Why have the Big 3 abandoned the "ordinary" man

[ontheplane]

I know, it's all because they make more money from bigger and bigger boats right...

But they aren't....

Sealine went bust,
Fairline's gone bust,
Sunseeker's in trouble,
Princess is making a loss ( I believe)....

So, why? I mean if they make so much more making bigger boats, why are they making a loss?

I think the answer is that although they make more "profit" per unit on a bigger boat, they failed to factor in that they would only make more money overall if they still sold lots of them.

I don't know how many people start boating at 40' and £350,000 boats but i suspect not many.

So whereas Sealine used to start with a lovely 18' boat, and you could work up - not so long ago, they had a 25' baby cruiser that I could imagine "normal people" could afford.

But now, most of them start at 40' and that's a funny size and price range.

Too small for a sudden lottery winner who wants to buy the biggest thing he can afford but way too big/dear for most people, which means that they have to get those who are moving up from smaller boats which means you're fighting everyone else for the business, rather than snaring them earlier in their boating life and persuading them to trade up.

I know I'm probably wrong, but I suspect this is half their problem now.

 

[DougH]

I know, it's all because they make more money from bigger and bigger boats right...

But they aren't....

Sealine went bust,
Fairline's gone bust,
Sunseeker's in trouble,
Princess is making a loss ( I believe)....

So, why? I mean if they make so much more making bigger boats, why are they making a loss?

I think the answer is that although they make more "profit" per unit on a bigger boat, they failed to factor in that they would only make more money overall if they still sold lots of them.

I don't know how many people start boating at 40' and £350,000 boats but i suspect not many.

So whereas Sealine used to start with a lovely 18' boat, and you could work up - not so long ago, they had a 25' baby cruiser that I could imagine "normal people" could afford.

But now, most of them start at 40' and that's a funny size and price range.

Too small for a sudden lottery winner who wants to buy the biggest thing he can afford but way too big/dear for most people, which means that they have to get those who are moving up from smaller boats which means you're fighting everyone else for the business, rather than snaring them earlier in their boating life and persuading them to trade up.

I know I'm probably wrong, but I suspect this is half their problem now.

WRONG. They lost more and more money when making smaller boats.

By the way, Sunseeker is not in trouble and is without doubt the strongest UK manufacturer.

 

[ontheplane]

They've been losing money since the nineties? How the heck are they still in business?

Thought Sunseeker were losing money as well, apologies if that is not the case.

 

[Nick_H]

By the way, Sunseeker is not in trouble and is without doubt the strongest UK manufacturer.

Unfortunately I think they are, although hopefully will turn it round before the patience of Dalian Wanda runs out

"The Dorset-based boat maker, which was bought two years ago by Chinese property developer Dalian Wanda Group, recorded sales of just £196 million in the year to December 2014, compared with £341 million for the previous 17 months.
However pre-tax losses widened from £26million for the 17-month accounting period to £39.1 million for 2014, meaning the company has not made a profit since the year ending July 31, 2012."

 

[wipe_out]

I had a similar thought when I was reading about Fairline a little while ago.. As much as the likes of Fairline, Princess, Sunseeker and Sealine make great boats I can't see myself ever buying a new one.. Well not unless I win the lottery..

As it happens last year I did buy a brand new boat but is was from French manufacturer Jeanneau who cater for the the sub 50ft mobo market (as well at up to about 65ft sail boats) and from what I have been told is going very strong.. Sure you can say they are built to a price or whatever and I would say yes, they are built to an affordable price for as many people as possible to afford..

I am sure I am probably talking about companies with completely different business models but it seems from my simplistic perspective that if you trim your product range to a smaller and smaller potential customer base you are heading for trouble eventually.. Especially if you want to build any form of brand affinity, get the customer young with an entry level product and grow them into your more expensive products as they age and can afford it, like car manufacturers do..

 

[doug748]

"........So whereas Sealine used to start with a lovely 18' boat, and you could work up - not so long ago, they had a 25' baby cruiser that I could imagine "normal people" could afford.

But now, most of them start at 40' and that's a funny size and price range.

Too small for a sudden lottery winner who wants to buy the biggest thing he can afford but way too big/dear for most people, which means that they have to get those who are moving up from smaller boats which means you're fighting everyone else for the business, rather than snaring them earlier in their boating life and persuading them to trade up.

I know I'm probably wrong, but I suspect this is half their problem now......"
Quote: ontheplane



You may be wrong, who really knows, but you have a very good point.

Here is an overview from the autopsy of a once robust manufacturing industry:


" (The DTI sponsored report) - contained sharp criticism of the manufacturers’ past performance. They had been, over the years, it charged, too preoccupied with ‘a concern for short-term profitability’, which had badly eroded their competitive position relative to their - rivals.

......The British manufacturers were particularly criticised for what was called ‘segment retreat’. This was the process by which they reacted to the advance of their - competitors, who initially built mostly small machines with limited engine capacities (sic), but had gradually moved ‘up’ the market with larger and larger machines.

As the competition increased, British manufacturers failed to develop new and improved light- to medium-weight models to counter those of their - rivals, and simply vacated the various market segments one after another. "

http://www2.warwick.ac.uk/knowledge/socialscience/stevekoerner/

 

[greenace]

By the way, Sunseeker is not in trouble and is without doubt the strongest UK manufacturer.

Well, a £41m loss isn't trivial. 'Strongest' is a relative term here, I think. Sunseeker are gambling their future on a 20% increase in high net worth individuals by 2020. Good luck with that, especially in a slowing global economy.

Begs the question is any volume boat-building business viable? I'll be keeping a close eye on niche builders such as Trusty, English Harbour Yachts etc to see if they fare any better (I hope they do).

 

[ontheplane]

But as above, the likes of Bennetau, Jeanneau, etc seem to be making smaller boats profitably, and more importantly, they are selling a lot of them.

The Chinese market is slowing considerably, and it strikes me that this entry point of 40' / £300k is mad - you either target the really rich and build superyachts, or you have a range of boats starting where normal people can "buy in".

The car manufacturers are seeing this - BMW, Audi, etc are all going smaller not bigger - offering a premium product, with premium features and premium pricing but at a smaller, more affordable level.

e.g. A1 audi in the same market as a vw polo - 10 years ago their range started at the golf size, and 20 years before that at the A4 / mondeo size.

You can buy a Mercedes A class for not too much more than a Golf - 20 years ago the cheapest merc was a seriously expensive car.

 

[DougH]

Well, a £41m loss isn't trivial. 'Strongest' is a relative term here, I think. Sunseeker are gambling their future on a 20% increase in high net worth individuals by 2020. Good luck with that, especially in a slowing global economy.

Begs the question is any volume boat-building business viable? I'll be keeping a close eye on niche builders such as Trusty, English Harbour Yachts etc to see if they fare any better (I hope they do).

Any loss is just that 'a loss', and a loss of £41m is huge, no argument with that but what you have to look at as well is the enormous investment they have made in the mega yacht range which is still selling despite the current financial situation.

'Strongest' may be a relative term but is relevant when you take into account who their owner is.

Would you be happy with Princess's owners/backers?

 

[greenace]

Take your point. But strong backer or not, it doesn't change the fact that, despite recruiting right now, Sunseeker's Phil Popham is talking about 'cost-cutting', 'streamlining' and 'improving efficiency'. All things we hear from desperate high street chains shortly before they flounder for good.

 

[Montemar]

An adage I learned from a customer several years ago was "better some sales at a low margin than no sales at a high margin". Perhaps the UK manufacturers should have battled it out in the more affordable end of the market rather than moving into the high margin end. Perhaps better to have done both though brand image may work against that but Beneteau or is it Jeanneau have launched Prestige ( naff name ) to combat that particular problem. The car market and its brand stratification is a good indicator of how the marketing experts think things should be done. Perhaps the big manufacturers have disappeared up their corporate derrieres in the search for more profit. Macho says you have to go big...big losses from the look of it.
If interest rates are currently low and marine mortgages correspondingly cheap how much worse will it get when the interest rate goes up?
We will have to sit and wait for smaller, newer and hungrier small manufacturers to produce boats for the common man.
Or buy older boats at sensible prices that give good value for money.

 

[Nick_H]

I should have balanced my previous post with the YBW report that Sunseeker already have 5 orders for the new 131 yacht. That seems a great result for such a large boat that has only just been launched, and coupled with the new recruitment it does suggest that better times may be ahead for them. Let's hope so.

 

[superheat6k]

When these firms were making their boats in the 20 - 40' range, they were also fitted out to a reasonable but sensible standard, which over time has been slowly increasing, but now the point has been reached where everything has to be palatial, and must reflect the newest trend of any material or interior finish available. Anything less is berated. Even the latest and has to be said spectacular Fairlines, pre-demise, had finishes that were openly berated.

These interior finishes do not come cheap, especially when there is no standardisation of design beyond a few for a model run. And as others have said far too many model variations continuously being produced.

Then there is the expense of electronics, engines, et al. Why on earth does a boat that will rarely exit the Solent, or venture more than 10 miles offshore, need dual station radar, ais transceiver, charts that cover the entire globe, etc etc.

Why also is 35 let alone 40 knots necessary at all on a non-racing powerboat ? There is a sound argument that 25 knots is the maximum safe speed anywhere in the Solent on a moderately busy day. Most of these true gin palaces will rarely venture out unless the weather is spectacular, when speed needs to be kept sensible.

But because if say Fairline offers (ed !) it then Princess has to.

For me most of these modern boats are like the King's new clothes - much imagined, but generally unnecessary style without substance. A boat is not a show home, it is a boat.

On the subject of ownership not sure a wholly Chinese owned company counts as a British company, Poole factory is just a convenient place for now, until they find most of their sales are to the local Chinese nouveau riche, and they find a convenient factory on the Yangtze. After all there is no way UK can compete with local Chinese non-nouveau riche labour.

So to echo the OPs original point what will the first time boat owner be able to buy in 10-15 years at a size that is sensible and on the south coast realistically berthable ?

 

[greenace]

That oneupmanship seems like the (un)natural progression of a sport from inclusive to exclusive. Manufacturers seem so keen to outdo one another they've lost sight of the point of all this. Most boaters love boats because of what they represent: freedom, the outdoors, getting away from the grind etc, not alcantara-covered helm stations and £15,000 pop-up TVs (looking at you, Princess).

Call something 'prestige' or 'luxury' often enough and it becomes a self-fulfilling licence to print money. It's only natural that manufacturers should go where most of the money is. It's just a shame they've forgotten about you and me in the process.

 

[spannerman]

Its a shame they don't take a leaf out of the car industries book, most manufacturers offer lower priced/spec'd intro models to get customers into the brand, hoping then that they upgrade to the more expensive models.
I am sure they could produce a decent 30 footer with limited spec for a reasonable price to capture new customers, after all Bavaria are doing it successfully, I know they are not in the same league but you get a decent size boat for the money with the basics to get afloat. Windy, SeaRay and several others offer weekend cruisers for people to start out in, then they find they want the space and luxury of a bigger model, it seems the big 3 have by-passed this sector, and a trend I have noticed is that the bigger boats get used less and less. There is a V65 I did a service on in 2013 moored next to my boat, its been out twice and that was over a year ago, and many other Princess and Fairlines over 50ft never move, whereas the smaller stuff is always coming and going. Signs of the times maybe.

 

[TheOrs]

So to echo the OPs original point what will the first time boat owner be able to buy in 10-15 years at a size that is sensible and on the south coast realistically berthable ?

This: http://www.fletcher-boats.co.uk/fletcher-showroom/classic/14gto-arrowflyte

to this: http://www.fletcher-boats.co.uk/fletcher-showroom/classic/19gts-sportscruiser

I think this answers the OP's question. There is a UK manufacturer (still) making smaller boats (including a 19ft weekender) - Fletcher. They are surviving but I don't think they are overflowing with orders. Fletcher is a well known, well respected name making a wide range of good quality boats. If there was a big market for such a thing they would be doing extremely well. My conclusion is that there's not really much of a market for small power boats.

Unfortunate, as I have two of their boats, so I hope they continue to survive.

 

[GrahamHR]

This: http://www.fletcher-boats.co.uk/fletcher-showroom/classic/14gto-arrowflyte

to this: http://www.fletcher-boats.co.uk/fletcher-showroom/classic/19gts-sportscruiser

My conclusion is that there's not really much of a market for small power boats.

.

I think most US boat builders would disagree !

 

[TheOrs]

I think most US boat builders would disagree !

My conclusion is that there's not really much of a market for small UK built power boats. (fixed)

 

[halcyon]

Part of the problem was reliance on export market, in Jan 1995 Sealine produced 27 boats that month in the 21 - 36 foot bracket, 20 went to export, only 7 were for UK customers.

How long did it take to make them ?

210S-100 ..... hull extracted 10/01/95, finished .... 24/01/95, pool final test ... 30/01/95
330S-022 ..... hull extracted 06/01/95, finished ..... 27/01/95, pool final test .... 02/02/95
360A-074 ..... hull extracted 10/01/95, finished ..... 26/01/95, pool final test ..... 01/02/95

Helps explain cost difference to length, but how fast boat were built to enable a profit, then consider some current fit out times you hear on the forum.

Brian

 

[paul salliss]

You seem upset that they don't cater for you and the mainstream buyer, who cares , there is so much boring talk on here about the " big 3" why don't people put there energy into looking at the many other brands out there that do cater for the mainstream, so much talk and conjecture about the big 3 and their financial status , YAWN