- The Washington Times - Sunday, June 8, 2008

Washington-area yacht dealers are hoping a choppy economy doesn’t discourage boat lovers from taking a walk around the new marina at the National Harbor Yacht Show.

The show, which ends Sunday, features dozens of million-dollar yachts available for sale or charter. Visitors also can peruse displays showcasing marine engines, electronics and hardware.

Boat sales have been declining in recent months as debt-strapped consumers rein in discretionary spending. Sales of new boats declined in nearly every category last year, and new boat sales were down 8 percent overall, according to the National Marine Manufacturers Association.

The Boat Owners Association of the United States reported that its membership rolls have increased about 1 percent this year, but the number of people who own boat insurance policies has dropped more than 10 percent - a strong indication that boat ownership has fallen recently.

“Anybody who is trying to sell a boat right now is in a tough spot,” said Bill Oakerson, chief executive officer of the association.

Yacht dealers are slashing prices to jump-start business this weekend, offering 10 percent rebates, extending warranties from three to five years and even cutting boat loan rates from 6 percent to 0 percent for the first four years.

“It’s a buyer’s market,” said Scott Harvey, general manager of Clarks Landing Yacht Center, which has locations in New Jersey, Maryland and Virginia. In his 15 years in the boating business, Mr. Harvey says his company has never launched a more aggressive campaign to woo buyers.

Mr. Harvey says his dealership’s sales haven’t dropped as dramatically as they have at other places, but it is still offering a variety of buyer incentives. For certain boats, his dealership is offering free gas cards worth between $1,500 and $5,000.

Mr. Harvey says buyers are showing interest in the gas cards. With marine fuel selling for $4.75 to $5 a gallon, many potential boat owners are wary of filling up gas tanks that can hold as much as 500 gallons.

High gas prices are only part of the problem, said Stuart Pumpelly, owner of North Atlantic Marine Group in Woodbridge, Va. A struggling economy and weak dollar contribute as well.

The slow economy has discouraged some buyers at home, but the declining dollar has created a bigger market overseas, Mr. Pumpelly said. Surging foreign currencies are enabling overseas buyers to gobble up yachts here at discounted prices.

“They’re very different from American buyers,” he said. “They know what they want when they call, and they buy boats. It just seems to be a much easier sale.”

Even with the new customers from abroad, Mr. Pumpelly said his company has seen sales drop about 20 percent over the past year.

“The whole industry has slowed down,” he said. “So we’re all trying to find new ways to invite buyers to our product.”

While traditional boat dealers have watched their sales sink, Todd and Paula Nelson say business has never been better for them. The couple own a fractional boat membership company, SailTime Licensing Group, which allows customers to buy a share of a yacht for a fraction of the price of an entire boat.

“People may not want to spend hundreds of thousands of dollars on a boat, but they’re willing to spend $10,000 to $20,000 with us,” Mrs. Nelson said.

Fractional membership is flourishing because people are afraid to spend money on big-ticket items in the current economic environment, Mrs. Nelson said, adding that her Annapolis company’s sales have increased about 40 percent compared to last year.

Boating may be expensive, but people still want to do it, she said.

“I think the worse the credit crunch gets, the better off we are,” Mrs. Nelson said.

Boat lenders haven’t had to tighten the leash on lending as much as auto and mortgage lenders have, said Jim Coburn, president of the National Marine Bankers Association. The average boat loan totaled $141,000 in 2006, according to the association’s most recent report.

“Many lenders in other industries developed poor habits and got greedy,” said Mr. Coburn, who is also first vice president at Flagstar Bank in Troy, Mich. “There weren’t as many [abuses] in the boating industry, so the loans are still there.”

Mr. Coburn believes the unstable economy has caused people to be wary of purchasing boats, but he expects the boating business to right itself when the economy recovers and gas prices settle down.

General admission tickets for the National Harbor Yacht Show sell for $16; VIP tickets cost $40. The VIP package includes complimentary finger food and beverages as well as tours of Old Town Alexandria and Mount Vernon at reduced rates.

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