second hand boat prices

[Birdseye]

For the first and probably only time in my life, I am thinking of treating myself to a new boat in the 36ft range. But one question that is making me hesitate (apart from the difficulty of finding one I like!) is depreciation.

Times of high inflation past, it was possible to sell a 5 to 10 year old boat for more depreciated pounds than it originally cost. Nowadays, brokers not selling a line of new boats talk about 25% depreciation - obviously depending on condition, extras etc. Those selling new boats talk of no depreciation. And second hand boat adverts suggest somewhere in between - though I suspect only the good value boats actually sell.

So have you any personal experience of what actually happens over a 5 to 10 year time scale:
a/ on a popular mass market boat like a Benny or a Bav
b/ On a Swede or Northshore or IP

 

[davidwf]

As a rule of thumb assume you will loose the value of the vat ie 17.5% + 10% per year for about 3 years on the current new price of the boat, if the boats in short supply then you will probably only loose the VAT. After about 3 years or so the price should stabilise.

The brokerage fees also dent the return quite considerably ie to the tune of 6% at least.

 

[Sailfree]

I have sold 2 boats in the last 6 years and I believe depreciation has been about 15% in the first year, 20% after the second and 25% after the third. The depreciation though is based on the current new price not the one you may have paid. I have no personal experience of longer periods but providing you keep it in excellent condition I believe the rate of depreciation greatly reduces after the first few years.

Initially you would not avoid first year depreciation unless there is such a waiting list and demand is high enough for someone to want the boat that you have specified at a premium to beat the waiting list. Depreciation in the first year is therefore the amount that creates an interest in people to buy your boat secondhand rather than order new!

I would expect other factors to also have an effect. Recently boat prices have been reasonably stable with price increases in line with inflation. Metal prices and resin prices are going up greater than inflation so I expect higher price increases in the near future. Any depreciation of the £ will also increase the new price as the majority of boats are from the Euro zone.

IMHO the government will realise that house prices can only be controlled long term by the supply = demand equation and that high interest rates are hurting industry so I believe interest rate will slowly reduce and the value of the £ with it and hence an increased list price for Euro priced boats!

I ordered a new boat in November 2004 and note that the retail price had increase some 2 -3% by the January 2005 London Boat Show.

I look at secondhand prices and I think many are flying a kite and the actual price paid considerably less dependant how desperate the seller is. Marina fees of approx £7000pa due now (for 1st April) on the South Coast can assist the degree of desperation!!

Whichever way you look at it sailing is expensive. I will sail for a long as I can but I am aware that there are many better and sensible things to do with £'s.

 

[rhinorhino]

HRs go up about 3-5% a year, if well maintained and discounting any work done on them.

 

[mikebees]

Be careful to compare a fully equipped new boat with same fully equipped boat 1,2 5 years later.
The basic list price of new boat as promulgated at boat shows is very different from the cost of one put in the water properly equipped.
I have just bought a twelve month old Beneteau. I paid 55% (yes fifty five) less than the original owner was invoiced in March 2004, less than one year's depreciation. If you buy mass produced boats built down to a price like Beneteau, Jennau, Dehler, Hunter, Legend you will suffer massive depreciation. If you buy quality like Vancouver, Rustler etc in monetary terms you may suffer almost no loss at all. My last two boats were second-hand Vancouvers and after several years of ownership I sold them for what I paid for them.
From long and painful experience imho if you can afford it, buy an almost new boat. There are plenty around, you can take advantage of the first owner's rashness: either the new one was too small, too big, the wife didn't like it, sailing wasn't what it was thought to be etc etc.
Remember also yacht brokers are just below lawyers, estate agents, used car salesmen and chandlers in low-life so never pay anything like what they ask.
If you buy an old boat you will spend a fortune in time and money in maintenance and re-equipping and reading forums like these to solve all the problems when you should really be out sailing which is what it is all about.
Good luck!

 

[Salty]

Five years ago I bought what was then a 5-year old Beneteau 35S7 for a good price and sold her three years later for exactly the same amount. However, this was gross of brokerage fees and while I had her I probably spent £5k on upgrading her to a decent spec. (ie installing equipment I considered essential: shore power, decent ground tackle, etc,) - this all stayed aboard when sold. So while I keep the missus happy by saying we got back what we paid for her, in reality it was about a 20% discount over that three years of ownership.

 

[aluijten]

I am looking to buy a secondhand Swede (10-15 years old) and as far as I can tell (after many calculations) my conclusion is that on average (for these kind of boats) the number you pay for the boat (so not the amount, but number actual you write down on the cheque) will allways be the asking price when selling. So related to the asking price at moment of selling, the loss you will have on the boat will be the inflation and all the kit and upgrades you buy for the boat. This is probably only true is the boat is well maintained and kept up to date. What I'm still trying to figure out what, on average, is the differende between asking price and actual selling price.
Also I saw that pricing of the boats is amazingly consistent throughout northern Europe.

Arno

 

[Birdseye]

I think there's some truth in what you say about the asking price, particularly when applied to boats 10 to 15 years old. But if you ever try ringing round sellers some few months after their ad has appeared, you will find that less than half have sold and these are either the ones who were offering a bit of a bargain, or the "in demand" boats like HR. Personally, I have never bought at less than 15% discount on the asking price anyway.

None of which really helps since I am looking at a new boat and the market seems to be changing from what it was even `10 years ago. These days much of the market is the low priced AWB, replaced after a few years with another similar - look on the YBW web site and see how many Bav 36's are for sale. Some people say they are in high demand and hardly depreciate. Others say they fall like a stone - 55% on a Benny mentioned above.

So who is right?

 

[jonjo]

So new boats depreciate 47.5% over the first 3 years?

 

[aluijten]

Buying a new boat is mostly a question how much you want to pay for the investement (or how much money do you have at hand). By buying Hallberg or Najad you will pay a lot more, but there are a few advantages over the AWB's. The level of workmanship is much higher (I saw this most clearly at the Düsseldorf boat show) and the depreciation is less. Also they will cope better with 'old age' compared to the AWB's. The latter is because of two reasons in my opinion; they're less 'trendy' and more rugged from build quality.
Next thing to consider is when you sell the Bennetau, you will have to compete with a lot of other sellers offering the same boat, thus lowering prices. The Swede will be more 'exclusive'. Of course there will also be less buyers, increasing the selling time.
All in all, I don't think there is much difference, either you loose the money during ownership (finance costs), or you loose it when selling. The questions I think you should ask are:
<ul type="square">
[*]Am I going to sell the boat in 3-5 years time (An AWB could be an advantage).
[*]Do I really enjoy solid workmanship (Go for a Swede)
[*]Do I want to go as fast as posssibe given the hull length (Many AWB's are very fast)
[*]Do I want to be sailing or struggeling at 7 Beaufort (Decide for yourself which boat to pick)
[*]Do I want to do some bluewater cruising (Go for a Swede)
[/list]

All in my opinion obviously /forums/images/graemlins/smirk.gif

 

[jonjo]

[ QUOTE ]
Next thing to consider is when you sell the Bennetau, you will have to compete with a lot of other sellers offering the same boat, thus lowering prices.

[/ QUOTE ]
This would imply that the rate of depreciation is directly proportional to popularity, which is perverse. Does it work for cars? Yes some will say look at BMW's - unfortunately I have just seen my boss experience a £17k loss over 22 months on his new £47k BMW.

Purchasing a Swede is an indulgence because clearly cheaper boats can do the job, so where are all these people (in an already small market) who are going to buy someone else's 10 year old second-hand dream at so little discount on a new model?

At any point in time in the yachting world a group of owners can successfully create a myth that their brand of boat is immune from fundamental economic forces. Owners of the "British evergreens" managed to do this successfully for some time. Trouble is, eventually the number of people prepared to buy into the myth dries up and the pyramid tumbles.

Soon large numbers of Swedes will end up on the second hand market looking tatty at 25 to 35 years of age, the brand will tarnish and normal economics will resume.

I seriously suggest that most commentators in this thread get out of yacht ownership and invest in fine-art instead where there is some chance that their delusions will not end up costing them the shirt on their backs.

 

[StugeronSteve]

Buy whatever fits your usage and pocket best. Boats aren't sensible economic propositions. Swedes / Island Packets etc may well have a considerably lower depreciation rate, but they are b####y expensive in the first place and carry much bigger brokerage bills on disposal. Furthermore, unless you have stacks of dosh in the bank, you are going to be borrowing and the interest costs should form part of the cost of ownership equation.

 

[Salty]

Quote: 'I seriously suggest that most commentators in this thread get out of yacht ownership and invest in fine-art instead where there is some chance that their delusions will not end up costing them the shirt on their backs.'

I think most of us appreciate that owning a yacht is equivalent to pouring money down the drain and hence is hardly an investment: however it's not unreasonable for someone to try and minimise the financial burden that owning a yacht involves.

Depreciation ultimately is driven purely by supply and demand. The advantage that the Scandi type yachts have is that supply is fairly tight and there is always likely to be reasonable demand for 'classic', seaworthy, well built yachts (and I say that as an ex-Beneteau owner').

Your BMW example highlights that the market for a £47k car is essentially status driven, and hence big beemers, Audis and the like plummet like stones once second-hand as they lose the glamour of being 'brand new'. Mercs on the other hand hold up better, for similar reasons as the Scandi yachts. More supply of course, but also plenty of second hand demand as a function of their reputation for outstanding engineering and longevity.

 

[jonjo]

You make it sound as though the supply of Swedes is a carefully regulated market similar to some limited edition collector's reproduction or freshly minted krugerrands. The Swedes are nothing more then manufactured items made from substantially the same commodity materials as a Bavaria.

I would certainly buy a new Malo if I could afford one but I would not buy a 10 year old Swede at just a 20% discount on a new model.

The mass market AWB's are popular by definition but so far in this thread no one has explained why this popularity should fall away so quickly.

By contrast given that the purchase of an HR is the fulfilment of a dream and an indulgence that few can afford, there is every reason to suspect high depreciation as per the big Beamer analogy.

Your Merc comments are interesting as well, I can assure you they are no longer respected by a younger generation of consumers. This only serves to illustrate that cultures bounded by age or geography build up belief systems around brands that don't hold up to scrutiny in the long term. Look across the pond, Americans regard Clarks Shoes as an upmarket brand!

 

[aluijten]

Jonjo,

As I said before the total cost of ownership between an 'expensive' boat and a 'cheap' boat are no so much different. It all bears down to the moment when you take your loss.
You suggestion on fine art is a bit of a laugh actually. The art prices are closely related to the economical tide, unless you buy the real special stuff, at real special prices (picasso etc.). And if looking at art is your thing, fine by me, but I rather go sailing...

As other people have said about a thousand times, don't buy a boat unless you are prepared to spend money on it. It's a hobby, not an investment.
On the otherhand is't much more economical as buying a new car.
Too bad I can't sail to work though...

Arno

 

[Salty]

Jonjo,

Blimey, you're in a state about this one. I'm not suggesting that the bottom is about to fall out of the AWB market - like you I can't see anything changing the supply/demand equilibrium. But while you wouldn't pay the required prices for a 10-year old Scandi, other people clearly would, and I don't see much changing that either.

'You make it sound as though the supply of Swedes is a carefully regulated market' - er, well it is isn't it? There are less of them around, than there are AWB's. And given that you're looking at a 9-12 month lead time for a new one, whereas the AWB manufacturers can pretty much deliver from stock is likely to keep it that way (in fact that may go some way to explaining 2nd hand prices, as not everyone wants to wait a year for a new boat). In any case it's irrelevant unless looked at in the context of demand.

The answer is clear in any case if you look in the back pages of any of the magazines, ybw.com or boats.com. The market sets the prices and the market can never be wrong.

Slightly off topic, but while you take a dig at my Merc comment, I'm afraid you're wide of the mark with your 'I can assure you they are no longer respected by a younger generation of consumers' reply. An interesting survey released a few weeks back by a US ad agency surveyed all brand names in US Billboard Top-20 charts for the last couple of years. Mercedes was first in 2003, and third in 2004, beaten by Hennessy and Cadillac, mainly thanks to mentions in rap music. So yo! bro' Jonjo, just chill, man.

 

[AlexL]

Quite.

Another consideration is the distinction between the "Rate" of depriciation and the "Amount" of depreciation.
A 100k AWB yacht may look bad with say 25% depriciation whilst a more luxury marque may only suffer say 12.5% depriciation, but if the luxury yacht cost 200k then the amount lost is 25k in both cases. I drew a few graphs of 2nd hand cars a few years back when everyone told me to buy a 15k nearly new BMW or Merc instead of a 10K new or nearly new ford. Whilst the BMW and merc had lower %age depreciation the amount of actual money lost over say 3years was bugger all different. I suspect that boats are the same. Obviously after about 10 years or so the depriciation curve is pretty flat, but then the running repair costs become much more significant. As has been pointed out there will never be a cold, unemotional financial justification for owning a boat, so just go with what you can afford and what you think is best.

 

[jonjo]

[ QUOTE ]
So have you any personal experience of what actually happens over a 5 to 10 year time scale:
a/ on a popular mass market boat like a Benny or a Bav
b/ On a Swede or Northshore or IP

[/ QUOTE ]
I don't have personal experience but SunSail have plenty. You could be guided by the minimum buy back % guarantees provided by SunSail for owners exiting from their charter fleets at 5.5 years.

I think they offer 55% after six seasons of use in their charter fleets. This usage must equate to at least 10 years of private use.

 

[jonjo]

[ QUOTE ]
Jonjo, Blimey, you're in a state about this one.

[/ QUOTE ]
Too right My shiny new AWB has only been afloat for one month and now you lot are predicting it will either depreciate 55% in 10 months or failing that 47.5% in three years for sure.

Fortunately I have enough functioning brain cells to appreciate the implausibility of a depreciation curve that plummets 47% in three years, then makes a sharp turn and continues at 3% p/a for the next 30 years.

Trouble is if this nonsense is not debunked it will become established urban myth and might affect the future value of my boat.

 

[Sailfree]

If you bought a 12 month old boat at 55% discount you were very lucky indeed.
Having sold a Dufour 36 after 3 years and a Dufour38 again after 3 my experience is approx 20 -25% depreciaton on a well equiped charter boats. The new price on which I base this depreciation includes all the extras. I sold both quickly at the price I wanted.

Any greater depreciation than this I suspect obeys the rules of supply and demand and desparation to sell.

A well equiped AWB 36' boat will be £100k a swedish equivalent £230k so Alex makes a valid point that the total value of depreciation (in £ not %) is roughly the same. Sailing for most people is fulfilling a dream, a £230k dream is a bigger one and probably nicer. Whether you have the money or borrow it I decided to live with a £100k dream and use the remainder to invest. Beware though - I may have initially refused the £230k swedish boat but my dreams grew to a 43'AWB. Its people like me that the mortgage people love!!

He who dies with the most toys wins, He who dies owing the banks £millions is my hero!!