Will used boat values ever recover?

[Deleted User YDKXO]

I've had my Ferretti on the market in Majorca with 2 well known brokers for several months now. Apart from one very low offer, I've had little or no interest. The brokers are telling me to drop the price to get a sale but I'm thinking that, if I have to do that, I'll hang on to it for a season or 2 more in the hope that the market improves. But one of the brokers is telling me that used boat values will never get back to the levels they were a couple of years ago and I might as well bite the bullet now and drop the price immediately because the boat certainly won't be worth more if and when the market recovers. His argument is that any economic recovery will be slow and new boat builders will have to continue to heavily discount new boat prices to maintain sales which will continue to depress used boat values
So, is he right and I am deluding myself that the market will recover and my boat will sell at a higher price in a year or 2? Are the days when you could buy a good used boat and sell it a couple of years later for the same money well and truly over?

 

[MapisM]

Short answer, yes.

I mean, those days are over.
Though I can predict everything but the future, to steal a clichè.

 

[DAKA]

Not an answer to your question Mike but I think you seriously need to give some thought as to where you would put the cash if you did sell today ?

Bank..........is that amount safe and it will deminish with low interest and high inflation anyway !
Stocks and shares.........could fall a lot more yet or you could loose the lot !
pension / Property...........your most likely saturated here already and do you want all your eggs in the same basket ?

Whats left /forums/images/graemlins/confused.gif

A Boat /forums/images/graemlins/cool.gif

May as well enjoy your investment safe in the knowledge it will always have a value /forums/images/graemlins/smile.gif

Your boat value will get back sooner or later as inflation takes hold, possibly 3-5 years.

There will always be cheap boats out there on ebay but most of the ones that need a desperate sale are sheds as their owners have always been on a shoe string budget or at least recently so they have not benefited from care, maintenance and upgrades that are required in order to support any good investment.

 

[mainshiptom]

Re: Short answer, yes.

The broker has got a point but buyers will make up their own mind? Basically buy what they believe is good value?


I think that well looked after boats will recover where boats that are old and neglect will not fetch much as well as models that either have flooded the market or not wanted by buyers?

Tom

 

[Kaste]

Because of a shortage of new boats, I am aware that many good used boats have now sold/are selling and an opinion i was given is that used prices will stabilise. Not sure if that is true or not but tend to think it is. In fact my own T43 was on the market for a year and only received "piss-take" offers. Changed fro new T44 on a deal and the EBY have already sold the T43 (not sure at what price though). Yesterday, whilst enquiring about changing my 4year old BMW I was surprised that the dealer commented that used BMW's were stabilising and in some cases increasing in value as there is a lack of stock on the forecourts. Taking all the above into consideration, that unless you need the money, enjoy your Ferretti and wait and see.

 

[capsco]

Depend if you are "getting out" or buying again, if the latter, sell yours cheaper, and buy the next cheaper, as I am sure you already know, it's the price to change that matters.

As far as your initial question goes, I think it will be a long time before thing stabilise, very easy, cheap money is a thing of the past, so by the time thing get back to "normal" I think we will all have forgotten what normal was.

 

[jfm]

Hmmm. As Mapis says, this is a bit of guesswork. My view is that the price to change wont alter much becuase the next boat you buy will be affected by the economy the same as the one you're selling.

An exception to that is late last year when new stock boats were cheap, but now manufs have cut production and new boat discounting is not happening to the same extent. So that particular small window of opportunity has changed

I think the priuce of a boat like yours will recover in a couple of years becuase of 2 factors: first, the economy will recover, and second I agree Daka's comment that we may well see much inflation when that happens. But those things wont affect much the price to change becuase they will impact your next boat too. And when those things happen we will see a return of the days when you can buy a good used boat and sell it for same money a few years later (not that I've ever managed to do that myself!). All imho!

 

[gjgm]

not that the broker has a vested interest, right /forums/images/graemlins/wink.gif
There must be a limit to how much the builder can reduce prices. I would have thought people would turn their eye on top second hand models rather than splash out on the premium of a new boat.. but I dont know the Ferretti market...
Also, boats depreciate.. if your boat sells for the same in two years time as you can get now, it may not have gone up in numerical terms, but it has still recovered in value.
You say you might hold it in the hope the market improves... how about hold it because at the current price, its worth enough to you to keep it anyway? Unless you are saying you just dont really want the boat, which puts you in a different situation.

 

[Nautical]

I would accept some of what you say there Mike, but, I would also say your broker is looking to get you down to a price that makes it an easier sale for them right at this moment. Saying that they can predict the market in two years is just fairyland stuff.

FWIW my take on it.....

Builders have been slashing prices over the last 9 months to ridiculous levels to shift stock and keep factories open, the down side to this is that it is not sustainable. If you look at most of the bigger builders the net profit (in a good year) is puny compared to a similar sized corporation say in building commercial property. when they start slashing prices as they have been that 4% nett profit suddenly becomes 10% -15% loss.

To survive there is only one option, cut production to a sustainable level and maintain a reasonable margin. This has the knock on affect of reducing the meterage available in new vessels, some will go to build to order only, some will cut so so sellers altogether and some will carry absolute minimum stock. The second hand vessels then start to create more interest, new order vessels are back to near the previous retail prices (pure economics dictate they have to if they are to survive) so the good value secondhand one will sell as the gap between new and secondhand will be not insignificant. A three year boat at £200k is probably £300k + options new so the SH is an attractive proposition but not at the moment as a new one can be ordered or from stock at up to 35% discount. The market will stabilize and prices will recover in about a year from now.

As an aside I think some builders have done their brand irretrievable damage by their short sighted discounting. A brand that has had an enviable reputation for residuals (no names though !) has been slashing prices for the last 6-9 months, great for the buyer now but what happens when new buyers in the future look to the brand, the first thing anyone does if they have any sense is look at what SH ones are selling for. Anything sold in the last year from the brand was heavily discounted, three years from now those buyers can afford to offer their boats to market an awful lot less than new prices and still be comfortable but the new guy is looking at three year old models of what he is about to buy new and is kacking it seeing the ticket price 50% of what he is about to part with.

The sensible builders cut production 9 months ago (dramatically so in some cases) and are ticking along paying the bills albeit not making any profit or very little. But they have maintained the value in their brand and not forced dealers to slash prices to make way for new stock they have commitments for. They have adjusted the new build to reflect the lower demand.

 

[jfm]

[ QUOTE ]
I would accept some of what you say there Mike, but, I would also A brand that has had an enviable reputation for residuals (no names here though !) has been slashing prices for the last 6-9 months, great for the buyer now but what happens when new buyers in the future look to the brand, the first thing anyone does if they have any sense is look at what SH ones are selling for. Anything sold in the last year from the brand was heavily discounted, three years from now those buyers can afford to offer their boats to market an awful lot less than new prices and still be comfortable but the new guy is looking at three year old models of what he is about to buy new and is kacking it seeing the ticket price 50% of what he is about to part with

[/ QUOTE ]

I agree everything you say Nautical except the above para. I think the sellers of recent new discounted boats will sell for whatever they can get. They wont discount just becuase they got a good deal in late 2008 during the overstocking period. I'm one of those people and when I sell it in say a few years I'll just take what I can, not undercut the market becuase I got a decent discount up front. It's nothing to do with "affording" it

Likwise, I recently sold a Sq58. The price I asked had nothing to do with what I paid for it. I just looked at what other boats were selling for and pitched my price accordingly. I could have "afforded" to sell it for less but I didn't, and why would I?

 

[Firefly625]

Just thought I would post this report I got today from British Car Auctions. Yes Cars, NOT boats... However I think this makes an interesting read, and certainly this is real increases in values that I am seeing month on month. Does this have any relevance to the boat market....... you make up your own mind, I know what my view is:

Tuesday, 12 May 2009

Average used car values rose for the sixth consecutive month in April,
according to the latest BCA's Pulse report.

The average auction values in April increased to £5,641, a rise of £59, or 1
per cent, over the £5,582 recorded in March. BCA suggested this indicated the
market is "beginning to settle" pointing out that earlier in the year there
were monthly rises of up to £400+.

Year-on-year April values are ahead of the April 2008 average figure of £5,406
by £235 or 4.3 per cent. It is the second month running that the year-on-year
figures have shown growth, following falls throughout much of 2008.

Stock remained at relatively low levels in April, with part-exchange volumes
falling after showing some growth last month. Strong demand from trade buyers
once again kept sale conversions high, but BCA described buyer activity
as "more muted than it was in February and March".

"April has been something of a surprise, as all the signs were that the market
was beginning to soften. In fact, demand has held up exceptionally well,
resulting in another modest, but welcome, increase in average value,
month-on-month," said
BCA Communications director Tony Gannon.

"Compared to April last year, average values are ahead by more than 4 per
cent, which indicates the strength of the recovery and suggests values are
very much back on track. In fact the market has improved by more than 18 per
cent from the bottom of the slump last October," he said.

 

[DAKA]

I am still confused why Princess 360's are being advertised for more not less than they were 4 years ago when I bought mine.

http://uk.yachtworld.com/boats/category/type/Princess/360/1

Are all Princess 360 owners optimists ?

Anyone else found this with their boats ?

Makes mine look cheap /forums/images/graemlins/cool.gif

Felix for sale

 

[gjgm]

I think Nautical has a point, in fact, because while the second hand market may have an indicated price level, many who got in cheaply will consider undercutting others a bit, as their "net" loss is mimimal. Someone who is 40pct down already is more likely to hold out for the remaining 60pct-though the extent of that hope might well depend on how recently he forked out all that money.
The net effect will be then that heavily discounted new boats will undermine future sale prices in the second hand market (assuming demand is neutral in this example).
I actually agree with JFM in that it shouldnt work like that (and not everyone does think like that) but human nature seems to cock things up when it comes to logic.

 

[PowerYachtBlog]

if you think for the now the broker has a very valid point
surely he is giving indicator for a 3 to 6 month period
the other thing to consider here especially if one things to upgrade the boat is the discount one can have in buying used now, there is some good deals to get out there
but I think Nautical and JFM comments can both make sense if new biulds levels return to pre 2008, which IMO will be a bit difficult...

 

[smileygirl]

I sold my sealine in January for the asking price (what I paid 6 years ago) but I took a small sports boat as part ex. I thought in the current climate it would be easier to sell a small boat than a big one. Also a percentage discount would also be proportionately less in cash value. The broker only charged me a fee on the cash difference - so I got a saving there too!

I am in the process of buying another boat - broker(different one) is taking my little part ex at £1K less than I accepted for it and did a good deal on the next boat.

 

[christianmoore]

Really interesting thread..... I deal with this question every day and wish I knew the answer. Everyone you speak to has very different opinions based on the side of the fence they are looking from.
I will continue to read the responses with great interest and see if it helps. The only thing I will say is that the only boats that are selling at the moment are the ones that are realisticaly priced and well maintaned......

 

[thefatlady]

Two years ago, I made an offer on a Sunseeker in Majorca. The seller did not accept, so we went our own ways.

He now has it on the market at an asking price significantly less than my offer and he has had all the costs and loss of interest in between.

This was far from being a dog. In fact, it was immaculate, very highly specc'd, and by far the best one of its type I had seen.

A bird in the hand .........

 

[Nick_H]

Either way, i'd be looking to selll now. If you're moving to another boat, then as others have said, the cost to change is no different. If you're not moving to another boat, then if you sell now you can invest the money and still get 4% ish in a bank, or buy shares if you're brave, plus you avoid all the costs and deterioration of owning a boat that you don't use. The boat would have to appreciate in value by probably 10-15% in that two years to break even.

 

[AndieMac]

It is indeed an interesting thread. The point about boats in good condition/well maintained can never be emphasised enough.
Even when the market is booming, no one wants the roughies!

 

[MVP]

Nobody needs a boat, but people do need cars, so I would forget that linkage.

The economy over the last few years was abnormal, and we are now getting back to "normal" - I wouldn't expect 2007 prices again, at least not for 10 years when the next boom will be due

MVP