Boat Values

Paul,

I'm with you on this one - but I have to see it very simply in Supply & Demand terms:

- Demand for boating (and therefore boats) will fall strongly - because a good proportion of the boating consumer base will find itself in the margins of being able to afford to continue. (A good proportion because the quantum of the annual cost change is so significant). Also the new entrants will look in and see it as prohibitively expensive and will choose to holiday somewhere warm each year for less money than boating.

- Supply will increase strongly - because those folk (above) who can't afford to continue will be trying to sell the boat asap to avoid any price reduction in the marketplace

Simple, simple economics tells me that that when demand falls and supply increases there must be a drop in value - and I think it will be a significant drop. The big decrease in prices will be caused by those folk whose need to "get out" will require them to accept very low offers for the boat.

This will wash through - when everybody has decreased the capital cost of the boat, as a consequence of this market adjustment, the demand will resettle and within the total cost structure the balance will have shifted from capital cost to fuel cost - and the market will stablise.

I sold my Targa 39 back in the early summer, but I may go back in to MoBo's in five years time!

rob

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Which is why it's possible to buy a £60k BMW 7 series for about £16k three years old. Great motor for no price, good buy, the total cost of ownership has moved away from depreciation to fuel cost - an exact analogy of what will happen in the boat market. The trick is not to own the BMW when it loses all it's value - let's somebody else suffer that loss.

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As I agree with all you said ..... the only question I have is why did you sell?

It seems you have pulled out .... was what is happening anything to do with that? If it was well, I have to tell you that you do not exist to some forumites around here!! :-). The market has already discounted all the effect of the £5.50 gallon of boat fuel.


<hr width=100% size=1>Paul
 
The majority of my decision to sell was based on this red diesel issue. There's no way that the fuel price rise has already been discounted in to the market - the wider market is not readily aware what is happening. Some folk who have heard discussion of this seem to think that fuel will increase as a result of full rate VAT being applied to fuel (an increase from 5% to 17.5%) and if that was the case I agree that the increase in cost would be so marginal as to have no effect. But that's not the case!

I'm delighted that some forum members don't think I exist - I've been trying to lose weight for years!

rob

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I agree but in the case of boats the BMW's sales were supported by a history of little or no depreciation and so OK you spent £1m but most of it came back and the real cost was the opportunity cost.
So the effect will be a drop in demand for new boats and lack of ability to trade up because your boat just lost a lot of its value.

The market will stabilise ... I agree but what at ... in effect at their being very few cruising power boats in the UK ... they will be the reserve of the very rich. The average sort of chap who sacrifices so much to get his 60k cruising boat is going to be hit big time.

Those that buy in wisely in 5 years would be able to get a nice big cruiser cheaply and so have escaped the fall but unlike cars, the new demand will be hit very hard because there is now a precipice of depreciation to face -- many used cruisers will go overseas but the market for the 1984 60k cruiser does not really exist over there.


<hr width=100% size=1>Paul
 
So how much money has the boating market lost from you over the five years in total including capital cost?

Its going to take a lot of chugging around with fuel at £5 plus per gallon to just pay for your loss ..... this is why if they do hike it up to petrol plus prices, they will raise less tax not more!!

If they increased the VAT from 5 to 17.5% folks would moan but the market would absorb it.





<hr width=100% size=1>Paul
 
Five year spend - including capital cost - I reckon about £175k - but actually I've swapped to sail so that I can stay on the water whilst the mobo market gets turned upside down. So what I've actualy done is dodged the problem. Some will say that I might not like sailing - well I might not, but it's a good chance to give it a go. I can always sell out if I want to - I can see there being increased demand for yachts over the next three to five years so I can't see a loss arising - and so far I have to say that the sailing has been great fun!

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The other point of course, is that there's no value in the tax yield argument that you allude to. The tax yield on marina diesel is the biggest non-issue that the Treasury will ever have the pleasure of discussing - it's just small change in Gov't terms. The only force pushing this change through is european politics - tax alignment, nothing more. And by the way - there's no electoral power either - I can't see 1 million people on Westminster Green lobbying for cheap diesel for boaters who can afford £100k for a pleasure toy. Ha ha!



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Just a comment regarding new and/old buyers..

Suspect that most boat buyers spend whatever it takes because they really want that boat come hell or high water.Can only offer my total admiration of anybody with a will of iron capable of declining the chance to enjoy themselves because the figures do not made financial sense./forums/images/icons/laugh.gif

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It onlty need a a 2% drop in the activity of pleasure boating to more than wipe out any possible tax yield and that assuming there is no fuel usage drop.

The issue does not even appear in the government radar for size ...... nor can they logically argue compatability with Europe ..... Its also an election year just when this issue gets discussed in Europe this coming Spring.

I tell you what ... I will have a rest and you take over my Gludy red diesel role.

<hr width=100% size=1>Paul
 
Re: Just a comment regarding new and/old buyers..

Maybe it's me that's the real Oldgit - and not you at all!

rob

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Arggh.........My wife was right all along.

I am a happy-go-lucky,young at heart,generous and warm hearted soul unable to let a day go by without spreading a little cheer throughout the known universe.
Compliments of the season and joy to you all.........and all right....that includes Gludy.(via gritted teeth)/forums/images/icons/laugh.gif


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Try a Corvette only 32ft. but aft cabin with offset double bed and large ensuite + 2 large singles + heads up front + good sea boat and no I dont work for them just starting my 3 year of ownership of a 1990 best years of my life
Life can only get better

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Simple question for Gludy then, since prices are about to drop by 30% according to you, and you own a, what, 1/2 million pound boat and therefore stand to lose £150,000 according to your own figures, why've you not sold it?

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It is being sold. I am sincere in my views.

The red issue is however only one of the reasons albeit the trigger that started me down my path.

The larger boats still have a market in the Med. This would buffer the drop on some of them. A boat costing £500k can afford to offset the transport costs to the Med, so the drop on those would be buffered but there would still be a drop.

If the rise to petrol levels happnes, the UK market will contract so that UK motor cruising was not there in anything like the size it is now.

It is the entry level cruisers, owned by the family struggling to keep it going that is going to be hit the hardest. There is not such a market for boats costing £30k to £100k in the med market and the differential price plus transport costs needed would still hit to a significant percentage anyone who did sell to the Med.

I still have hope that the government will not go all the way and will end up adding more VAT etc. I do not think it is inevitable because there are so many practical difficulties and the amount of money involved is so tiny.

<hr width=100% size=1>Paul
 
I'm sorry but this is tosh. The Med is full of small motor boats many of which are British, Scandinavian, American etc and all of which have been transported there. In any case the transport costs need not be huge. I brought a 48 footer back from the Med to the UK last year for £3000, about 1.5% of its value
Even if your scenario of plunging UK values is correct, which I very much doubt, a situation whereby one market has significantly lower prices is unsustainable. In simple economic terms, if UK prices fall, then two things happen, either this encourages foreign buyers to buy in the UK or UK boats are moved to the Med for sale. The result of this will be stabilisation of prices in the two markets



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Generally speaking the Med prices in the small boats we are talking about are lower than the UK. I know of a number of people going to the med to buy, one from our pontoon this last month. They were able to but their model about 30% cheaper than in the UK. I know this tends to vary from model to model but generally the older boats are cheaper in the med.

Market differentials exist because it because of natural barriers 0 its bad enough travelling all over the UK to see boats let alone all over Wurope to look at a £60k boat. Plus the costs of getting it here vary considerably.

I know of one recent case of a low price boat bought from Spain, boat cost £70k, required 2 trips to do sea trail and purchase plus cannot go by road, so having to pay about £5k to £6k by sea. Extra marina charges etc Total market barrier costs = about £8k. that is over 10% of the cost of the boat but still worthwhile in this case.

However very few boats change hands between UK and the Med at this price.

Even if you were right and they did change easily and the markets adjusted then what we would have is a mechanism for emptying UK waters of boats! ... a lot less tax in red, repairs. marina charges, eating out etc

There is no chance of public support on this issue the resistance must come from the fact that it can be shown there is no more tax for Mr. Brown and that it is full of practical difficulties. That has been mt theme throughout all the threads.

<hr width=100% size=1>Paul
 
So are you selling for 40% less than you paid for it in line with your views?

Also, your comment about boats in the £30K-£100K bracket being hit hardest.

Well lets look at a Sealine S25 at circa £60K, bang slap in the middle of that group. Single KAD 32/dp, whats that using, 5 gallons an hour max?

Extra 60p a litre, times 4.4 makes about £2-60 a gallon, so what, about another tenner an hour if red diesel goes?

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At least you've acknowledged one thing now and that is there is no prospect of any public support outside the boating fraternity for the continuance of the red diesel derogation. The idea that Joe Public struggling to pay 85p/l to fuel his 30mpg car would support we boatowners buying fuel at 30p/l for our 1mpg gin palaces is a nonsense
Regarding the Med, there will always be price anomalies in every market but I've bought 2 boats in the Med in the last 2 yrs and I did thoroughly research the market in the UK and the Med for the type of boat I wanted. I found no evidence that Med boats are priced significantly lower than the UK and I would say, now that the Euro is so strong against Sterling, prices might even be higher in the Med in Sterling terms
Your argument concerning barriers to trade is contradictory. Firstly, with flights now so cheap, it costs only a few pounds to inspect a boat or carry out a seatrial. Secondly, if your associate was willing to spend 10% of the value of his boat to buy it abroad, why wont a foreign buyer be willing to spend 10% of the value of a boat to buy it in the UK if the market here should fall? So, the idea that a 30% price differential between the UK and Med markets can be sustained is very unlikely

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Nice to read some reasoned logic.

The last 2 boats I have bought I have requested a selection of digital photographs showing interior and exterior (similar to "Boatshed" network brokers). Not foolproof but shows the disaster areas and saves a lot of footwork.

Short listed 3 to look at last time and bought one in Holland.
Petty cash for flight to Amsterdam. Picked up by broker's wife. Viewed a.m. Sea trial p.m. Signed contract subject to survey before return to airport by broker. Survey arranged and report emailed within 1 week. Monies transferred direct. One further trip by car with boaty stuff and then trip back to UK.
Not much hardship and at the time I reckon I saved about £10k on the purchase and acquired a far better boat than those seen in the UK.

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