National Liquidators’ Matthew Amata says there’s a disconnect between the number of boats repossessed from failed dealerships and those showing up in his yard and those of other boat remarketers.
Repossessions in the fourth quarter at National Liquidators, one of the nation’s largest outlets for auctioning repossessed boats, were up just 9 percent over what they were for the same period in 2008, says Amata. Yet inventories from bankrupt dealerships continue to grow.
Amata says a lot of the boats that floorplan lenders repossess from distressed dealerships wind up at other dealerships, where they sit in the back of the showroom while dealers push their own inventories out the door because they are holding floorplan loans on these boats.
Inventories of boats from distressed dealerships are “increasing significantly,” Amata says. “And I suspect there will be increased levels of wholesale repossessions through 2010.”
Amata believes the best way to stabilize the boat market is to move repossessed inventory now instead of letting it sit in dealer showrooms. He says dealers are not geared up to sell repo boats. “It is our core business,” he says. “Give us a boat and, on average, we sell it in 64 days. That’s a tremendous statistic.”
Amata says National Liquidators has been selling boats at about the same rate as it has been taking in inventory, while operating at just 75 percent of capacity. He believes the remarketing industry has the capacity to move more boats from failed dealerships in 2010 without dramatic disruptions to the marketplace.
In addition to boats from failed dealerships, he says he and other remarketers have been seeing more repossessions of privately owned boats, especially big ones over $500,000. “That business is exploding,” he says. “Just this week alone [in mid-January], we had inquiries on a half-dozen [big boats].”
With repossessions still on the increase, used-boat prices could “dip slightly” again as the slow winter sales season goes forward, says Lenny Sims, a vice president at used-boat price guide NADAguides.com.
The large number of repossessed boats on the market has had a depressing effect on used-boat prices, though not nearly as much as one might expect. In 1995, National Liquidators was selling most of its repo boats at 98 to 102 percent of “book” price, Amata says. “Now we’re selling at 90 to 92 percent of NADA.”
Amata says lenders actually have “held the line pretty well” on the pricing of repossessed boats, but there is a glut of some brands in the repo market — Sea Ray, for one. “We’re not getting close to book on those,” Amata says.
Hinckleys and Tiaras have been doing a lot better and selling closer to book value because there are a lot fewer of them in remarketers’ inventories.
NADA’s Sims says his price guides, updated monthly online, reflect the results of surveys of used- and new-boat sales from some 285 retail dealers and remarketers.