Boat prices starting to fall

[Portofino]

There is no one size fits all in the used boat market. At the lower end there are boats whose value is potentially less that the cost of keeping them afloat. These boats might get sold when nothing else is available but struggle when there is more to choose from.

At the opposite end of the spectrum there will also be new boats that get sold when more desirable models have too long a lead time. When the more desirable boats become available the less desirable ones will struggle to find a home.

New boat prices have risen over the past few years. Brexit, Covid, wars and general inflation have all conspired to send list prices upwards and that’s not going change, you’re not going to wake up one day and find the big players announcing reductions. It’s a world stage so even if UK PLC falls on its knees other markets still have an appetite.

Used prices will always be a proportion of new so if new prices have risen so will used, certainly with boats new enough to tether the link twixt new and old.

The boating magazines tend to be quite gentle with their reviews. I’ve seen some absolute horror stories over the years but read the review and butter wouldn’t melt. I can think of one boat that took the skin off my back as I walked up onto the flybridge but the review said it was great

Similarly there’s stuff that leaves you scratching your head price wise. You can’t imagine anyone paying the asking MRP. Like the badly designed boats they just don’t get sold, certainly not in volume. These will suffer in the used market.

With that in mind there will be some models whose dealers are over hyping the reality a bit claiming long waiting lists when actually there are quite a few stock boats. That means list price might not actually be list price.

There are other instances where genuinely you have to pay list price and wait in line. Those boats will retain value in the used market because of genuinely strong desire. You have to assume a degree of depreciation but 10 years down the line new list will have shot up taking some of the sting out of the tail.

So I’m not sure you can generalise and say the market is up or down a specific percentage.

As a charter operator ( buying yours through the business so to speak ) you are at the other end of the telescope compared to the vast majority or private leisure owners on here .Different drivers for both ownership arrangements.

In fact if you understood the jist of my last post ? …….one the beneficial end of the societally change i was directly referring to .Generation rent .
Your business will boom . Renting , Air b + B ing a few days afloat as opposed to stumping up capital, disposable £ to fund a hobby ……when they don’t have to because there phone flags up your product ……making a flood of wanna be s contact you .To rent it .Take selfies put them on there FB page etc etc .” Look at me “

Your depreciation at offload is actually better greater than lower as it’s a tax against loss anyhow .So in your shoes lower residuals are better for you . A price slump benefits a commercial charter Co .More so if the boaty side is held from a structure pov close enough to the “ goose that’s laying the golden egg “:flogging second hand car s .So it’s losses are offset from the mother money maker .

Anyhow thanks for the warm words on the mkt .
But most on here are speaking from there own wholly owned assets with no HMRC visibility.

Oh well I just 9issed off or is it re 9issed off another forum member .One more on the Porto ignore list .So what ?

What am I missing folks ?

 

[Sticky Fingers]

WTAFDTM?

 

[jfm]

As a charter operator ( buying yours through the business so to speak ) you are at the other end of the telescope compared to the vast majority or private leisure owners on here .Different drivers for both ownership arrangements.

In fact if you understood the jist of my last post ? …….one the beneficial end of the societally change i was directly referring to .Generation rent .
Your business will boom . Renting , Air b + B ing a few days afloat as opposed to stumping up capital, disposable £ to fund a hobby ……when they don’t have to because there phone flags up your product ……making a flood of wanna be s contact you .To rent it .Take selfies put them on there FB page etc etc .” Look at me “

Your depreciation at offload is actually better greater than lower as it’s a tax against loss anyhow .So in your shoes lower residuals are better for you . A price slump benefits a commercial charter Co .More so if the boaty side is held from a structure pov close enough to the “ goose that’s laying the golden egg “:flogging second hand car s .So it’s losses are offset from the mother money maker .

Anyhow thanks for the warm words on the mkt .
But most on here are speaking from there own wholly owned assets with no HMRC visibility.

Oh well I just 9issed off or is it re 9issed off another forum member .One more on the Porto ignore list .So what ?

What am I missing folks ?

You're missing plenty.

1. Politeness.

2. It's business-illiterate to say that a business that gets tax relief on its costs/depreciation is better off if costs/depreciation are higher rahter than lower. OK, if you get tax relief at say 20% then a £100 expense might only feel like £80, but £80 is still £80 and the business would rather it were £0. If depreciation were actually a benefit as you say, the best thing for Henryf to do is cancel his insurance then set fire to the boat - that will give him maximum benefit in the form of depreciation and tax relief.

3. Your generational analysis compares the young people of today (renters, Air BnB-ers and non boat owners) with older people of today (like us). When the young folks of today get to our age they will become boat buyers. It's a human condition.

 

[MapisM]

Oh well I just 9issed off or is it re 9issed off another forum member .One more on the Porto ignore list .

Not sure of who you think to have pissed off and why.
But whoever he is, I struggle to understand why after pissing someone off, you should put him on your ignore list.

 

[henryf]

I’m sure I saw table tennis mentioned somewhere…..

Now that is clutching at straws to win an argument

Big boats will always be bought by older people in the main because they’ve acquired the wealth to do so.

Look further down the food chain and there are still young lads in small speedboats just like me in my youth.

Similarly there will be people who have cashed out of a business or landed a windfall who treat themselves.

If the ping pong club is struggling I do have some ideas to attract new members. In Asia it’s still a vibrant youth sport.

 

[DAW]

I’m sure I saw table tennis mentioned somewhere…..

Now that is clutching at straws to win an argument

Big boats will always be bought by older people in the main because they’ve acquired the wealth to do so.

Look further down the food chain and there are still young lads in small speedboats just like me in my youth.

Similarly there will be people who have cashed out of a business or landed a windfall who treat themselves.

If the ping pong club is struggling I do have some ideas to attract new members. In Asia it’s still a vibrant youth sport.

100% agree with this!!!

It's not reasonable to draw parallels between trends in boat ownership (already a niche activity) with more general trends in consumer behaviour, even less so when you start to talk about more expensive boats at the top of the market which have always been an aspirational purchase and lifestyle choice, and I suspect will continue to be so.

Returning to the original topic ... There seems to have been a significant slow down in brokerage and charter activity at the top end of the market during the first quarter. Boat International and others have reported and published statistics on this. Further down the food chain there is less visibility of what is happening, but manufacturers who were previously reporting full order books and waiting times of 1-2 years or more for new boats are now quietly offering a limited number of earlier delivery slots arising from cancelled orders, and several had show boats available for sale immediately after the recent round of boat shows. The number of "nearly new" boats coming to the market after only one or two seasons of use has also increased, and they seem to be staying on the market for longer before selling suggesting weaker demand and/or unrealistic asking prices.

Given the dramatic increase in the cost of new boats, the extent to which all of this translates to materially lower prices for used boats in good condition remains to be seen. However, my impression from what I see is that the exceptionally good times of the last few years for boat builders, brokers and sellers could be coming to an end as the impact of rising interest rates on affordability begins to take effect.

 

[Fire99]

My opinion is mostly observational and I'm certainly no economist. I think there is a super-premium league where I class Super Yachts in a league of their own. They appear to operate outside of conventional profit / earnings and from what I see, bigger and bigger boats still seem to be appearing in that demographic. At the budget end I've seen a drop in marina moorings my way but that may mean they've moved to cheaper mooring options. I think a local harbour is about 1/3 of the price of an unserviced marina pontoon. Whether that is affecting buying and selling I don't know.
I think in the big whale of a market in the middle, there's been a softening. Ok the brokers are using language to obviously highlight everything as a positive but a friends boat which was in exceptional condition but priced high, didn't get a single view, even after a price drop and I've seen a broker of a 2022 vessel offering a price drop.

High interest rates, a rapid increase in living costs, hassle getting boats in and out of the EU - which I think is becoming a sticking point for more and more people, and a whole lot of world uncertainty has to have an impact, especially after what I see as massively over-inflated prices during the Covid malarkey and that really couldn't be sustainable.
This opinion is only UK focussed.

 

[Momac]

Prices may well have been inflated by the Covid malarkey but other reasons given for increased used boat prices were the EU malarkey and the new boat price malarkey.

The changes since then are
(i)Inflation malarkey
(ii)Interest rates malarkey
(iii)Covid no longer a malarkey

 

[Bigplumbs]

I’m sure I saw table tennis mentioned somewhere…..

Now that is clutching at straws to win an argument

Big boats will always be bought by older people in the main because they’ve acquired the wealth to do so.

Look further down the food chain and there are still young lads in small speedboats just like me in my youth.

Similarly there will be people who have cashed out of a business or landed a windfall who treat themselves.

If the ping pong club is struggling I do have some ideas to attract new members. In Asia it’s still a vibrant youth sport.

Makes me smile that you assume Younger people are lower in the Food Chain...... Says a lot....

 

[Seastoke]

I always wondered where the saying come from. Always Porto in a storm, is that right

 

[roa312]

Given the dramatic increase in the cost of new boats, the extent to which all of this translates to materially lower prices for used boats in good condition remains to be seen. However, my impression from what I see is that the exceptionally good times of the last few years for boat builders, brokers and sellers could be coming to an end as the impact of rising interest rates on affordability begins to take effect.

Maybe a bit off-topic in this thread, but I am very interested in learning more about the key drivers behind the significant price increases over the last couple of years. Just off the top of my head, I would think main cost items would include:

1. Raw materials (such as fiberglass, gelcoat/resins, wood, steel, etc.)
2. Engines (sort of a raw material, but a key one)
3. Labor/subcontractors
4. Facility costs
5. Manufacturing overhead
6. Other factors?

There may also be an element of 'why not raise prices if order books are growing,' and I imagine the industry as a whole has been longing for higher margins. Nonetheless, it would be very interesting to learn more about the specifics if someone has that level of insight into the business.

 

[henryf]

Makes me smile that you assume Younger people are lower in the Food Chain...... Says a lot....

No, I said smaller, older boats were lower down the food chain.

I have nothing against younger people and don’t see them as any less worthy. I was young myself and wish I knew now just a half of what I thought I knew then.

The fact remains that older people generally have more money to spend on boats than younger people.

 

[Parabolica]

Maybe a bit off-topic in this thread, but I am very interested in learning more about the key drivers behind the significant price increases over the last couple of years. Just off the top of my head, I would think main cost items would include:

1. Raw materials (such as fiberglass, gelcoat/resins, wood, steel, etc.)
2. Engines (sort of a raw material, but a key one)
3. Labor/subcontractors
4. Facility costs
5. Manufacturing overhead
6. Other factors?

There may also be an element of 'why not raise prices if order books are growing,' and I imagine the industry as a whole has been longing for higher margins. Nonetheless, it would be very interesting to learn more about the specifics if someone has that level of insight into the business.

I am in the sector so will answer.

1. Very much so. Material prices during 2020 & 2021 were increasing with such regularity and by such high percentages, that we had little choice but to follow suit and mimic these within our own prices. The increases were mostly linked to the wet & dry composite products where the increases were linked to oil but transport costs increased significantly too, which for the manufacture of a product such as a boat affects the whole build significantly also.
2. I can imagine engine prices have increased as supply stumbled but i don't have exact knowledge of this.
3. Labour - yes, the cost of living increase over the last few years has meant hourly rates have shot up and in this sector where pay was relatively low, the % increase is vast and with boat manufacture being so labour intensive, this one aspect would be a key driver to much of the price increases seen but take note of point 6 below.
4. Very much, especially through energy price increases. We have seen this raise five fold. Imagine that across all the boat builders yards !
5. See above.
6. Those noted above are significant and in truth the manufacturers have not passed on the full impact they have felt because they’ve not fully measured it yet. Remember they set prices at the beginning of each year so increases to them during the year they still suffer and only adjust to compensate for the following year. So this means they have been even less profitable (they make precious little already), than they were before the volatility of the post Covid era.