Invest in Inflation

“Invest in Inflation.  It’s the only thing going up.” --Will Rogers

There is a strong possibility that we are about to enter an era of inflation with the possibility of it being as dramatic as the one U.S. citizens endured in the decade from 1975 to 1985. If that happens there will be a sterling opportunity for buyers of boats currently in dealers’ inventories.  

The next few months have all of the earmarks of an incredible buying opportunity because –

1. There is an abundance of new boat inventory for many brands (but not all) on dealers’ balance sheets, and many of them are selling the boats at only slightly over wholesale prices, just as we saw in 2008-2010, the first years of the Great Recession. Don’t wait for the prices to get lower, because they won’t.
2. Since January the U.S. Dollar has lost 9% of its value compared to a basket of currencies, and 5% against the Euro. That means that foreign-built boats sitting in inventory can probably be purchased at the pre-devalued price. But new boats coming in will become 5% to 9% more expensive, unless the dollar strengthens in the meantime -- tariffs notwithstanding!
3. The prospect of greater inflation -- the likes of which we haven’t seen since the decade from 1975 to 1985, when inflation average 7.7% a year – is acute due the fact tariffs can only drive it up. 

The 2008-2010 Great Recession saw new boats being sold at fire-sale prices, then bankruptcy prices, and that was followed by a good 10 years of very low inflation.

Compare the two decades and see the difference—

Buy a New Boat TODAY – That Means Today, Not Next Month

There is a small window of opportunity for savvy boat buyers and it will be closing soon. It will last weeks, probably not months -- a disaster in the stock market notwithstanding. The game plan is simply to buy a new boat now at a big discount, and if it’s an import, not only will you get a huge discount (depending on the brand), but you will in all likelihood get a boat priced in pre-January, 2025 dollars. 

Then, don’t pay cash, rather get a 20-year boat loan at the lowest interest possible.  But even at 6.99%, as can be seen in the numbers above, you will be paying off that loan with inflated dollars.    

Inflation to the Rescue

One thing to bear in mind is that while a new boat is depreciating – the U.S. dollar is also depreciating.  According to the U.S. Bureau of Labor Statistics, the U.S. dollar lost 23.3% of its buying power between January of 2020, and January 2025. Here was the rate of inflation by year--

The “miracle” of compounding interest also works in reverse for inflation, because it compounds, too – but in the opposite direction. That is bad news when contemplating what will happen to boat prices but is good news when you are paying off a quickly depreciating asset.

Because used boat prices are buoyed by new boat prices for the same model, your rate of depreciation will be slowed.

Boat Prices Could Go Up Faster and Higher

If history is any guide, boat prices – particularly big boat prices -- could go up faster and higher than U.S. core inflation because boat yards are limited on how many boats they can build in any given year, or any given model. Fixed overhead must be spread over fewer units, and any number of other details, can raise prices higher than core inflation. 

Note what happened to 41’+ inboard cruisers in the four years from 2019 to 2023, the last year for which we have industry stats. Without a change in tariffs, but the disruption in supply chain, and an incredible buying frenzy created the numbers you see below from industry sources--

While we don’t expect to again see the boat buying frenzy we saw during Covid, new tariffs inherently disrupt the supply chain as manufacturers search for new, lower-cost suppliers, or goods are routed through 3rd parties to reduce the tariff.  Plus, there is the tariff itself, and the increase in marketing costs, which are a percentage of the cost of goods. 

Time to Bite the Bullet

Folks, you will never see prices again like the ones being advertised today. And, the way things are going, the dollar may never be stronger. With any luck and good maintenance, the new boat you buy today might well be able to be sold for what you paid for it, or even more – in devalued dollars, of course, five years into the future.