Observations on boat prices

Tranona

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In this month's YM there is an interesting article about the final demise of Westerly in 2000 and the extraction of a part finished 33 Ocean by its buyer. Much has been written about the reasons for the collapse of the British boat building industry around that time and the article is a useful reminder of what buyers were facing then if they were buying new.

The owner had ordered the new boat at the boat show for a price of £100,000. I bought a new boat that year as well, and as I have just sold it, I was clearing out the original paperwork so refreshed my memory of prices at the time. My first choice was a Bavaria 34 which was then priced at around £78k in the UK for a fully commissioned, good spec example, but there was a long waiting list. So, instead I bought a 37 which to a similar spec was around £85k. Both of course substantially cheaper and probably better specced than the Westerly. As my boat was for use in the Med for charter the final price, delivered and coded was the equivalent of £97k including VAT - the coding and charter spec added over £13k to the basic price.

Fast forward to today, as many know I have just bought a new Bavaria 33. It has a far better spec than the earlier boat, particularly electronics, autopilot and a bow thruster and the price was approx £100k. Inflation since 2000 has been averaging 2.9% pa so an inflation adjusted price for a 34 from 2000 would be £117k, so in real terms the price of a similar boat has fallen by nearly 20%.

This illustrates the power of mass production. In 2000 a British boat with similar materials (both by weight and type) was 20% more than a mass produced boat - but the builder still could not make money. Since then further advances in production technology have reduced costs by a further 20% or so in real terms, and improved quality.

An argument often made for buying a "quality" boat - ie not mass produced is that they hold their value better. A quick check on the current asking prices for these late 1990s early 2000s boats does not bear this out. Asking prices are roughly 50% of the list prices when new - so Bav 34s are around £40k and the few Westerly 33s that have come on the market are asking £50k.
 

Way

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That is genuinely really interesting stuff. And backs my view about 2nd prices of Moodys, Westerly's etc that just seem to be tumbling over the last 2-3 years.

Is It due to expensive UK labour costs? And perhaps also currency moves - strong GBP is great for buying in but awful for exports of boats to Europe and beyond.

I fear for people like Rustler. Beautiful boats, beautifully built, but I just wonder that most peoples wants have changed over the last decade.

And that newer sailors aren't bothered about owning so much as charting in Croatia for example.
 
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I think that MAB prices, even on the quality class of yacht, will continue to fall further for the reasons that Tranona has pointed out. When the time comes to sell my Rival I shall be offering her at price to sell, not at a price based on what I have spent or my personal aspirations. My replacement will likely be a new mass produced yacht or a young second hand mass produced yacht where I would be owner number two. I am very firmly an old boat fan but my chartering experiences have turned that on it's head, the convenience will be what I am looking for later in life. Bilge crawling will be a thing of the past then. The argument for MAB being an economical way into sailing is crap as a new or nearly new Bavaria is far more economical to run that a MAB.
 

Sybarite

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Early on the French realized that their main market would be probably short term charters organized by groups of students, works committees etc. Therefore storage was a secondary consideration and more berths were added. No need for lee cloths as the vast majority of boats didn't sail at nighttime or, if they did, only for one night at a time eg cross channel.

In other words they built for the market and hence sold a lot of boats enabling economies of scale to be realized.

The English builders always had the idea of what a proper boat should be. No harm in that if you are prepared to accept a smaller market because of the price.
 
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Fast forward to today, as many know I have just bought a new Bavaria 33. It has a far better spec than the earlier boat, particularly electronics, autopilot and a bow thruster and the price was approx £100k. Inflation since 2000 has been averaging 2.9% pa so an inflation adjusted price for a 34 from 2000 would be £117k, so in real terms the price of a similar boat has fallen by nearly 20%.

Is it coded as well?

I'm surprised at the cost of coding, as one who rents, the boats don't have a lot of bells and whistles so aside from safety gear which you'd presumably buy anyway where does the money go?

Is It due to expensive UK labour costs?
Perhaps down to a lack of investment in tooling and automation - British management is rather notorious for this - or rather the other way around; Bav is famous for applying enormous amounts of automation which has driven their costs down and quality up.
 

Tranona

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Is it coded as well?

I'm surprised at the cost of coding, as one who rents, the boats don't have a lot of bells and whistles so aside from safety gear which you'd presumably buy anyway where does the money go?
The %age difference are based on the list prices for private boats without coding/charter equipment. The £13k was to bring the boat up to Greek charter coding plus extra gear such as bimini, sprayhood, electric windlass, domestic equipment as well as safety equipment, inspection fees and survey costs, Greek registration, legal fees and delivery from Slovenia to Corfu.

So, the 2000 Bav 34 price of £78k (£117k in today's money) is for a comparable spec to a 33 today (like the one I have just bought) which is under £100k. The main points are the drop in real prices in the last 15 years and the uncompetitiveness of UK builders reinforced by my own experience in 2000 of buying a bigger 37 for substantially less than a basic Westerly 33. The underlying reasons for this are mainly to do with economies of scale which UK builders were not able to achieve while their products appealed only to a small section of the international market. Of course not helped by volatile exchange rates, hostile government policies, lack of long term finance and all the other factors that have led to the decline in UK manufacturing.
 

Koeketiene

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An argument often made for buying a "quality" boat - ie not mass produced is that they hold their value better. A quick check on the current asking prices for these late 1990s early 2000s boats does not bear this out. Asking prices are roughly 50% of the list prices when new - so Bav 34s are around £40k and the few Westerly 33s that have come on the market are asking £50k.

Your argument says more about 'buying new vs used' than it does about 'buying AWB vs 'quality' boat'. IMHO, of course.

Anything you buy new depreciates like the clappers - be it boats, cars, ...

I know what I want, but I could never afford to buy what I want new. So, I bought/buy used. And I tend to buy used 'quality' rather than used 'cheap and cheerful'.

We all make our own choices in life - and we have to live with our choices. There is no universal 'one size fits all' out there.
Not for boats, not for anything.
 

JumbleDuck

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I wonder how much boat prices are additionally depressed by a rotten summer like this one, and people thinking "If it's going to be like this from now on there is no point having a boat".

Note to MMGW obsessives from The Lounge: Hush. Adults are talking.
 

Tranona

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Your argument says more about 'buying new vs used' than it does about 'buying AWB vs 'quality' boat'. IMHO, of course.
Think you misread what I wrote. The main thrust was that new boat prices have fallen about 20% in real terms in the last 15 years and that the fall is primarily the result of more efficient design and production. Second that the difference because of efficiency started before that to the detriment of British builders who were not able or willing to go down that route. Only third was the observation that one of the arguments for paying more to get a "quality" British boat was that it held its value better than the "cheap" AWBs. This is not borne out by the current market asking prices - the rate of depreciation is much the same. They have typically lost around 50% of the original cost in real terms over 15 years.

Whether it is better to buy a second hand rather than a new boat is an entirely different question, although falling prices of new boats will obviously depress values of used boats and make new boats more accessible.

As you may know I have just spent £100k on a new boat. That amount of money would have bought me one of a huge range of used boats, or I could have got a cheaper used boat similar to the one I actually bought. My choice was influenced by my previous experience of buying a new boat which over 14 year's ownership has proved an excellent buy both from the functional point of view and the financial as little has gone wrong with it. I expect the same with the new boat. It is as close to the "perfect" boat possible as a mass produced boat can be and I expect it to perform equally as well as its predecessor.

Of course not everybody is in a position to make this particular choice, nor is it the right choice for everybody.

BTW new mass produced boats are not "cheap and cheerful" - they are generally well built, trouble free and excellent value. Perhaps that is why they have thousands of satisfied customers each year.
 

Gwylan

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The thrust of this is the fact that those environments that have encouraged or even helped investment in manufacturing techniques are the ones that have benefited. The drive for efficiency in manufacture is also a drive for production volume and homogeneity in models. This is the case in most manufacturing - the price per unit comes down when you can spread the fixed costs over more units. Not excatly a revolutionary concept.

Our '86 Westerly has an amazing number of parts that bear the hull number - implying that they had been fashioned by hand for that boat - rather than produced in batch quantities. Whilst this artisan approach has a charm, it is the way to economic death.

Whether our competitor nations helped their boat building industry with concealed or overt subsidies really does not matter now. We, the UK ,do not have a serious boat building industry whilst others, especially France, have an active industry.

But there we are, we are a service based economy - where most of our service is delivered by offshore customer centres and we produce graduates in Media and Television Studies.
 

Tranona

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The thrust of this is the fact that those environments that have encouraged or even helped investment in manufacturing techniques are the ones that have benefited. The drive for efficiency in manufacture is also a drive for production volume and homogeneity in models.

The trend now is to offer a wide variety of detail choice within the same basic model, just as in cars. Have a look at the bewildering choice of fabrics and finishes for example in the latest Hanse range, particularly the larger boats. For my boat I had the choice of 3 different wood finishes 3 different flooring finishes, 12 saloon fabrics and 2 cabin fabrics, plus 2 different keel types and in mast or slab reefing with then a choice of 3 types of sails. All things that don't add to production costs but volume still allows economies.
 

Twister_Ken

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Surely the inability of British yards to adopt more modern manufacturing techniques (and thus produce good boats at the attractive prices) was not the fault of the designs, the workmanship or the workforce, but of the management. I met the MDs of two UK boatbuilders back in the day, and while I would happily have sailed with either of them, I wouldn't have invested money with them. They were sailors first, second and third and businessmen a poor last.
 

Tranona

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Yes. The buck stops at management, not just in failing to adopt better manufacturing techniques, but continuing with designs that had limited appeal in the growing international market. Equally these designs were not sufficiently unique to the home market to justify the price and buyers when faced with the choice of more attractive boats at significantly lower prices voted with their wallets.

On the other hand the powerboat builders and luxury yacht builders have thrived in the UK because they produce products with a much wider appeal, the former to growing markets where power boats are more popular and the latter to the smaller, but growing market of wealthy people who are prepared to pay for something different. However, as you can see from the latest designs from some builders mass production methods are increasingly being used to reduce labour costs and improve quality.
 

JumbleDuck

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Think you misread what I wrote. The main thrust was that new boat prices have fallen about 20% in real terms in the last 15 years and that the fall is primarily the result of more efficient design and production..

My Triumph Herald would have cost around £1,000 new in 1969. That's about £16,000 in today's money, and a £16,000 car does not look much like a Triumph Herald.

On the other hand, my 26' boat - lovingly hand made by British craftsmen - cost £20k in 1986. That would be around £55k today, which is about half what you'd pay for a Cornish Crabber 26, which is probably the closest or perhaps the only equivalent on the market. So as well as mass-produced boats falling in price, hand-made ones are rocketing up. I don't know what this proves, but it's interesting.
 

dom

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Interesting post. Just a quick technical point; I'm guessing OP is using RPI instead of the benchmark CPI. CPI is a geometric mean whereas RPI an arithmetic one, so RPI will always be somewhat higher. That said UK CPI I think averaged about 2.4% in the period so his argument fully stands and indeed opens an interesting window onto the UK economy.

Since about the 1960s UK real wages have been growing at c.2% p.a. and here is a fairly good explanation/depiction: http://blogs.lse.ac.uk/politicsandpolicy/real-wages-and-living-standards/

UK real wages however turned south in 2000 taking them back to a level just 5% more than their 2000 level. The cost advantages Tranona is observing are therefore at least somewhat due to the recent rise in sterling (c. 25%) which has more than protected European boat manufacturers from the 8% fall in post-2000 UK real wages. UK boat builders on the other hand must decrease their selling prices (and therefore costs) by at least 8% to remain in the game and more like 20% to remain competitive against mainland Europe.

This takes us to JDs observation about niche high-craftsmanship UK businesses. The UK economy is in many a ways now a dual currency one with different people simultaneously using different currencies For example a decent family house in London or the commuter belt home counties will now cost in the region of £1.5-6m. In London lots of people make more than £1m a year so these prices are accessible. In parallel most people earn something more like £25k. To all intents and purposes these two groups live in a different currency system: e.g. London restaurants can charge prices that have no real meaning in terms of value for the £25k worker.

The point (which I think JD makes) is that the savvier UK boat builders have realised that their only serious market is to these higher income brackets. Here decisions on price are relevant, but perhaps no more so than the difference between a £1.50 excellent coffee from a local Italian and a more expensive £3.00 Starbucks latte/cappo/upmyarso.

But on a very serious note: the UK is NOT doing enough to support its base industries to remain competitive in terms of productivity which will in time drive real wages Some of the money being paid out by corporates should also be reinvested to this end. Not doing so won't have a good ending.
 
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