New (majority) owners for Princess Yachts!

[henryf]

I’m not sure there is much of a comparison between houses and boats. House fittings are made in their millions and cheap, boat fittings are not.

Having started to familiarise myself with the new F55 I am staggered by the amount of stuff there is dotted around. It’s a very complex bit of kit.

Don’t forget that unlike a house your RRP includes 20% VAT.

Finally how necessary is a dealer? From my experience I would say they are essential. The F55 is the first new boat I’ve ordered and had built, all the others were existing stock boats. The added value of our dealer has been massive. Advising on spec, being there for factory visits, even the logistics of being in the right place to pick the boat up. Then there’s the technical handover and ongoing support. I dismissed one particular builder because they didn’t have a credible UK dealer to support us afterwards. Poor dealer support could ruin an otherwise excellent manufacturer.

 

[jrudge]

I suppose there is a difference between dealer support and dealer selling the thing. The web site can deal with the config ( if they put money into it) and the logistics of moving it around are simple if the factory has a team that deals with it.

Does the boat need support - yes. But bear in mind that the majority of boats are maintained by the local company not the manufacture, and the parts are surprisingly common - princess will only make the mouldings and there maybe some custom electronic controllers ( that usually cause problems) the rest will be bought in. Pumps, AC, engines, kitchen equipment, trend will make the glass, victron the inverters / chargers, paserelle, lights, anchors, winches etc etc etc. None of this will be unique to the boat and is the stuff that goes wrong!

Not sure it is so different to a house to be frank! And if you take you boat to the med you don't pay VAT. Heck of a premium 20% to keep the boat in the Uk with the whether we have!

 

[henryf]

I still maintain that the dealer adds value during the build process. I was genuinely surprised at how much they added, maybe I was just lucky with our build liaison team.

As for after sales yes, in theory everything is outsourced but it’s not the part but knowing where it is and how to change it which takes skill. Also the factory just aren’t geared up to dealing with customers around the world, they are a big fixed asset who build stuff. When I need help on a Sunday afternoon that’s when a dealer swings into action. The dealer also protects the manufacturer from a lot of build / snagging issues. The dealer margin sounds impressive but there are plenty of costs and you don’t actually know how much you’ve made until probably 2 years after delivery when any warranty liability is complete.

I mentioned the VAT only because in your £2m analogy there would be £335k of VAT to come off so you’re down to £1.65m before you start taking off dealer margins and other costs. Don’t think the manufacturer gets £2m.

The biggest cost when building a boat is of course Labour and of late that’s been exasperated by delays in supply meaning things have to be done out of sync / more time has been spent.

I built a 70 foot narrow boat in my youth and know how long it took to build a relatively simple boat in comparison to something like a Princess.

 

[ari]

I would love to understand the cost make up of a £2m boat and how they fail to make a profit.

I am building a very large house for not much more ( ex land ) which is 2 years work and a huge volume of materials.

the profit in a £2m grp moulding should be huge. I accept a house does not have. £300k of engines but the rest is pretty comparable.

As you say, a house doesn't require £300K of engines. But perhaps more pertinently, a house builder doesn't require five (I think it is, could be more now) huge factories, some based in expensive waterside locations, and circa 3,000 staff to turn out Henry's boat and maybe about 300 others per year like Princess does.

A house builder also isn't funding huge ongoing R&D costs, or boat show costs around the world or a whole host of other costs that are necessary to maintain a viable high end boat building business.

There's rather more to it than adding up the cost of raw materials and comparing it to the cost of a load of bricks and a plot of land to stack them together on.

 

[PowerYachtBlog]

the profit in a £2m grp moulding should be huge. I accept a house does not have. £300k of engines but the rest is pretty comparable.

300k of engines is stretching it for two Volvos even if they are the D13.
I know of a Canados 24 meter who the past fall went from 2004 C30 to Man 24 liters 1600hp and he payed 300k. No part exchange involved as I sold him the Cats engines.
Normal purchase price without gearboxes, and ordered and delivered, without the deal and purchasing power a boat builder has for buying a lot of engines.

 

[PowerYachtBlog]

A house builder also isn't funding huge ongoing R&D costs, or boat show costs around the world or a whole host of other costs that are necessary to maintain a viable high end boat building business.

There's rather more to it than adding up the cost of raw materials and comparing it to the cost of a load of bricks and a plot of land to stack them together on.

The material cost of a boat buying of the shelf staff is usually about 40% (maximum) of its price if you do workings and including man power to do the fiberglass and fittings.

 

[MapisM]

I know of a Canados 24 meter who the past fall went from 2004 C30 to Man 22 liters 1600hp and he payed 300k.

Hang on, a MAN 1600hp engine never existed.
The highest power they reached with the 22 liters block is 1300hp, with the D2842LE404 EDC, phased out in the mid noughties, or 1360hp with its common rail version.
The new 24 liters blocks, all common rail, are instead available with higher power (up to 2000hp, unless I missed some further stretching), but the closest to 1600 is the 1550.
Anyway, there's a helluva price difference, depending on what he actually bought, and whether used or new.
BTW, in a Canados 24 originally C30 powered, I'd have rather repowered her with C32s... But that's me!

 

[Portofino]

The house builder is bank rolling the land purchase, another difference FWIW .
Similarity will be pricing the end product ….they both can’t be far off the competition.Its the competition that sets where they think they are with pricing .Sure they can do a bit of smoke and mirrors with “ extras “ to reach a figure , coax the punter to paying above the sticker rrp .That’s easier with a boat / German car .

Princess would not sell enough if you tried to back worked the bottom line by adding an extra 20 % or £200K to£500 K on each modal .They would still have a busy show but very few prospects converting .

 

[Portofino]

I still maintain that the dealer adds value during the build process. I was genuinely surprised at how much they added, maybe I was just lucky with our build liaison team.

As for after sales yes, in theory everything is outsourced but it’s not the part but knowing where it is and how to change it which takes skill. Also the factory just aren’t geared up to dealing with customers around the world, they are a big fixed asset who build stuff. When I need help on a Sunday afternoon that’s when a dealer swings into action. The dealer also protects the manufacturer from a lot of build / snagging issues. The dealer margin sounds impressive but there are plenty of costs and you don’t actually know how much you’ve made until probably 2 years after delivery when any warranty liability is complete.

I mentioned the VAT only because in your £2m analogy there would be £335k of VAT to come off so you’re down to £1.65m before you start taking off dealer margins and other costs. Don’t think the manufacturer gets £2m.

The biggest cost when building a boat is of course Labour and of late that’s been exasperated by delays in supply meaning things have to be done out of sync / more time has been spent.

I built a 70 foot narrow boat in my youth and know how long it took to build a relatively simple boat in comparison to something like a Princess.

I tend to agree with the first sentence .The dealer can does add value .If the previous experience was +ve then it’s harder for competition to get a conquest sale .Ie Sunseeker prise H away from Priny .

With cars these day irrespective of the price I tend to favour a modal / manufacturer with the dealer side.Geographic, accessible, even a pretty woman meeter and greeter + coffee .All adds up tiny increments.

After a while the item / product is just that an item and full of compromises .Compromises which mean different things to different men .So the differentiator is simply the ease of the transaction = the dealer at the end of the day .Not what some opinionated jurno writes or some vogger puts up on utube .

 

[benjenbav]

Building houses: in addition to what’s already been said, it’s difficult to get a fixed price, unless buying from a housebuilder. Also, it helps if a boat floats reasonably level, so whacking a big old item of plant in a dusty corner is less feasible than with a house!

Cars (new): interesting to look at - on the one hand - Porsche - where there’s a lot of configuration on the manufacturer site plus a regimented dealer network and - on the other - Tesla - where the model is direct sales and very limited scope to configure your choice (I think it’s just range, 2/4 driven wheels, colour and wheel design). Clearly though, both of these manufacturers sell many, many more units than any major boat builder.

With boats - labour, materials and product development will all represent a big cost per unit and once a builder starts to offer bespoke there’s more than an incremental cost.

 

[PowerYachtBlog]

Hang on, a MAN 1600hp engine never existed.
The highest power they reached with the 22 liters block is 1300hp, with the D2842LE404 EDC, phased out in the mid noughties, or 1360hp with its common rail version.
The new 24 liters blocks, all common rail, are instead available with higher power (up to 2000hp, unless I missed some further stretching), but the closest to 1600 is the 1550.
Anyway, there's a helluva price difference, depending on what he actually bought, and whether used or new.
BTW, in a Canados 24 originally C30 powered, I'd have rather repowered her with C32s... But that's me!

Opps I meant 24 liter and should be 1600hp.
I agree with the C32, but in Malta the Man service is very high standard so people go on with them.
He actually could have stayed with the original engines and they where still running like a perfect clock.
This was a repower for a new owner who thinks changing engines equals having a new boat.
Ok there is a total refit going (including fitment of CNC stabs) and she will be as good as new, even though the condition she was sold in was already very good 8/10.

 

[jrudge]

I still maintain that the dealer adds value during the build process. I was genuinely surprised at how much they added, maybe I was just lucky with our build liaison team.

As for after sales yes, in theory everything is outsourced but it’s not the part but knowing where it is and how to change it which takes skill. Also the factory just aren’t geared up to dealing with customers around the world, they are a big fixed asset who build stuff. When I need help on a Sunday afternoon that’s when a dealer swings into action. The dealer also protects the manufacturer from a lot of build / snagging issues. The dealer margin sounds impressive but there are plenty of costs and you don’t actually know how much you’ve made until probably 2 years after delivery when any warranty liability is complete.

I mentioned the VAT only because in your £2m analogy there would be £335k of VAT to come off so you’re down to £1.65m before you start taking off dealer margins and other costs. Don’t think the manufacturer gets £2m.

The biggest cost when building a boat is of course Labour and of late that’s been exasperated by delays in supply meaning things have to be done out of sync / more time has been spent.

I built a 70 foot narrow boat in my youth and know how long it took to build a relatively simple boat in comparison to something like a Princess.

Lets put in another way.

The dealer margin is typically 23% ( I have specifics but I won't post them on here) . Lets assume that Princess etc are the same / similar. You haggle a bit so they get 20%.

Question. would you as the buyer

a. like to pay current retail
b. get a 20% discount but have to config the boat using the online config tool with a phone line to assist in stuff that is not clear / discuss it with the manufacturer direct at a boat show?

They are selling 200/300 a year. This lot can be handled by a few central sales people.

If I had just bought Princess I know what I would look at ! The dealer is not in a capital intensive industry, and he is making more than the manufacture !



The Porsche config tool is excellent. The only bit that is not explained is Innodrive - but their dealer can't explain it either! When they can do is provide a car with it in to play with - which an anonymous shed on a motorway could do.

Re VAT did you find it worth £335k to have the boat in the UK when you could have had a £335k discount and kept in in the med? I know you charter it, but £335k isa lot of charters !

 

[Portofino]

Lets put in another way.

The dealer margin is typically 23% ( I have specifics but I won't post them on here) . Lets assume that Princess etc are the same / similar. You haggle a bit so they get 20%.

Question. would you as the buyer

a. like to pay current retail
b. get a 20% discount but have to config the boat using the online config tool with a phone line to assist in stuff that is not clear / discuss it with the manufacturer direct at a boat show?

They are selling 200/300 a year. This lot can be handled by a few central sales people.

If I had just bought Princess I know what I would look at ! The dealer is not in a capital intensive industry, and he is making more than the manufacture !



The Porsche config tool is excellent. The only bit that is not explained is Innodrive - but their dealer can't explain it either! When they can do is provide a car with it in to play with - which an anonymous shed on a motorway could do.

Re VAT did you find it worth £335k to have the boat in the UK when you could have had a £335k discount and kept in in the med? I know you charter it, but £335k isa lot of charters !

Wouldn’t the VAT be re claimable on a commercial set up ?

 

[henryf]

Lets put in another way.

The dealer margin is typically 23% ( I have specifics but I won't post them on here) . Lets assume that Princess etc are the same / similar. You haggle a bit so they get 20%.

Question. would you as the buyer

a. like to pay current retail
b. get a 20% discount but have to config the boat using the online config tool with a phone line to assist in stuff that is not clear / discuss it with the manufacturer direct at a boat show?

They are selling 200/300 a year. This lot can be handled by a few central sales people.

If I had just bought Princess I know what I would look at ! The dealer is not in a capital intensive industry, and he is making more than the manufacture !



The Porsche config tool is excellent. The only bit that is not explained is Innodrive - but their dealer can't explain it either! When they can do is provide a car with it in to play with - which an anonymous shed on a motorway could do.

Re VAT did you find it worth £335k to have the boat in the UK when you could have had a £335k discount and kept in in the med? I know you charter it, but £335k isa lot of charters !

I have no desire to keep a boat in the Med. If we were boating socially and not based in the UK I would base it in Thailand around Phuket / Krabi. As a charter company the VAT is reclaimed and then charged when disposing of the asset, it remains VAT qualifying.

As well as a lack of understanding regarding VAT you are also quite naive when it comes to the dealer role in all of this.

Excluding any marketing expense our dealer has incurred cost during the build process holding our hand and helping to make the experience less “industrial”. They have then checked over the boat, moved it from the factory to the Solent, provided initial tuition and technical support and now the real work begins as they support us with snagging and any failures. An awful lot of the warranty work is covered by the dealer.

You could have the factory do all the after sales support but they are a bit too heavy handed in this respect - they build boats industrially and aren’t geared up to service a worldwide client base. Besides, if they did do all the after sales they would have to charge the dealer margin so I wouldn’t be any better off.

Yes, sometimes a component supplier might bring something to the table cost wise but usually it’s down to the dealer.

You aren’t seeing the full picture.

Just re-read and I was worried I came across as aggressive. Not my intention so please don’t take it as such.

 

[jrudge]

I didn’t know the extent you chartered it. HMRC don’t like boat vat reclaims for not so Charter boats so you clearly qualify.

re the dealer I don’t dispute they can add value. I suppose it is down to would I pay 20% for it given the option. Our opinions can differ !

Princess need to make money which is one of the themes of this thread. To me the dealer margin as simply a target ! As above you are most welcome to disagree !

 

[stelican]

I am surprised that Princess do not reimburse dealers for warranty work.
I know that Fairlone always had I the past and also supplied all parts free of charge.

 

[henryf]

@jrudge you still aren’t getting it, there won’t be a 20% saving because the dealer has costs in the process which have to be covered by someone ie: the customer. It is even possible that the factory would be more expensive that an efficient dealer.

In terms of cost reimbursement I don’t know exactly how things work but there are definitely costs to the dealer, they don’t get life handed on a plate unfortunately.

It’s interesting that Fairline got a mention. I recall some years ago when someone decided that BA Peters weren’t needed and the factory could go it alone. Shortly later they went bankrupt. I’m minded to think of a certain politician who assured us we’d be £350m a week better off by leaving the EU. It turns out we’re actually £650m a week WORSE off…..

 

[jrudge]

I know the precise details of what happened to ba Peters and it was not Fairline deciding to eliminate the dealer network.

Bap had no contract with Fairline. There was an understanding that they would buy 50% of the factory output to keep their franchise. The factory wanted to build more. Brian peters would not buy more as he felt he could not sell it given the economy at the time. Both sides got pig headed and they parted company. Bap was a vertically integrated business it had high costs it could not shed fast enough or replace with the likes of azimut.

we have different points of view. The world has moved on. Most people now do self service ( look at banking ).

Will there be cost ? Yes. Will it come close to a dealer network. In my view no. As I said you an have a different view. That is fine.

the issue is will sales suffer or not ? Will the brand / advertising / boat shows / magazine reviews be enough to generate the same level of sales ?

I can say with utter certainty that the Porsche network add close to noting. Porsche west London actually destroy goodwill. Did they influence my decision to buy on. No not one bit. They are now building new dealer offices. The other day they gave me lunch whilst I had the car serviced. Why !

 

[MapisM]

The other day they gave me lunch whilst I had the car serviced. Why !

In the hope to sweeten an outrageous bill, possibly?

 

[henryf]

I think cars and boats are very different. There is very little need for the Porsche dealer once a car has been delivered because it will work fine out of the box and the manufacturer hypes up demand by limiting numbers so arguably they aren’t needed beforehand either. I have strong feelings about not being able to buy a Porsche despite admiring and supporting the brand, it’s not the dealer’s fault but the manufacturer.

A boat is a far more complex thing and small batch produced so the customer needs support. I was considering Sirena but they don’t have a UK dealership and the last thing I need is the hassle of sorting out every issue large or small on my own.

Good luck maintaining your Tesla or sorting out warranty issues because the manufacturer isn’t a customer facing dealer, so in that case not having dealers may well be their downfall particularly as the cars age and the manufacturer focusses on the current models.

Someone like Rolls Royce however will build as many cars as they need to. There’s a bit of a lead time but you’ll always get a car and their dealer network works with the factory to ensure you feel valued as a customer. Potential for a strong, long lasting and loyal relationship.

But all this is by the by, the customer won’t save 20% as you keep suggesting by there not being a dealer because the costs absorbed by the dealer still need to be covered.