When the National Marine Manufacturers Association announced last week that sales in 2007 saw the largest decline in a decade, it begged a simple question: why have boaters stopped buying?

While the reason may be different for every consumer – fuel costs, tight credit, increasing prices – industry experts say that it all adds up to a high level of economic uncertainty. And when buyers are uncertain, they keep their wallets closed.

But experts say that the downturn is not hitting all segments of the market equally. While sales of smaller, less-expensive boats have been hit hard, some dealers say that larger, premium-brand boats have continued to sell. And at the end of it all, there may be some opportunities out there for committed buyers.

Unit sales for sailboats were 11,800 in 2007, about half the 22,500 delivered in 2000. "Cyclical ups and downs happen and the psyche of the consumer is always important in these cycles," said Jim Hubbard, chief of staff at Mercury Marine.

The sentiment in the marine industry may be mirrored nationwide, where consumer confidence is hitting record lows. The Consumer Confidence Index, which measures how consumers feel about the economy and is used by the government to set interest rates, hit a 16-year low in May.

"Consumers' ability to buy has been diminished by smaller income gains, fewer jobs, higher prices of necessities, falling home prices, rising credit standards, and record levels of outstanding debt," said Richard Curtin, director of the Reuters/University of Michigan Surveys of Consumers, another gauge of consumer confidence, which hit a 28-year low in May.

"When asked to explain their views, consumers said that they favored the postponement of purchases given their uncertainty about their future income and job prospects as well as concerns about the future course of gas and food prices."

Glenn Sandridge, vice president of marketing for large dealer MarineMax, says he can see it in the showroom: "People are just deciding, 'maybe we're going to hold off on buying a new boat.'"

STILL ON THE WATER

Of course, people are still boating. There are more than 17 million boats on the water in the United States and participation in the sport has grown for the past two years, according to NMMA statistics.

In 2007, unit sales of outboard boats fell below 200,000 for the first time since 1998."Boaters are still using their boats and enjoying the lifestyle," said Thom Dammrich, president of the NMMA. "They may have changed their habits somewhat because of fuel prices, by motoring less and anchoring more, or alternating outings with boating friends. But they're still out there boating."

Yet the fact that fewer of them are out there buying is undeniable. NMMA figures show that boaters spent an estimated $37.5 billion on boating in 2007, a five-percent decline over 2006 and the largest drop in the last decade.

Equally severe is a decline in unit sales across several major product categories. For example, there were 188,700 outboard boats delivered in 2007, marking the first time since 1998 that the number fell below 200,000. Unit sales for inboard cruisers and sterndrives also hit 10-year lows.

Sailboats, which have seen sales decline for a decade, also saw a severe decline. Roughly 11,800 boats were delivered in 2007, compared to 12,900 the year before. The latest figure indicates that sailboat sales are now roughly half what they were in 2000, when 22,500 boats were delivered.

A SILVER LINING FOR SOME

Larry Russo Sr., the patriarch of 68-year-old Russo Marine, one of the largest boat dealers in the Northeast with showrooms in Massachusetts and Rhode Island, says buyers of some of his smaller boats have stayed away.

"The units we've lost are the lower dollar units," he said. "They're thinking it over, saying 'we could do it, but...'"

He added: "They'll come back next year."

Russo has one significant advantage at his dealership: premium brands. Russo says carrying Boston Whaler and Sea Ray means his natural customer base is more affluent and less affected by economic downturns. In fact, Russo says his dealership reported a 21 percent increase in sales value since October, the beginning of his fiscal year. Though he declined to state a specific number, he said his margins are up significantly.

Unit sales for inboard cruisers hit a 10-year low. "Small boats are hurting; big boats are doing well," Russo said. To underscore his point, Russo noted that his average transaction last year was $78,000. "Now the average is $115,000," he said. "We're marketing harder than we ever have in the past, making sure no prospect is unmet, no customer inquiry is unanswered."

Russo believes the current environment also offers deals to those with the right set of circumstances. "This is a buyer's market so smart people with money are finding opportunity," he said.

That sentiment is echoed by Hampton Watercraft's Joe Villareale. Hampton offers premium brands like Formula and Tiara, in addition to Boston Whaler. Villareale says having support from the manufacturer is crucial in these times.

"We're a Formula dealer so we're a little spoiled," he said. "They have some great factory-backed financing and incentives, including zero percent interest for 42 months, so we've had some success with that. Even our smaller-boat Boston Whaler sales have been doing okay in the last 30 days, but they're more high-end than average, so you still see that customer."

Villareale also talked about the concerns many of his customers express about fuel efficiency. "Everybody comes in concerned about the price of fuel," he said. "What you have to do is educate the customer about what that means to him. On a bigger boat, yes, that's a real issue. But on a smaller boat, how many hours are you going to really use the boat? In our area (eastern Long Island), a small boat may see 50 hours a year. How much of an additional cost is the higher price of fuel actually making?"

Frank Bongiorno, co-founder and owner of Staten Island Yachts, one of the country's biggest Carver, Marquis, Viking and Silverton dealers, agrees that both economic uncertainty and anxiety over fuel prices are contributing to the current sales slump.

"It will take the American public some time to get used to and comfortable with $5 per gallon – Europeans have been paying high fuel prices for 20 years," he said.

A BUYER'S MARKET

Many experts are calling this a buyer's market, noting that there are deals out there for boaters who are ready to buy.

While some manufacturers have been providing highly-publicized incentives to dealers and buyers, such as Formula's zero percent financing offer, there are other incentives not quite so visible to the customer. For that reason, it's always worth asking what the dealer can do.

Some manufacturers had unique offers on the market as the spring buying season got into full swing. Ranger had a spring promotion that included free boat covers and gift certificates to Wal-Mart, while all of the Genmar fishing boat brands were sponsoring nationwide recreational fishing contests with prizes up to $1 million. Mercury Marine extended a free warranty extension program on many of its outboard models until June 28. Honda is offering special financing on its engines.

And not all buyers are walking away empty-handed. Tom and Marge Towers took advantage of a hungry dealer to get what they considered a great price on a new Silverton 33 Convertible, which they keep in Lindenhurst, New York. Towers has owned "more boats than I can count" and has been boating since he was a child. He and his wife decided to sell their 15-year old Sea Ray 31 sedan bridge, the boat on which they got married.

When a local Sea Ray dealer refused to give him tickets to the Miami Boat Show in February, he went to Frank Bongiorno's Staten Island Yacht Sales. They were selling the Silverton yachts Towers was considering as an alternative and they were happy to cough up tickets, adding passes to local shows as well.

The seemingly minor gesture – a ticket to the Miami show costs less than $100 – signaled an attitude to Towers that the Silverton dealer was more interested in his business. "(The dealership) shot us a good deal, for around $200K, and worked with us to make some changes to the configuration that we wanted," said Towers. He added, "That dealer made out with me, because my son went back there and bought a used Sea Ray at the same time I was buying my new Silverton."