Confidence may be returning on the back of a strong currency but consumers are turning to cheaper imported products, piling pressure on domestic producers
Although Sweden emerged from the European debt crisis relatively unscathed, an ever-strengthening krona is having a profound effect on the country’s leisure marine sector. According to Swedish marine industries federation Sweboat, around 15,784 boats were sold on the home market in 2012 – a drop of 16.7 per cent compared to the previous year. Boat production, a sector that was particularly hard-hit, fell by 25.2 per cent to just 6,142 units as Swedish consumers shunned domestic products in favour of imported brands.
“We’re at the level of around 15,000 new boats sold per year in Sweden and we’ve been at that level for a couple of years now,” Mats Eriksson, Sweboat president, told IBI. “The problem is that more and more of those boats are imported. We’re not bringing more brands into Sweden, but more boats per brand and it’s really having a negative effect on our producers. As imports grow in prominence, Swedish boatbuilders are struggling with brand awareness. The strong krona means that exports are down too. It’s a tough situation.”
Sweboat’s latest figures show that motorboat production fell by 32.5 per cent in 2012 to 309 units, while the number of sailboats more than halved to 120 units – a drop of 52.9 per cent. The majority of boats built in Sweden are small vessels under 7m (23ft) in length, accounting for 93 per cent of all output. In 2012, this segment fell by 23.8 per cent to 5,713 units.
“Swedish boat producers are very aware that they should be looking to China, Korea, Vietnam and other faraway markets to sell their products, but when it comes to small boats of around 5-6m, the cost of transportation really upsets margins,” says Eriksson. “It makes more sense to start producing in China. That should be the next step. Of course it’s a very big step for them to take, but it’s coming up on the agenda more and more.”
Swedish boatbuilders exported around 2,784 boats in 2012 – a drop of 24.8 per cent compared to the previous year. Exports to Norway, Sweden’s biggest trading partner, fell by 18 per cent to 1,532 units, while sales to Germany plunged 57 per cent to 297 units. Sales to Britain, while small at 212 units, outstripped that of Finland with 15 per cent growth in 2012. Finnish exports dropped 18 per cent to just 208 units.
On a more positive note, the krona’s strength has led to a noticeable improvement in consumer mood. Increased purchasing power among Swedish boat owners, says Eriksson, caused imports to fall by just 13.9 per cent in 2012 to 12,426 units. Boats imported from Norway, including second-hand vessels, soared by 83 per cent to 2,561 units. In value terms, however, sales were down 51 per cent to SEK49m.
NOTE: This is an excerpt from the country report included in the June-July issue of IBI magazine. IBI Plus subscribers can download the complete report at IBI Plus website.