MOBO depreciattion

[Powersalt]

The story goes something like this.

I purchased a P42 just 3 years ago ( at SIBS) after much deliberation and much help from Henry ( of this parish), who had one at the time. Great boat and no regrets.

So at SIBS this year I look at the new model P43, replacement, and could have been tempted to upgrade just for the sake of it really as I have no complaints on my fly bridge boat and not really used it that much yet. Looking at the price list I was impressed to see that the price did not seem to have gone up compared to my years list price. So salesman's calculator comes out and there's lots of hmmms and arrrhs and then a figure is offered. Because at the end of it all I think you are really looking at the additional money you have to put into the pot to change. Any way by this first and then my last price guide it worked out that I had lost £63,000 per year for three years on my boat in order to change models.

I hope you understand that I walked away as it just was not worth that sort of money just to change to a new model. But I am still amazed at the year on year depreciation they consider of a mobo at trade in.

 

[Portofino]

People like me rely on people like you to take the initail hit on depreciation , to move boats out of the factory -into the market (wide world of free capitalist trade)
Why not buy a good 2-3 Y old one ? Here the depro curve on the graph is more nearer to the hrizontal then the vertical which is what has just happened .
bigger the outlay -bigger the depro figure , like cars really .

 

[Powersalt]

Yes, also the other interesting mention is that the actual list price had not really increased between models.

 

[rubberduck]

Shop around, in my experience Princess offered the worst trade in rates without exception when I was last upgrading. I got lucky with a new stock boat being cleared. Next best was EBY Fairline.

 

[Nick_H]

I suspect it's less to do with depreciation on your boat, and more to do with the level of discount you received on it. Your P42 was an old model, probably a stock boat, and three years ago we were in the worst of the recession and dealers were heavily discounting boats, so you probably paid a lot less than the list price. The P43 is a brand new model, Princess as a brand are doing well, and PMYS can probably sell it at close to list price, so why heavily discount it to sell it to you?

 

[rubberduck]

Hopefully you're right, if you are things should improve across the board as demand increases again.

 

[Powersalt]

Could be right about Princess offering worst deals, and yes I suspect EBY would offer best and I dient really go at it to get best deal as I think I would like to change for something slightly bigger, but was just shocked at their quoted value for my existing boat and then I worked that out at £63,000 per year of ownership. Quite a hefty chunk on top of running cost for only a few weeks use in total each year

 

[simon barefoot]

Crikey! I thought I'd had a rough time dropping £30k in 7 years on a Princess 37s liveaboard!

 

[Avalon]

Depreciation? What depreciation?

Sadly I am unlikely to be able to buy a brand new boat any time soon, so I am looking at older boats.

Today I looked at a Princess 435 from the early 1990s, so a 20+ year old boat. In decent condition.

The asking price is a whisker under £100K. Brand new, with a few extras, the boat probably cost £175K.

So by my calculations, the annual depreciation is between 2 and 3 percent.

Not so bad. And I have seen boats where the figure works out even lower.

 

[Portofino]

Crikey! I thought I'd had a rough time dropping £30k in 7 years on a Princess 37s liveaboard!

Really-I know a mate who paid £9M for a Benetti 120 something- 7y ago .
Family all fed up with it now = up for sale £4.75M -been on for nearly 2Y no takers .
At Cannes we had a look around a San Lorenzo 130 -little bigger asking circa £15M
So over £10 M to change !
Spending £500K /annum on upkeep-crew etc hardly used it past 12/12

As I said bigger the boat bigger the depro

 

[symondo]

Bit fresh to the boat scene, but as I understand it, its expensive. If your buying new, its not really an investment for the future, your gonna loose a pile of cash. If loosing such cash ruins your sleep at might, maybe 2nd hand where the initial depreciation has already been removed from someone elses pockets

Its harsh but I'd rekon its also harsh of you go n buy a Bentley too.

 

[Portofino]

Depreciation? What depreciation?

Sadly I am unlikely to be able to buy a brand new boat any time soon, so I am looking at older boats.

Today I looked at a Princess 435 from the early 1990s, so a 20+ year old boat. In decent condition.

The asking price is a whisker under £100K. Brand new, with a few extras, the boat probably cost £175K.

So by my calculations, the annual depreciation is between 2 and 3 percent.Quote

It's on the horizontal part of the depro graph .first 75 k went inthe first 5 Y -now petty much flat as you say less than 3-5%
From now on per annum .
But the OP is talking about the cost to change into a new one similar size same brand .
So on the water Prinny speced up fly around 45 ft what ? --£600 K. So £1/2M to buy new .

 

[Deleted User YDKXO]

Could be right about Princess offering worst deals, and yes I suspect EBY would offer best and I dient really go at it to get best deal as I think I would like to change for something slightly bigger, but was just shocked at their quoted value for my existing boat and then I worked that out at £63,000 per year of ownership. Quite a hefty chunk on top of running cost for only a few weeks use in total each year

Is that £63k per year based on list price at the time you bought the P42 or based on what you actually paid? I'm with portofino on this. I'm delighted that there are people around willing to take this kind of hit on buying a new boat because it keeps a steady flow of almost new boats coming on to the used market at more realistic prices. In the case of my boat, the first 2 owners took a hit of nearly €1m and I thank them from the bottom of my wallet

 

[rwilson]

My new to me boat had a list price of just over £140k and I bought it 2 years later for £75k ish, so in %age terms the OP hasn't done too badly compared to the previous owner my little boat!. Presuming VAT was paid on the Princess, I guess £80k or so was the VAT?

That said after all the comparisons £63k pa x3 is a big number, but at least your not selling it because have to.

 

[Marsupial]

Is that £63k per year based on list price at the time you bought the P42 or based on what you actually paid? I'm with portofino on this. I'm delighted that there are people around willing to take this kind of hit on buying a new boat because it keeps a steady flow of almost new boats coming on to the used market at more realistic prices. In the case of my boat, the first 2 owners took a hit of nearly €1m and I thank them from the bottom of my wallet

It used to be the case that boats depreciated at the rate of inflation, so you would expect to get what you paid for it but the cost of a new one was much more. Recently however manufacturers have been cutting specs and new ones are more expensive but not by the margins seen previously. Regardless of what some will say the cost of fuel has had a marked effect on used prices. A friend of mine recently sold a 2 year old Broom 50 he had from new, he "lost" about 66% - £350,000 for a Broom 50 with very very low hours, another selling a older 47 ft Trader "lost" 80%; that's a lot of boat for less than £100,000 - both beautiful boats and bargains for the new owners.

so do MOBO's depreciate? yes like falling bricks!

 

[Powersalt]

I did not do any negotiating and just listened to the figures, but yes that's the price I paid with all extras and gizmos to the price offered today. Of course I would then expect a discount off the new one.

Being an ex yachtie, and on all those boats I always got what I paid back and as yoy say inflation covered up the difference

 

[Greg2]

It used to be the case that boats depreciated at the rate of inflation, so you would expect to get what you paid for it but the cost of a new one was much more. Recently however manufacturers have been cutting specs and new ones are more expensive but not by the margins seen previously. Regardless of what some will say the cost of fuel has had a marked effect on used prices. A friend of mine recently sold a 2 year old Broom 50 he had from new, he "lost" about 66% - £350,000 for a Broom 50 with very very low hours, another selling a older 47 ft Trader "lost" 80%; that's a lot of boat for less than £100,000 - both beautiful boats and bargains for the new owners.

so do MOBO's depreciate? yes like falling bricks!

The size of boat does appear to be a factor. You only gave to compare prices of Broom 50's against those nearer 40 feet to see that if you can afford to run the larger boat there are bargains to be had. It seems that there is no single 'rule of thumb' and that factors such as age, size, make, model, engines will all play a part.

 

[Marsupial]

quite, but £350,000 a year for the pleasure of owning a new Broom is eye watering by any measure and that's without the upkeep - and the hours were less than 40 when it was sold - it was a "new" boat. The Trader was - or should have been at the end of its depreciation curve being an older but immaculate boat but the market dictates the price - again a depreciation of £400,000 over 3 years on that one, so yes age did make a difference to the rate of attrition in real terms.

OK so another friend of mine got out of boating in 2010, sold his Princess 38 for £165,000, three years down the line it seems to be worth less than half that (quick Google confirms this) - so as a percentage its lost just over 50% but "only" about £30,000 a year; so while age size make model and engines is a factor the fact is mobos do seem to depreciate rapidly.

 

[Deleted User YDKXO]

The size of boat does appear to be a factor. You only gave to compare prices of Broom 50's against those nearer 40 feet to see that if you can afford to run the larger boat there are bargains to be had. It seems that there is no single 'rule of thumb' and that factors such as age, size, make, model, engines will all play a part.

I have no hard facts to back this up but I have a feeling that 50ft is the weakest area of the market at the moment. I think many buyers who would have looked at used 50 footers a few years ago have decided that a newer 40 footer fulfils their needs nearly as well and would be significantly cheaper to run in these more difficult economic times. Apart from that, I think some boaters are really beginning to question whether the enjoyment they get out of boating is worth the spiralling cost.
I think above 60ft is a different market in which buyers are more well heeled and running costs are less of an issue

 

[ari]

My new to me boat had a list price of just over £140k and I bought it 2 years later for £75k ish, so in %age terms the OP hasn't done too badly compared to the previous owner my little boat!. Presuming VAT was paid on the Princess, I guess £80k or so was the VAT?

That said after all the comparisons £63k pa x3 is a big number, but at least your not selling it because have to.

Assuming the previous owner paid full list price...