PrinFairSeeker... do they have a long-term viable business model

[jrudge]

Small boats can sell - it is simply how much money you can make form them given R and D and so on. Sealine sold SC35 well, but the brand was not strong enough to support the higher end products - but they still carried the R and D cost etc.

The sale prices of the manufacturers given they global names was indeed poor - which i suppose goes back to they are capital intensive businesses and overall not that desirable compared to their low capital counterparts - which suppresses their value.

 

[Deleted User YDKXO]

FWIW here's my thruppeny's worth on this issue. First, the 10yr period upto 2008 was an economic aberration and history will view it as such. It was a debt fuelled boom period which will never be repeated in our life times (hopefully never at all) and many industries, not only pleasure boat manufacturers, cannot predicate their business models on the turnover and profit they achieved during those times. Second, boating is a dying pastime; interest in boating is waning and fewer young people are being attracted into boating partly because of the cost, partly because of environmental concerns but mostly because there are many other distractions to take their attention. Thirdly, and this applies mainly to motorboating, but the manufacture and particularly, the operation of boats is far too wasteful of scarce oil based resources. Fourthly, the price of boats has consistently outstripped inflation over many years and the industry is pricing itself into an ever diminishing market. Not only that but because there are fewer buyers willing to pay high prices for new boats, there are similarly fewer secondhand buyers willing to pay near to those high prices for used boats. So not only are new boat buyers faced with high prices for new boats but they are then faced with crippling depreciation when they sell out of those boats.
So how does the industry deal with these trends. The short answer is that I haven't got a clue but a few things are for sure. With regard to pricing, it is not good enough for the industry to claim that prices are going up ahead of inflation because buyers demand more features. Many other industries have managed to hold down prices whilst increasing performance and features. Second with regard to fuel consumption, it really isn't going to be acceptable in the future, either in financial or social terms, for a 50ft boat to be cruising around whilst consuming fuel at a rate of less than 1mpg. So boat manufacturers have to address both their production costs and the operating costs of their products in a major way in order to keep attracting buyers. I don't know whether this is by significantly reducing weight by using different construction methods and materials or by using different propulsion systems but one thing I think is fairly sure. IMHO nobody is going to be buying a 50ft boat weighing 25t and consuming fuel at 0.7mpg in 50 years time

 

[MapisM]

Manufacturing of boats is capital intensive

Well, everything is relative, I reckon.
But if it would be possible to calculate the average of "capital intensitivity" among all industrial products, my bet is that the pleasure boats industry would be significantly below such average.
At least as we know it today, which is still very far from being a proper industry, in fact.

 

[MapisM]

IMHO nobody is going to be buying a 50ft boat weighing 25t and consuming fuel at 0.7mpg in 50 years time

LOL, talk about vision.
I bought 15 years ago a 50ft boat weighing 10t MORE than that, and which burns fuel at a 2mpg rate....

Reminds me of when swmbo tells me that most of my wardrobe is outdated.
My standard answer is that I'm just more advanced than the current fashion...!

 

[ari]

Second with regard to fuel consumption, it really isn't going to be acceptable in the future, either in financial or social terms, for a 50ft boat to be cruising around whilst consuming fuel at a rate of less than 1mpg.

Why not? Stop the man in the street and tell him a 50ft flybridge does less than 1mpg and he'll already say it is 'unacceptable'.

So what? The average man in the street cannot afford to buy or run such a boat. Arguably, those that can and wish to, will. Why should that change?

 

[Deleted User YDKXO]

Why not? Stop the man in the street and tell him a 50ft flybridge does less than 1mpg and he'll already say it is 'unacceptable'.

For the same reason that wealthy middle class families buy hybrid cars. They don't want to be seen to be conspicuously consuming the earth's resources. I'm not saying that's right or wrong, I'm just saying that it's a social trend that will become more widespread and could affect motorboat sales. Even now, when friends and relatives ask me how much fuel my boat uses, I'm not exactly proud to tell them and that isn't because I can't afford it. Also if there's one thing that can be guaranteed along with death and taxes, it is that fuel prices are going upwards. The motor vehicle industry is reacting with new technology; the boating industry needs to do the same sooner or later

 

[Hugin]

Small boats can sell - it is simply how much money you can make form them given R and D and so on

I think this actually works in the favor of smaller boats. R&D (and remember start-up tooling costs too) can be spread on a much bigger number of boats for the smaller boats. Usually a boat for, say 150K, should be able to find at least 5 times as many buyers as a boat for 300K.... market access and all other things else being equal. It's a function of income distribution. Therefore there should not be any problem getting profitability in the small boats.... if only production numbers are high enough.

What if we consider the price per kilo of boat? After all they all need engines, a rudder/outdrive, batteries, water heater, bilge pumps and all the other systems making it a functional boat. How much extra can it really cost to add a few hundred kilos of resin, more wooden cabinets and seat cushions? Surely the propulsion system and all the tech stuff are the expensive bits, so merely going up in size should reduce the price per kilo.

I've done a bit of research on this and surprisingly it is the other way around. The bigger the boat, the higher the price per kilo...... and it really takes off almost exponentially above 10tons. OK, maybe it's not so surprising..... it has everything to do with how many units are built. If you order 5 tailor-made window frames from a supplier per year then you obviously pay a lot more per frame than if you ordered 150 identical frames per year. R&D + tooling costs are of course also distributed on much fewer hulls for the bigger boats. It's often mentioned that boats have to be big in order to secure the builder a profit....... I don't see the logic in this claim; quite to the contrary - the odds are stacked against the big boats due to insufficient numbers.

And I'm quite confident Beneteau-Jeanneau makes a profit on the modestly sized boats rolling of their assembly lines.

 

[Hugin]

For the same reason that wealthy middle class families buy hybrid cars. They don't want to be seen to be conspicuously consuming the earth's resources. I'm not saying that's right or wrong, I'm just saying that it's a social trend that will become more widespread and could affect motorboat sales. Even now, when friends and relatives ask me how much fuel my boat uses, I'm not exactly proud to tell them and that isn't because I can't afford it. Also if there's one thing that can be guaranteed along with death and taxes, it is that fuel prices are going upwards. The motor vehicle industry is reacting with new technology; the boating industry needs to do the same sooner or later

+1 to your two posts. I agree with most of it. Change will come in one form or the other.... those predicting (or guessing) the changes better than others will survive and thrive. And I agree sustainability in all its different aspects will become a major theme

 

[ari]

For the same reason that wealthy middle class families buy hybrid cars. They don't want to be seen to be conspicuously consuming the earth's resources.

Agree with that. Some do indeed.

But many others drive Range Rovers, Porsche Cayennes, BMW X5s, Discoverys, Mercedes MLs, Audi Q7s, Shoguns, Mitsubishi Animals, etc etc etc. In fact, arguably the trend toward big 4x4s is growing faster than that toward hybrids.

I find it hard to believe that some people buying hybrids and concerning themselves with 'global warming' points to a widespread change in powerboat buying habits. Sunseeker aren't selling to everyone, or even most people. They're selling to a tiny tiny tiny fraction of extremely wealthy people.

And even those people can chose not to tell other people about their boat if they like. It isn't parked on their drive.

 

[Whopper]

I do sometimes wonder where the next generation of UK boaters will come from? Many twenty somethings today are struggling under three huge financial burdens that my baby boomer generation didn't have to worry about; student debt, eye wateringly expensive property, and the demise of private sector defined benefit pension schemes. If I'd have had to deal with those three I'm not sure I'd have ever found the financial wherewithal to get into boating.

Good point! It kind of resonates with a line Matt Damon says narrating the Inside Job. Roughly: for the first time in history average Americans have less education and are less prosperous than their parents.

The boat manufacturers, like the high end car manufacturers will target new customers in the rising middle classes of the BRIC economies.

 

[admillington]

I see another issue. Having had 14 boats (last 8 are Fairlines) in the last 15 years, I have every year been able to part exchange my boat and provide another lump of money and upgrade. Now in the current market, there are no sensible upgrade deals and going from my Squadron 58 to a new 65 costs more than buying a new Targa 48. I believe the entry to market 30ft boat argument also applies to the upper end in that the people you are hooked want to carry on up the range.

So this year, I had Berthon fix anything so the boat is perfect and inspired by JFM's latest Match upgraded the Garmin 5000 series on board to three new Garmin 8015s and one 8012 - truly amazing electronics. So I spent £30K rather than the normal £150K and with the boat another year older the upgrade cost keeps rising so I think I will keep the SQ58.

 

[U4]

I see another issue. Having had 14 boats (last 8 are Fairlines) in the last 15 years, I have every year been able to part exchange my boat and provide another lump of money and upgrade. Now in the current market, there are no sensible upgrade deals and going from my Squadron 58 to a new 65 costs more than buying a new Targa 48. I believe the entry to market 30ft boat argument also applies to the upper end in that the people you are hooked want to carry on up the range.

So this year, I had Berthon fix anything so the boat is perfect and inspired by JFM's latest Match upgraded the Garmin 5000 series on board to three new Garmin 8015s and one 8012 - truly amazing electronics. So I spent £30K rather than the normal £150K and with the boat another year older the upgrade cost keeps rising so I think I will keep the SQ58.

Wow, 14 boats in 15 years - that has to be a forum record??!!

 

[Deleted User YDKXO]

They're selling to a tiny tiny tiny fraction of extremely wealthy people.
/QUOTE]
Precisely and nearly every other boat builder is chasing that tiny tiny fraction of wealthy people too but even that tiny fraction of wealthy people will eventually get pissed off with high running costs and wallet busting depreciation. Also that tiny fraction of wealthy people build up their interest in boating with smaller cheaper boats and if no builder is producing those then they are lost to the industry
Btw, nearly all of the 4x4s you mention have hybrid models

 

[Deleted User YDKXO]

Wow, 14 boats in 15 years - that has to be a forum record??!!

Yup, beats my 14 boats in 23 yrs!

 

[Hugin]

I see another issue. Having had 14 boats (last 8 are Fairlines) in the last 15 years

I'm curious; what size was your first boat? And what size was your first Fairline?

 

[admillington]

I'm curious; what size was your first boat? And what size was your first Fairline?

Fletcher 15 - First Boat

Targa 40 - First Fairline

 

[ari]

Precisely and nearly every other boat builder is chasing that tiny tiny fraction of wealthy people too

With a tiny tiny number of boats. How many cars do the BMW group build a year? a million? Two millions? How many boats do Sunseeker build? 200? 300?



but even that tiny fraction of wealthy people will eventually get pissed off with high running costs and wallet busting depreciation.


Why will they? They didn't yesterday, or the day before, why will they wake up tomorrow 'pissed off with high running costs'? Running a big boat has ALWAYS been very very expensive. What's changed? It's got a bit dearer. As it always has, every year, for ever.

Also that tiny fraction of wealthy people build up their interest in boating with smaller cheaper boats and if no builder is producing those then they are lost to the industry

What, like Bayliner, Regal, Jeanneau, Beneteau, Sea Ray, Ocean Master, etc etc? Plenty of people building cheap boats.

I don't get this logic that the only way anyone can buy a big Sunseeker is if their first boat and every one in between is a Sunseeker. Cars don't work like that. A car enthusiast might start off with a Corsa VXR, progress to a Golf GTI, then a BMW M3, then a Porsche 911 and then an Aston Martin. There is no reason why Aston Martin not building cheap cars should prevent this, ironically if they did it might make their products less desirable as less exclusive.

Btw, nearly all of the 4x4s you mention have hybrid models

EXACTLY! You can buy a Lexus 4x4 Hybrid for not much more than a normal Lexus 4x4. It looks the same, drives very similarly and does over 100mph. Until you can buy a hybrid Sunseeker 60 footer for similar cost with little change in performance people will continue to buy normal ones. Why would they not? It's what people want. Go look at the motorboats in Ocean Village, Shamrock Quay, Salterns Marina, and everywhere else on the south coast and see what peole are actually buying. There are a few displacement boats in there but the vast majority are planing. Indeed look at this forum. From JFM down most people have planing boats.

They're selling to a tiny tiny tiny fraction of extremely wealthy people.
/QUOTE]
Precisely and nearly every other boat builder is chasing that tiny tiny fraction of wealthy people too but even that tiny fraction of wealthy people will eventually get pissed off with high running costs and wallet busting depreciation. Also that tiny fraction of wealthy people build up their interest in boating with smaller cheaper boats and if no builder is producing those then they are lost to the industry
Btw, nearly all of the 4x4s you mention have hybrid models

 

[MapisM]

There are a few displacement boats in there but the vast majority are planing. Indeed look at this forum. From JFM down most people have planing boats.

True, but it's equally true that many (if not most) of them lately became more and more interested in pootling, stabilizers, etc.
And while for none of these folks the fuel cost is a deal breaker, enjoying the sea more and wasting less money while you are at that is a sensible proposition for everybody, I reckon.

I also disagree with the cliché that fuel economy is the primary objective of displacement boaters, because that's actually just a nice by-product.
In fact, Nordhavn does not sell to folks that are interested in burning less fuel than with a Sskr, for any given size.
They sell to folks aiming at a cruising style they could not even dream of, with a Sskr.
Some of them never come to the point of materialising such dreams, but that's a different matter altogether...

 

[ari]

Is it people are getting 'more interested' in stabilisers or is it that there are more stabiliser options available for smaller boats at lower costs (a bit like bow thrusters, you very rarely saw them on anything under 40ft twenty years ago. You regularly see them on 25 footers these days).

We went through all of this when red diesel was lost. It would be the end of the world for planing boats, that funny chap with the Trader came up with some wacky calculation that 'proved' all fast boats would be worth a 1/4 of pre red diesel costs, marinas would empty, etc etc. Nothing changed. The recession has had far more effect.

Motorboating will, I'm sure, continue to evolve, different things will become more popular, and maybe people will slow down a bit, go less far, whatever.

But fundamentally, if I were Princess, I don't think I'd be looking to get into a completely different concept of boat just yet, nor see a need for loss leader 30 footers.

 

[Deleted User YDKXO]

T

rue, but it's equally true that many (if not most) of them lately became more and more interested in pootling, stabilizers, etc.
And while for none of these folks the fuel cost is a deal breaker, enjoying the sea more and wasting less money while you are at that is a sensible proposition for everybody, I reckon

.
Precisely. Displacement cruising of P and SD boats is a trend in boating and the builders need to react to that. It's not because owners can't afford to burn the fuel, it's because they don't want to afford to burn the fuel (which probably tells you a bit about how they got wealthy in the first place). I'm sitting opposite a fuel berth in Elba right at this moment selling fuel at a whopping €1.83/litre. There's no way I'm going to blow 350 lph of fuel at 20kts at that price tomorrow for 5 hours when I can take double the time at 10kts and consume only 60lph

I also disagree with the cliché that fuel economy is the primary objective of displacement boaters, because that's actually just a nice by-product.
In fact, Nordhavn does not sell to folks that are interested in burning less fuel than with a Sskr, for any given size.

Whisper it quietly but if you look at the fuel consumption of say a Nordhavn 55 at 8kts, its less than 1mpg so a lot higher than a planing boat of similar size at the same speed. Dragging all that weight around and having a deep draft hull costs fuel. Yup, Nordhavn buyers definitely don't buy them for fuel economy!