Which Boat

[ari]

Re: Actual numbers on impact of luxury tax

Oh, and in answer to Simon James who origionally posted about a Princess 45 before his post was completely hijacked...

My advice similar to above.

Nice boat, excellent sea keeping. Make sure you get a late one with the big engines (Cat 375hp or Volvo 380hp) and don't pay too much, remember even the very last ones are approaching 15 years old now!

Good luck!

Ari.

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[Gludy]

Re: Actual numbers on impact of luxury tax

I ask you a straight question and you give up.

Most forumites would agree with me that the industry will be greatly damaged by a 400% price hike A poll showed that.

Never mind ...

<hr width=100% size=1>Paul

 

[Observer]

Re: Actual numbers on impact of luxury tax

Ari,

Your arithmetic is OK but I think you underestimate the impact of a large increase in marginal costs. Fuel is the significant (almost only) marginal cost of powerboating. Everything else (permanent berthing, insurance, maintenance) are all pretty much fixed costs. Once committed, these are easily forgotten (like depreciation on a car).

From my own position, consider a 'typical' weekend's boating. Saturday Cowes and back, Sunday Poole and back. Say 100 miles in total. At present, give or take a bit, that will cost £100 in fuel with berthing on top. Meals out and stuff add to the overall cost but arguably would have been the same regardless of activity so are probably ignored. So, as I say, the real marginal cost is just the fuel. £100 for a weekend is not trivial but comfortably affordable. Now quadruple that to £400? At that cost, I'l be thinking hard about whether I'm getting recreational 'value for money'. What else could I do for £400. Answer - quite a lot. And if I gave up the boat to spend that marginal £400 elsewhere, I save all the fixed costs as well so I am massively better off.

For most people, the pot of money for leisure is relatively fixed. If more is taken out on boating, SWMBO and family will not like to be told the ski-ing/Disneyworld/Caribbean trip is off. Result - I don't need to say it.


<hr width=100% size=1><A target="_blank" HREF=http://aflcharters.co.uk>Dream Dancer</A>

 

[Gludy]

Observer you are basing the cost on using the capital fund as well. My calcualtion was based on fully replacing the fuel cost on an ongoing basis, your based on a defined period that uses the interest and capital.

However, even on your basis the factoring in of the fuel would knock £23k off a 60k boat to cover extra fuel costs for 10 years and then you would have a boat you paid 37k for and would have to have a new buyer factor his fuel costs in as well!!!

I would call a drop of 23k significant - its about a 38% drop in price!!!! Not many boaters could afford that.

The entire boating industry is based upon a well looked after boat depreciating slowly. That underpinning of the new boat market will collapse.

You know boaters will I think decide on the cost of each trip.

A local run to Padstow that may have cost say £100 there an back now costs £400 there and back .... folks take the decision based upon the marginal cost of their decision not only the total cost. Thats how you decide how much it costs to make a car journey.

A £200 journey becomes an £800 journey and we are being told that such a price hike will not make any difference!!!

At the end of the day all the boaters I know, without exeption, would decide its just not worth the cost and will get out or go abroad.






<hr width=100% size=1>Paul

 

[Gludy]

Re: Actual numbers on impact of luxury tax

Observer, we both made the same point at the same time about marginal cost decisions .... I posted mine and saw an almost identical post from you sitting there!!!

<hr width=100% size=1>Paul

 

[ari]

Re: Actual numbers on impact of luxury tax

If we were all applying that much logic and calculations to boating then I don't think any of us would be doing it.

All your calculations are very impressive, but I think you'll find boating is a little more emotive than that.

As to the fixed cost/running cost point. True enough, but the fact that Mr. Targa 33 can afford to tie £60K up in a boat and £10K a year on running it (fixed or otherwise) means that firstly he must really enjoy it (cos its a lot of money) and secondly he aint that bothered about an odd £1,000 here or there or he wouldn't be in the game in the first place!

And bear in mind this is a guy with a nearly 15 year old boat, most of the marinas seem full of much newer/bigger/more expensive kit, the owners of whom will be even less bothered.

Sorry, but its just scaremongering.

Damn, and there's me saying I wasn't going to reply again!

:-D

Ari.

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[jfm]

elasticity of demand

Observer, dont want to get into a big economic debate, not least cos I dont know enuf and would likely lose!

But this marginal cost stuff seems a bit flawed. The numbers are right, but the concept is only rleevant if many boaters are sensitive to the marginal shift.

Stuff is priced at kind of the supply demand equilibrium. Depending on the shape of the curves, many buyers can be unaffected. I mean, for every boater who would actually do something drastic (like give up) in response to (say) the £100-£400 price jump in the Padstow trip (or whatever), there are loads who dont give a damn. There are people who like their boating so much and are rich enough that they would do the same mileage/use if the boat cost ££££ more, and fuel was £££ more

Now, the effect of a given price movement depends on how many are in the "only just afford/will pay it now" camp versus how many in the other camp. I suggest - just a hunch, no evidence, happy to be corrected - that there are many in the latter group so not so much would happen if fuel price went up.

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[Gludy]

Re: Actual numbers on impact of luxury tax

We are not applying just logic but explaining it on the basis of how people make the decisions and as to go out on a trip, its based on the marginal cost.

The sort of boat you give as an example in practice even for your hours would be paying £1800 per annum more £1,25 up to £5 per gallon) = an increase of 18% overall yes - even that is significant but an increase on the marginal cost of 400% an that is critical.

I own a bigger boat and know other owners of big boats and without exception they cannot justify a trip out to Padstow for a weekend rising from £300 to £1200.

The top end luxury car market in America collapsed when a 10% hike was imposed yet I am sure most of them could have afforded the rise!

I think you are in denial......

<hr width=100% size=1>Paul

 

[Gludy]

Re: elasticity of demand

" there are loads who dont give a damn."

I know not one boater in our Marina who fits into your classification of not giving a damn no matter what the cost. In over 700 boats in the club and marina, there is , I am confident, not one who does not give a damn regardless of cost.

That may be the case in some med marinas but it is certainly not typical in the UK.

Most boaters I know have normal jobs and sacrifice a lot to have a boat .. they are not wealthy people.

In our whole marina and club we have one 65 footer, two in the 58/59 length and then we shoot down to a handful of 50 footers or so. My squadron 59 is the second largest boat there ... the vast majority of power boats are on the 25 to 40 foot range and old.

You are honestly living in a different world to make the statements you make. I think there are certainly some Med spots where your points about regardless of cost apply.

<hr width=100% size=1>Paul

 

[Observer]

Re: elasticity of demand

I agree with all that but less sanguine that most people are in the "Damn the Expense" category (apologies to Planty). Gludy reckons most are in the marginal category. If he's right, I think there could be considerable dropout from powerboating. More difficult to say that massive glut of used boats will result immediately - maybe just much less use - people using boats as floating caravans.

It's difficult to claim any insight into this without speaking to loads of people and even then how to be sure you have reliable answers?

Perhaps business opportunity for bareboat chartering? People sell boats cos marginal high fuel cost on top of full ownership costs no longer justifiable but charter to 'get on the water' and (guessing here) duty free fuel costs still available by taking a 'wet lease'?

Anybody want to buy shares in Dream Dancer? Get in early at special low prices?


<hr width=100% size=1><A target="_blank" HREF=http://aflcharters.co.uk>Dream Dancer</A>

 

[jfm]

Re: elasticity of demand

Yes, I repeat that I'm just guessing the shape of the elasticity, I dont claim any insight and happy to be proved wrong. Just throwing the point into debate really.

Observer, on your last post, do you know if a luxury boat in UK in commercial charter use will qualify for de-taxed fuel? Seems correct t me, but not sure. That's certianly true in some med countries. If true, you must be correct that running boats as charter operations will save fuel duty. The question will be, what rules and practices develop around the definition of "commercial charter use". Will it be tough like some countries, or a bit relaxed like other countries?

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[marklongstaff]

Re: Actual numbers on impact of luxury tax

Tim,
There seems to be a simple solution to your quandry.. buy a yacht - sailed back from Cherbourg - Hamble (approx 80 NM) on Sunday on a friends J120 in 9.5hrs at a total cost in fuel of the price of a 1/2 in the folly!! Such fun as well 15.1 knots max speed on the way back - think we would have given dream dancer a run for her money in those seas. Think the procedes from the sale of the sealine would cover a fair size yacht....
Mark L.

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[Deleted User YDKXO]

Re: elasticity of demand

And, by the same token, there will be many who say they are in a marginal situation now and will sell their boat (after all is anyone going to say it does'nt matter to them?) but in actual fact will get used to any new price regime after it happens and not sell their boat. Like you, I think there will be very few who actually get out

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[Deleted User YDKXO]

Re: elasticity of demand

Good point. There are plenty of luxury charter boat operations on the S Coast and I bet all but a few boats have VAT reclaimed on their purchase price and running costs but reclaimimg fuel duty would be another matter all together. You cant reclaim road fuel duty as a business so why would you be allowed to reclaim marine fuel duty?

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[KevB]

Re: elasticity of demand

I think I class myself as a marginal and currently have a "suck it and see" attitude.
At current costs we (as a family of four on a boat we bought new two and a half years ago) find the expense of boating justifiable as long as we use the boat most weekends.
The annual fixed costs i.e. marina fee's, servicing, insurance, mortgage, we try not to equate into monthly boating costs (too scary) and don't take these costs into consideration when evaluating our x amount of monthly boating spend.

So, currently a weekend on the boat costs us around £150-£200, this includes diesel, food, away marina mooring, petrol getting to the boat and odds and sods (not including annual fixed costs, as above).
£50 of the weekend cost is diesel, if this suddenly became £150-£200 I can't see myself being able to justify continuing, but I'm going to "suck it and see" I think.



<hr width=100% size=1><A target="_blank" HREF=http://static.photobox.co.uk/public/images/45/99/10714599.s.jpg?ch=97&rr=16:00:39>Nirvana</A>

 

[Deleted User YDKXO]

Scary

Too damn right its scary to break it down into monthly or daily costs. All this talk of taking your boat to the Med because of fuel costs does'nt take into account the extra costs of basing a boat there like travelling, higher berthing costs (if you can find a berth) and having to pay somebody to carry out maintenance. I reckon we'll only have used our boat about 30 days this year and when I calculate the total cost of keeping and using our boat there, it works out at about £1000 per day. Ouch! Better not divulge that figure to SWMBO. You can stay in a pretty swanky hotel for less than that per day

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[jfm]

£1000 per day, and moving to Med

You can stay in the Eden Roc Deleted User!

Re the move of boats to med, it just cannot happen, at least in the W med Spain, Blearix, France + Italy. There aint enough marina spaces. There might be in Croatia et all, but not enough flights there yet.

So whatever the outcome of the red diesel price hike, it simply cannot be a mass movement of boats to the W. Med

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[Deleted User YDKXO]

Re: £1000 per day, and moving to Med

Sssh, don't tell the wife

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[Gludy]

Re: £1000 per day, and moving to Med

There would not be a mass move to the med for many reasons - very few people can afford to take the time of work for the travel time involved.

<hr width=100% size=1>Paul

 

[ari]

Re: £1000 per day, and moving to Med

So if they're not willing to move to the Med, and not willing to dump thousands and thousands of pounds (as per your projections) in selling cheap, what they gonna do?

Err... just carry on I guess and nothing'll change!

Dammit, I've done it again!

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