Boat Values

The loss of red diesel derogation is by no means a done deal.
Negotiations between the government and the RYA,BMF and IWA dont actally get underway until next year as well as talks with the MCA and other marine institutions.
Please dont put your head in the sand and think it's all over 'cos its not.

Steve

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Message to Gludy

Ah, Now, this is not true, Gludy. You have been admirably vociferous - but lots of people like the idea of paying less tax. Perhaps a lot less tax. Or loads and loads and loads less tax. I note that the limit of how we have to pay has been found by the EU(surprise!) who withdrew the guidleine to MEPs who were sent a memo (withdrawn hastily) saying that they were allowed to send in expenses for €750 of xmas presents. Argh!

The only thing we (or at least I) am not prepared to share with you is the ongoing upsettedness (is this a word?) at possibly increased taxes at some point in the future. I sort of think that this might be at the heart of MBY's backfootedness (another invented word?) regardling red diesel .

Cos, see, as boaters, we're optimists or escapists, or both. Better than that, we're optimists and escapist WITH REASON. After all, however crap our crate - it's a boat, innit? Nobosy else in your street has a boat, ususally. Nor anyone at work either. So how does iot fit with our pyche, our mood, our image and general denouement to winge on about possioble extra taxes either? Badly, I'd say.

Like it or not, inthe eyes of most ordinary folk, motorboaters are the cheerleaders of conspicuos consumption. Instead of buying a big house, spend the same loot on something that goes DOWN in value AND costs sevral hundred quid to make it work EVERY HOUR. Yeehah!

It's a significant resposnibility to smile weakly when non-boaties confront you with this sort of stuff- but it's a duty that i think most MBC forumites undertake with gravity. Others expect (and ususlaly get) a weak shrug when asked about the incredible costs, not only of buying the boat, but of parking it, then putting fuel in ("I expect it's Gallon per Mile eh? Haha - ooh er jeez you can't be serious....")

But such deportment cannot easily square with wingeing about the cost. Nor with possible increased cost. Nobody want to hear our tale of woe, in the same way the ydon't want to hear that the Home Sec is lusting after some ancient old middle aged ex-bimbo who is happily shacked up with a 60-year old. It would be much better if he had been discoverd shacked up with erm, well whatever the current version of Marilyn Monroe is. Obviously, i'm a bit out of touch with this sort of thing, especially seeing as how i went to Homebase today and bought some drainrods, but i think you get the point, ahem.

The point being - we're right behind you, Gludy. But that's the sad thing - behind you, rather than in front. I'd love to be in front. I think lots of us would. But how can any of us go to the pub and order a pint with the landlord handing it over and saying "pleasant day, sir?" "Well, no, not a great day at all, landlord, see, cos you know that monster looony powerboat i bought - guess what ? - they're going to make the fuel the same price as for cars, instead of a third the price as it is now!..."



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"take away the fuel saving and the guarantee of a higher resale and people won't finance the difference in cost as there is little point....."

Hmmm, so are we expecting the:

"never mind the additional cost of diesel engines sir, you'll recoup the difference in fuel cost saving over the life of the boat" arguments by Volvo etc to be replaced with:

"never mind the additional cost of diesel engines sir, it reflects the additional cost of the engineering in diesel engines"

or

"never mind sir, we've just reduced the installed cost of a diesel to 10% more than an equivalent petrol because, ahm well even though you've no option on you 45ft boat we feel obliged to help you offset the new fuel cost"

Not very likely? I don't think so and I'd expect the cost of new boats to remain where it is, the costs born by subsequent owners, if higher, will be part of the "like it or lump it" costs of boating... member if a boat doesn't travel any appreciable distance (and so many don't) then they aren't affected by the fuel cost, and I can't see affected boaters forming enough of a share of users to affect the market... IMHO of course (and a peol owner....)

<hr width=100% size=1>Rgds

Simon
Its Only Money
Fairline Sprint
Solent-based
 
Re: Message to Gludy

As usual, tcm, most eloquently put. You should be a journalist

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Two things in life are inevitable - death and taxes. By and large we have little or in some cases no control over either. If fuel duty on Red D brings it up to road fuel levels it will be a sad day but just as with other taxation, we will each and all eventually accept it. There is nothing set as final re. this increase ever taking effect. Assuming that it does escalate....... you reason that a reduction in boat values of 30% plus would be the result. This would at a stroke put most builders out of business overnight as far as uk market at least is concerned. I believe that the effect of a fuel increase will have little or no bearing on boat prices, but only on day to day useage at the lower end. People will budget more for journeys & Boats will travel less distance perhaps......

The market depends upon people buying boats at the huge prices that they cost new and the second hand values that follow, allowing others to buy these second hand, later on at their own budgeted price.

I remember when I started my married life that a house was £3000 and now costs £150,000 upwards - a 15 fold increase. Petrol hit 50p a gallon in the 70's and now £4.50 (9 fold) and a good car cost £500 and now... say £15,000? - (30 fold) More fuel, more cars, more houses, more roads, more towns, more jobs more economic success exists now than ever before. I believe that boaters will moan and carp on about possible or actual fuel cost rises -we all dislike paying more, but pay more, we will if we must, because the desire factor will outweigh the cost factor. A boat is like a love affair and very little will stand in its way - especially money or logic. People buy and operate leisure boats for emotional reasons - not economic or logical reasons at all. Its a bit like kissing - people do it for emotional reasons - while logic decrees that this is a strange way to communicate..... Anyway, i am drifting away here. Just thought to put in my tuppence worth.. - sorry, Ten quids woth!! Roy



<hr width=100% size=1>Make your own happiness!
 
Re: Message to Gludy

If what you are saying in all that is that we cannot expect to get public support .... I agree!!! :-)

Because of that, I do not talk about it to the chap behind the bar!




<hr width=100% size=1>Paul
 
"I'd expect the cost of new boats to remain where it is"
I totally agree.

The new boat market depends to a great extent on the value of the boat holding its own. If the bottom end of the market collapses that has an effect all the way up the chain. if buying a new boat meant a huge drop in price, then fewer will purchase new boats.

<hr width=100% size=1>Paul
 
£3000 and now costs £150,000 upwards - a 15 fold increase. Oops..meant 50 fold.

<hr width=100% size=1>Make your own happiness!
 
But the bottom end of the market is predominantly petrol powered, with a consequent cross-over band. Individuals will as always make their own decisions on usage vs fixed costs, I think the assumption that the diesel usage sky will fall down is over-egged, as others have said the boat mkt is driven by emotion, not economics...guess we'll just have to wait and see!

<hr width=100% size=1>Rgds

Simon
Its Only Money
Fairline Sprint
Solent-based
 
No it is not dominated by petrol boats - petrol boats are not even part of this market that is effected - we are not talking about run around the bay boats we are talking about diesel crusing boats and most of those by a long way are deisel.


<hr width=100% size=1>Paul
 
Re: Message to Gludy

I have to agree somewhat with Gludy. The majority of people I know Will change their boating habits.

As it stands now, to me boating is a justifiable expense. A family of four can spend the weekend anywhere in the Solent, eat out of an evening, pay visiting marina mooring fee's, fuel expense plus sundries all for around £200.
If suddenly the fuel bill alone equates to our normal weekend expenditure, suddenly it's no longer justifiable.
Maybe we wont entirely give up boating but the pubs, restaurants and other facilities which rely on our money will no longer be getting it.

Instead we'll anchor overnight and BBQ more...Actually it's more appealing but it doesn't help the industry.

Not sure if the price of boats will drop drastically as I doubt people who have invested their money in a boat will accept drastically reduced offers. I imagine the price will drop by as much as the brokers talk the situation down just to get a sale.

Diesels will always be more attractive in a boat regardless of running costs.

IMHO it's the industry around boating that will suffer as that is where people will make their savings to pay for the increased TAX.

<hr width=100% size=1><A target="_blank" HREF=http://static.photobox.co.uk/public/images/45/99/10714599.s.jpg?ch=97&rr=16:00:39>Nirvana</A><P ID="edit"><FONT SIZE=-1>Edited by KevB on 29/11/2004 14:28 (server time).</FONT></P>
 
If I understand your argument correctly, you believe that the price of a New Boat will hold up due to the "fixed" cost of manufacturing but the depreciation on secondhand boats will increase.

However this must be a self limiting system; fewer people will want to buy new because of the loss when the boat goes from new to secondhand, however relative demand to change caused by wanting the extra cabin etc will remain the same, so rather than buying a new boat they will decide to trade up to a larger secondhand boat. This will help keep sustain the demand for secondhand boats and therefore maintain the prices.

I don't see how the market would work if the new price remains high and the secondhand prices crash, everyone would buy the better value used boats. Either all the prices have to come down by a similar percentage of the they wont fall at all.

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No - the market mechanism works this way:-

Second hand boat market adust downwards - increases real cost of owning new boat hence new boat demand drops. You end up with fewer people buying boats full stop.

The price of a new boat will hold up because the margins are not there to drop it.

"However this must be a self limiting system; fewer people will want to buy new because of the loss when the boat goes from new to secondhand, however relative demand to change caused by wanting the extra cabin etc will remain the same, so rather than buying a new boat they will decide to trade up to a larger secondhand boat. This will help keep sustain the demand for secondhand boats and therefore maintain the prices."

in effect you are saying that the price of secondhand remains the same!!! no, it cannot, As cost of use increases demand drops and so too does the price of the secondhand boats. This cannot coma back around to increase demand and hence put the price up to where it was .. thats absurd. :-)

"I don't see how the market would work if the new price remains high and the secondhand prices crash, everyone would buy the better value used boats. Either all the prices have to come down by a similar percentage of the they wont fall at all. "

No, that has to be wrong. Just consider an example in expensive cars.

Some expensive cars depreciate very fast indeed. from £50k to say £30k within a year. This does not change the new price ... it is a factor that folks who buy these cars know about but demand for them would be higher if depreciation was lower. So you can have a high new price with a low second hand price.
Further one of the reasons you can pick up large engined luxury cars so cheap is because they cost a lot to run. A Rolls purchased at 90k gets sold a few years later at 30k because very few people want such an expensive car to run. The new cost was say £300k.

When I spent a lot on my boat I did it in the knowledge that boats were not like cars and if looked after held their price well ... it not unusual to learn of those who sell for more than they bough a boat for .... if that changed my costs would be much higher and frankly I could not have afforded to buy such a boat.




<hr width=100% size=1>Paul
 
"...diesel crusing boats and most of those by a long way are deisel...."

Well I had worked that out! - even so (thanks for explaining it BTW), that's a bit like saying that the bottom of the housing market is entirely seperate to the market for flats - and of course it isn't - in the same way that petrol boats (which are available used up to 30-35ft, more limited lengths new) after all form the bottom of the market you are talking about.

<hr width=100% size=1>Rgds

Simon
Its Only Money
Fairline Sprint
Solent-based
 
".....hence new boat demand drops. ....The price of a new boat will hold up because the margins are not there to drop it."

...well I'll just wait and see rather than invent supply-and-demand discontinuities such as this....



<hr width=100% size=1>Rgds

Simon
Its Only Money
Fairline Sprint
Solent-based
 
No thats not right.

Only crusing boats are effected by the hike, the run around the bay. small fishing trip boats etc are not touched and many of these are petrol.

There are distinct markets in boats and that are not readily substituted in the economic sense for each other. I personally would never want a small run around, or ski boat ... my interest is in the cruising boats and it is those and only those effected by the hike so it red goes to petrol , it is these that will be hit.

No matter what happens to the small petrol boats it will have no effect on the prices of the cruisers ... full stop.

<hr width=100% size=1>Paul
 
Lots of people progress from smaller to larger boats.

Around the 30ft mark, lots of used petrol boats will have the cash saving incentive to re-engine to diesel dissappear. Hence the price difference between identical boats (1 petrol, 1 diesel), will diminish as the incremental fuel cost difference per mile changes from a ratio of 8:1 to closer to 2:1 - although still in the diesel's favour.

This doesn't rely on anything happening to the petrol boats.....at all

These are the only boats I'd expect to have their values adjusted - and probably the diesel's down rather than the petrol's upwards...IMHO of course

<hr width=100% size=1>Rgds

Simon
Its Only Money
Fairline Sprint
Solent-based
 
"Lots of people progress from smaller to larger boats."

I agree but that progression, as regards the red issue, is only effecting diesel boats.

"and probably the diesel's down rather than the petrol's upwards."

Exactly the diesel down in price ... a price drop in the boats and that is my whole point. There is no chance whatsoever about petrol boats going up in price.... I do not know why you gave that even a slight chance.

Imagine the car market and a situation whereby the bigger cars were not too expensive to run and held their value like boats have done. Now imagine a tax coming onto the bigger engine cars that increased their fuel costs 3 to 4 fold .... the second hand price of those cars would plummet like a stone. ... new prices would hardly move at all.
Evben now large engined cars drop in price like a stone simply because of their cost of running.
This has already happened after an oil crisis in the USA - the large engined USA made car sales were devastated yet the fuel prices were to us very low. it also happned with just a 10% luxury car tax.




<hr width=100% size=1>Paul
 
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