Effect of Interest Rate Rises on the New and Second Hand Boat Market?

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Don't forget, BMW GB (cars), BMW Finanacial Services (Money) and BMW Alphabet (leaseing) are all owned together.

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They may be all owned together, but they've also still got to earn out of it.

You obviously know a lot more about this than I do so I'm not doubting your figures, but it just makes no sense for a finance (or lease, call it what you will) company (s) to be supplying a car and for it to be costing less than the cost of running that car.

Unless you simply can't sell 7 Series and are looking for a covert way of selling them for much less without anyone noticing the big discounts...

I wonder if the numbers still work to the leaser's advantage on desirable attractive cars... /forums/images/graemlins/crazy.gif
 
Re: Effect of Interest Rate Rises on the New and Second Hand Boat Mark

That may well be so. But when interest rates were maybe 10 or !5%, house prices rose quite slowly, or dropped at times. Now interest rates are nearer 5% house prices have sored to the extent that 5% is a bigger burden than the 15% was in the past. Loads of folk are now being reposessed and made bankrupt. Unfortunatly nearly no one remembers the last recesions.

Case in point. I've just closed down my manufacturing business. That made a fortune in the past. No problem to me cos I saw it coming years ago and went into property. But anyway.

Down turn comes. At first you say, no problem, just make a few redundant, hang on, that costs more than keeping them on. On the other side, customers cost more to get and they want to buy less at lower prices. At the same time, any assets you have, Plant machinery ect. Becomes worth less than zerro.

So. To recap. A 1% rise in interest rates today, is the same as 5 or 10% in the passed.
 
Re: Effect of Interest Rate Rises on the New and Second Hand Boat Mark

Dave,

I agree that rates are unlikely to move more or less than 1%! It would take a serious crisis in confidence to make it move more than that. The fact the Bank Of Eng now control them and not the Politicians gives me a lot more confidence.

I am caught between the devil and the deep blue sea! I want a bigger boat again (my heart says so) but my brain says hold back. Luckily I have a great boat so will hang back for a while....I think! Of course thatis at this present minute in time, after 11.00 O'clock I may feel different! /forums/images/graemlins/laugh.gif

Cheers

Paul /forums/images/graemlins/laugh.gif
 
Re: Effect of Interest Rate Rises on the New and Second Hand Boat Mark

Wise words Haydn,

The only people more prudent than Accountants are people in Manufacturing! Got to say I have never had a sleepless night over money (well not since my divorce in 1998!) so I am lucky.

I manage my personal accounts like a business and keep a B/S. If it is possitive I am OK, if it goes negative I am in trouble. If I blow £120k on a boat it will go negative /forums/images/graemlins/confused.gif

Might wait to see how our films do until Christmas, then I can gauge my Income better. It has not been agreat year so far....

Cheers

Paul /forums/images/graemlins/laugh.gif
 
Re: But the REAL effect

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Oh, and despite the economics sermonzing, sorry, i wd probably just buy it.

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Not sermonizing at all - there are quite sensible points that you're raising.
But the boating industry seems to a fair extent driven by different/irrational criterias.
That's why I replied "None" to the original question about the offects of interest rate rises.
The historical trend of this business is rarely related to economic indicators, particularly for bigger stuff.
In some years, it was even inversely related - but not enough to call it a rule.
Also, short terms considerations as "...bumpy ride for sales big-ticket stuff over next say 6-12 months" can hardly affect an industry where the best builders are (still!) working with orders in their portfolio in excess of a year.
The USD trend is maybe the only relevant parameter, not that much in terms of shifting volumes between EU and US, but definitely in terms of shifting bottom lines.
Overall, the "i wd probably just buy it." approach is the real driver of the demand, and that's almost impossible to predict.
...At the end of the day, I approached my boating purchases mostly in that way!
 
Re: Effect of Interest Rate Rises on the New and Second Hand Boat Mark

um, the interest rate is decided by some people who are appointed by the chancellor, who can take back the power to setinterest rates and hence is ultimately responsible for the interest rates. There's a shadow MPC too, whioch would have rates a teeny bit higher which could have been better. Not good to have interst rates due to rise a bit with forecast of it rising another bit soon, cos it causes too much concern - hence the original quesion i suppose...
 
Yup, thats pretty much the contract hire deal I have on my 730d Sport. I went in to the BMW dealer to look at a 535d but came out with a 730d because it was pretty much the same cost per month. I was told that BMW were subsidizing the contract hire rates on 7 series as they were'nt selling too well. Mine costs my company about £750 + VAT per month for 20k pa/23 months and that includes some gizmos like comfort seats and Logic 7. I thought it was a great deal but as you say BMW finance pay a lot less than retail for the car and I guess they'll make their money when the car is sold on at retail used price
The 7 may have been hit by the Bangle ugly stick but its a superb car and so far, totally faultless unlike my previous Merc
 
Re: Effect of Interest Rate Rises on the New and Second Hand Boat Mark

You hit the nail on the head.

From my forecasting (and it is not very scientific..) I expect two rises of 0.25%, one in Nov and one in Feb (they will avoid Jan as the credit card bills will be landing from Xmas). Of course the second rise is dependent upon Xmas retail sale and fuel/utility prices over the next 4 months. Beyond that I doubt there will be any more than one extra rise before summer and then possible reductions in the Autumn of 2007.

This of course is dependent on no major shocks hitting the Fuel or Housing market. Given I believe (whether they happen or not) that these Hikes will take place, I am a little concerned that the £50k-150k boat market may take a sudden plunge.

Although I can afford to buy one, it will leave me sailing close to the wind without much room for manouver. I could take a 4% Mortgage raise at the moment without trimning back. If I buy the boat more than 1% will really hurt...which is a little risky. And if that is how it is for me,(pretty normal Junior Exec) it is probably the same for most other people in this range.

There will always be the larger money around for big boats, but at this level I think it is very susceptive to the Interest rise hikes.

On the other hand I can afford a marine mortgage at current rates, but if I wait and rates go up 1% then I will be pushing it (on a 10 year mortgage, easier on a 15 year mortgage, up to 1.5%). So you see, I may be stumped if I do, and stumped if I do not!

Of course, a reduction in boat sales due to supply and demand will not correct as quickly as any rate changes. A rise in Mortgage rates could increase supply, but more likely reduce demand within a 3 month period (especially if two rate hikes out of season), but a drop in Interest rates after this will take 6 months+ to feed back into the market, so prices could suffer until Easter 2008. If I wait the Mortgage rate and therefore cost will go up, but prices of boats may come down so it , in effect, evens itself out. The only difference is that depreciation may be substantially less if I wait. Aso when people need to tighten their belts, there are more deals to be done and so the oportunity of scoring a 'bargain' improves.

All confusing you see /forums/images/graemlins/confused.gif

Paul /forums/images/graemlins/laugh.gif
 
You can do all the calculations you like of "what must be the case when leasing a BMW 7 series", but I do lease a BMW 7 series like Deleted User and so I know, I don't need to guess. It is, like Deleted User's a 730d, which was a factory order and delivered for the 06 registration.

It costs £609 per month, including VAT. There is nothing unusual about the deal, a straightforward 3+23 12,000ml lease contract. So, over two years that's 26 payments of £15,834, or £7,717 p.a.
 
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