Boat sales and the coming reccesion.

[mvweebles]

Originally Posted by Pizzazz

So, my math is like this. Engines have 1,000 hours on them. Let's say I put on at least 1,000 hours more before major work. 1,000 hours x 15 gallons per hour x 2 = 30,000 x 3.8 liters/gallon x $2/liter = $230k in fuel costs. It may take three to five years to run through than many hours. All other costs including oil, paint, maintenance, slip fees, insurance would be a fraction of this cost (it depends a bit on the standard of maintenance but it is tiny overall). So, say total nm will be 1,000 hours x 20 knots = 20k and total cost will be $300k. Fuel is still 75%+ of total cost of ownership.

One can easily put 20k nm on a sailboat for less than $300k. So, the real difference is time vs. cost. It would take 4,000 hours to put 20k nm on a sailboat, while on a powerboat it will take 4-5x less time, depending on speed. Hence I do not understand trawlers?!

20-kts is a different ballgame - definitely outside the trawler basket. Here are a few long-distance cruising examples of trawlers:

1. A sistership to my Willard 36 trawler went from So Cal to Hawaii (roughly 2300 nms) and burned 325 gals of diesel; and averaged around 6-1/4 kts burning 0.9 gph. For this boat, the 20k nm use-case at $5 USD/gal would be under $15k.

2. Nordhavn 57 So Cal to Ft Lauderdale. I spent about 5-years as a full-time delivery skipper based in San Francisco. One of my deliveries - a Nordhavn 57 with single 350 hp diesel from So Cal to Ft Lauderdale, averaged right around 9-kts and burned 6 gph for the 4500 nm run. The first leg from Dana Point to Acapulco, we were in the company of a 80-ish foot Azimut that was running at around 20-22 kts. He passed us three times as he stopped for fuel, and we both arrived in Acapulco at roughly the same time. We burned about 1000 gals over the 7-day run, the Azimut likely burned 4000-5000 gals making at least three fuel stops plus port clearance and such. Lesson being a tortoise and hare thing. Now, this was a $1.5m boat - 20k nms would cost around $65k USD in fuel. A fraction of the TCO.

3. Willard 40 from Long Beach CA to La Paz Baja. I can tell you from experience doing the Baja Ha Ha in a Willard 40 trawler (full displacement with long keel) that a 40-foot trawler is considerably faster than a 40-foot sailboat. Sure, but have a hull-speed of around 7.5 kts, but we averaged 7.2 kts - 170 nms/day whereas a typical 40-foot sailboat is lucky to average 150 nm/day. BTW, at 7.2 kts from Long Beach to La Paz (over 1000 nms), we averaged 1.5 gph - roughly 325 gals diesel for the +1000 nm run (boat held 700 gals). To round-out the 20k example, fuel costs would be in the $20k range.

I realize some sailors like yourself migrate to go-fast powerboats, but seems vast majority migrate to trawler-style boats. Many still want to go faster than displacement speeds (full displacement boats like mine are rare these days), but its a choice. Go fast and you'll pay a lot (same with sailboats, though expense is not fuel).

Bottom line: you can spend as much on fuel as you would like. But there are some very economical alternatives in the powerboat range. No less than Steve Dashew, a noted sailor and powerboater, very credibly states the cruising costs are about the same between the two. I know of two other people who have circumnavigated on a sailboat, then did extensive cruising on a trawler and their experience was the same: long term operating costs between sail and power/trawler are a wash.

[ohdrinkboy]

I've been saving for over 20 years for my cruising sailboat. I've got the cash, but will likely buy in 3-4 years because I don't want the running costs of keeping the boat until I am ready to use it. I expect we will see prices drop significantly over the next 2 years. I'm already seeing indications on yachtworld of a return to more pre-pandemic pricing. Timing could be perfect for me.

[Lemsteraak]

Back to the graphs - or "grafts" ;-)

It isn't that used boats are going up in price, OK they are. Your money is becoming less valuable so it is reflected in rising prices. The actual value is the same, price changes reflect inflation. Our inflation rate is quite high and is really a secret tax. You loan your money and "buy" US treasuries and receive a return on your money. The value of the money they return to you depreciated at a higher rate, so it is a losing proposition. The difference in what you receive as interest and what you lose to inflation is thought of as the secret tax. What is even more disturbing is you are then taxed on the "profit" or interest you receive.

Boats depreciate, they deteriorate, not like land, for example, which holds value and rises with inflation. The old adage is they aren't making any more land is true. We are seeing this in land prices along our waterfronts. I feel the best way to combat these rising prices and restrictions is to support your local boating and yacht clubs. In essence you become an owner and have a say in how it operates. Some even have repair facilities which will become more important as we have fewer options for DIY boatyards.

[CaptTom]

Originally Posted by Lemsteraak

It isn't that used boats are going up in price, OK they are. Your money is becoming less valuable so it is reflected in rising prices.

Very true. I think you have to look more broadly. It seems to me that the middle class (however you define that) is being priced out of the boating market. My former neighbor, a janitor, bought a brand-new 23' cabin cruiser back in the '70s. Decades later, I bought my first brand-new boat. Neither he nor I could buy a comparable boat today, even if you adjusted our incomes for inflation.

Originally Posted by Lemsteraak

I feel the best way to combat these rising prices and restrictions is to support your local boating and yacht clubs. In essence you become an owner and have a say in how it operates.

Yes!! I feel very fortunate to own a membership in our boat (not "Yacht"!) club. We'll never be selling out to Safe Harbors or sending bundles of cash to some faceless out-of-state corporation.

What I do worry about, however, is our ownership shares ("memberships") increasing in price to the point where only those who can afford the most expensive boats will be able to join. These people don't use their boats much; we're already seeing the social aspect of this so-called "club" dramatically diminished. They don't work on their own boats, so I could even foresee the day when they vote to ban DIY work.

[SV THIRD DAY]

Date Point:
Boats are selling as fast as ever here in La Paz, Mexico.
The Covid Surge in boat sales hasn't slowed "Yet" but I fully expect things to slow down a bit. Even if some don't want to admit the USA is in recession, you can't hide from the Laws of Economic forever.

[Rumrace]

I’ve had a couple new boats. Used the crap out of them. Repowered 2 for fun.
Just about ever stupid repair I’m not qualified to do on a boat I’ve done. Maybe that’s a good thing cause if finally learned hiring a pro is cheaper and I can focus on hobby mechanics rather than spend a season hauling parts.
I love telling people I saw my Dentist playing diesel mechanic. I know he makes way more money an hour working on mouths.
DIYers can be the bane of a club. A clutter of stuff smells dust and noise. One guys touching up the teak with a little oil and it reminds we all should. Another guy drops a greasy generator on the dock leaving a permanent oil stain leaves it there so carts can’t get by and takes a lunch break.
So maintenance heck it’s a passion of boating tuned polished yummy.
Some folks take it too far and in many cases are wasting time and money.
The current market for my next boat says new is best value. I don’t think that will change for 5 years. I think if your looking for an old boat the free section grows daily. If your waiting for a deal on a recent boat you are going to be out of boating for awhile.

[carlosproa]

Two days ago my neighbor called me lamenting there is no supply of $100,000 to $1M power boats here in Miami for a broker like him. Last year he broke his sales record and sold every boat he was retained to sale. This year so far, the big dealers got smart and swiped as fast as they can any owner wanting to sale, they get them into a contract.

So at least in South Florida, for motorboats on the range mentioned above is a seller market

[Celestialsailor]

Originally Posted by goboatingnow

My experience from the last two recessions is , the wealthy ( as opposed to the super rich ) tend to become cautious with cash orientated transactions. Those financing often don’t care as much albeit repayments may climb, but recessions often lower interest rates.

Marina fees are rising , true , but greater interest then looks at lower quality moorings , secondary locations etc. Boaters tend to be enthusiasts and are not in it for the money.

I think we’ll see a surge of “ Covid” boats within two years , but that will be a surge. That market will dampen new boat sales also which are very high at the moment as good 2nd hand stock is hard to come by.

High end boat builders tend to have a lot of high fixed costs particularly labour and wages will be rising quite dramatically in the next few years. This squeezes their margins and coupled with increasing buyer reluctance poses a challenging market.

Middle ground has the option to drop back in size , the crazy situation of couples buying 50 footers may slow or stop , especially as marina pricing increases.

I don’t subscribe to the gloom and doom brigade , pharma and tech are doing well and order books are healthy , many countries have good tax takes and can insulate populations to some degree. It depends on how long

The war in Ukraine will be over by the winter

I agree with almost all of that which you said. Your last line?...I really hope you're right!

[SV THIRD DAY]

Since the Definition of Recession now says we ain't in one, I don't worry.
Plus the same people that told us Inflation was Transitory are running the show, why are you guys being so Negative? Build Back Better will save us.

[shimari]

Originally Posted by dhenline

...

One year ago, the Amel dealer mostly laughed at me when I asked to purchase a boat new becuase of the time frame. Now there are three late model ones for sale.

...

There were five Amel 50's (2022 sold now, 2021, 2020, 2019, and a 2018) for sale until a few days ago. The price of all of them is probably roughly what the owners paid for them (if not more for the '18 and '19).

I can't remember the number of boats the yard produces a year, but this many for sale at once is pretty surprising. It's a definite sign that things are slowing.

[Allied39]

Originally Posted by SV THIRD DAY

Since the Definition of Recession now says we ain't in one, I don't worry.
Plus the same people that told us Inflation was Transitory are running the show, why are you guys being so Negative? Build Back Better will save us.

Right.

[clamshack]

I don’t think we’ll see much difference in the market over the next few years price wise. There isn’t enough supply in the market to warrant it. Between the Great Recession, that killed off manufacturers and COVID, if anything the supply of decent inventory is shrinking.

One thing that won’t be happening is buyers banging down doors to buy junk. The last two years have been an outlier. However, if you put a well kept boat on the market in the right season, it’s going to sell for a decent price. With that being said keeping a boat and maintenance are going to become more and more expensive.

[Celestialsailor]

Originally Posted by SV THIRD DAY

Since the Definition of Recession now says we ain't in one, I don't worry.
Plus the same people that told us Inflation was Transitory are running the show, why are you guys being so Negative? Build Back Better will save us.

Actually Rich...you are the one being negative with your mockery. Just in case you were wondering.

[Cwens]

Originally Posted by dhenline

[...] before the pandemic ended [...]

.

Before the what?

[NPCampbell]

Originally Posted by Celestialsailor

Next you can see in this graph how close we are to the next crash.





There is a direct correlation to recessions, S&P 500 and boat sales.


I thought maybe people would have some input on what may be coming.

Coming? We are already in a recession. We've had two consecutive quarters of negative real GDP growth. The S&P 500 is down 20%+ YTD already.

This graph is old. It's not showing the China trade war dip in 2018, the Covid dip or the 20% dip YTD from the current recession.