there are probably going to be more boats available in inventory, but it's still going to be buy now if you want it available in spring," he said.
Boat sales last year were driven by an improvement in economic conditions, including consumer confidence and the housing market, as well as growing interest in recreational boating and new, more affordable, boat designs. While these trends should continue, Sandy's destruction is also expected to spur sales.
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The storm destroyed or damaged more than 65,000 recreational boats, resulting in losses of about $650 million, according to the Boat Owner's Association of the United States — the worst since the group began keeping track in 1966.
The traffic boost that dealers have reported seeing so far because of Sandy is not without precedent.
"If you look back at Hurricane Katrina in 2005, we saw sales in Alabama, Louisiana and Mississippi spike about 30 percent for new boats and boat parts and accessories," Dammrich said.
Boat Show Season Kicks Off
At the Progressive New York Boat Show, dealers and prospective buyers, still reeling from Sandy's damage, browsed the latest offerings. Dealers rely on these events to drum up business since typically, anywhere from 40 to 60 percent of sales result from orders at the boat shows or leads that stem from them.
One such visitor, Jim Gennosa, an electrician from Oceanside, N.Y., came to the show with friends to see the boats after losing one of his own during the storm.
"The larger one was a 33-foot Coastal Wellcraft, and we took that out of the water the night before the storm, figured it would be safer on land, but found out the next day, the marina, all of the docks and half the building were gone," Gennosa said. "So the boat was totaled. We found it in somebody's yard about a half of a mile away."
Gennosa's other boat, a 25-footer he's owned for more than two decades, was tied to a floating dock behind his house and weathered the storm well.
Since Gennosa's insurance company has already reimbursed him for his destroyed boat, he's in the market for a new boat again.
"I'm looking around for another larger one," he said. "If I can get a good deal — a real good deal — I'll buy one. If I can't, I'll wait."
Deal hunters, like Gennosa, are in luck. To spur sales, manufacturers are offering a wide range of incentives, according to dealers in the Sandy-strickened Northeast.
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"Some of them, we are doubling the cash incentives," said Matthew Barbara, MarineMax's regional president for the New York City area. "Some of them, we are giving slips. We are just trying to be as creative as we can."
Although MarineMax failed to turn a profit from 2009 to 2011 due to high inventory and high expenses, Barbara said it was able to stop "the slide down" last year as consumer confidence picked up. But he said the lack of settlement checks for some customers has been an issue.
The Waiting Game
For boat owners who haven't received insurance checks yet, the incentives may not be enough to spark a sale yet. Although Barbara said his company has not seen a Sandy boost yet, he forecast that there will be an uptick down the road once people settle their claims.
"A lot of them are still waiting for their boat's condition reports to come back from the adjusters and to get their settlements from the insurance companies," Curry said.
For those whose boats are not totaled, Curry foresees many headaches due to a surge in repair orders.
"We quite frankly are not prepared for that kind of a surge because the economy itself has caused us to lay off quite a few people — many of whom have gone out and found other jobs so there's going to be a big wait on the average consumer's part as a boater to get their boat fixed because there are just not a lot of people around," Curry said.
Additionally, the service departments at many dealers and marinas have been wiped out due to the storm, adding further pressure to the industry's ability to service repairs.
Once Sandy-damaged boats do get repaired, many will eventually make their way to the pre-owned market. Before paying for these boats, Dammrich urged buyers to hire a boat surveyor to examine potential purchases to see if they are sound again.
"That person can tell you if the boat was damaged and repaired and scan and tell you if there are any problems with the systems," he said. "Particularly now in the Northeast, buying a pre-owned boat without a boat survey would be ill-advised."
Despite the repair worker shortage, there is good news for the boating industry sales ahead if the NMMA's forecasts prove true. The association predicts sales will rise by 5 to 10 percent this year provided the economic conditions continue to improve and there is a sustained increase in outdoor recreation participation.
Although Northeast enthusiasts have been tested by Sandy's devastation, Staten Island Yacht Sales' Curry also sees a bright side to the damage.
"There's always somebody who benefits from somebody else's losses," he said. "But we've lost a lot. Our industry has, and we as individuals, we as a company have lost a tremendous amount of money — and us being able to help people replace their boats helps us be able to replace the money that we've lost. So there's kind of a silver lining to a dark cloud."
-By CNBC's Katie Little; Follow her @katie_little_
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