Negotiating Price On a New Cat

[Skip JayR]

To give a little understanding how work intensive a boat building process is, one of the leading designers/builders of top class catamarans did a video with a time-lapse camera. The boat building process starts on 10th September and end on 30th December. Just to create the hull structure (yet not the interior and rigging done).

It shows the complexity of such a process... lots of handwork, with many specialists behing involved. You can watch this procedure in 6 minutes.
https://www.facebook.com/morrellimel...type=2&theater

So it makes clear... there is no "automatisation" like in car factories where robots can produce lots of units within hours.

The market situation is little bit different: In total the French market of boat builders had in 2011 an annually growth of plus 21.1%. In numbers = 694.4 million Euros.

E.g. Benetau (one of the big boat warfts) that time reached closely the annually growth level of the pre-financial crisis in 2008. Hanse Yachts (a concern listed as stock company with the brands: Hanse, Fjord, Dehler, Varianta und Moody) had a growth of 17 % that year. But they still made a loss of 6,9 million Euros that year (compared to the year before: 13,1 Million Euro). You can follow the stock quotes over last years here: - HANSEYACHTS Stock Quote | quotenet.com

Last to name: Europe's biggest boat builder: Bavaria... (total built units: more than 30,000 yachts). - This company had huge troubles till 2007... where there existed the rumour that this brand shall be sold. The management went through a tremendously restructuring process, now being owned by Anchorage Advisors and Oaktree Capital Management. In 2011 they did a "capital writedown". Otherwise this company would have been lost and closed.

Bavaria got new fresh money in the size of 55 Millionen Euros and all the highly debts were reduced fiscally nearby down to "0" by a technically procedure, so called "Balance restructuring".

Regularly by law the legal company form (German "GmbH") demands to publish the report of the annually financial statement. But the management of Bavaria requests annually to be liberated from this duty. Very strange and suspiciously.

The reason behind that these companies make "good progress" even in times of financial crisis (since 2008), recession and Euro crisis: They sell excellently in the "big boat segment". From there comes the real profit.

Strange formula a boat warft has to live with: "Customizing brings the money. "Standard products" bring losses."

I heard about that the boat industries association in Europe has fixed an up-prizing for 2016 at round about 2%. Just "heard" :-)

[SailBVI]

Originally Posted by tuskie

Lastly, it is a widely espoused fiction on this forum that sailing catamarans cost 10% of their purchase price to annually maintain.

What would your % estimate be for maintenance and repair costs for a 5-10 year old catamaran? I'm sure this is dependent upon how much work you do yourself. Is 10% assuming all work will be done by a boat yard?

[Bulawayo]

We have maintained our own boats 100% ourselves over the last 20 years and have not spent 10% annually of the capital cost. Perhaps owning from new and sailing conservatively also contributes. We maintain a schedule for maintenance (and sometimes reluctantly due to laziness) but always keep to to what has to be done. Our costs are pretty low and if I went through our records we could average the costs on an annual basis - to reuse a well known phrase, frankly, 'I could not be ar**ed to be so anal'. We maintain our boat in as near 100% condition to what it was was when new. Yes, I would reckon you could push 10% pretty comfortably if a yard maintained the boat. New sails every other year or so, new lenses for the hatches, pulling the engine(s) and gearbox(es), unstepping the mast, changing rigging and running rigging, paint/wax the top sides, replacing the anchor chains and then 'updating' the water maker, electronics, refrigeration and upholstery etc etc. A simple haul out, pressure wash and bottom side job could run you 10% if you are not careful. The list goes on and on. It must also depend on what is called maintenance.
I would say get more cruising liveaboards to make comments and it shall be seen that 10% of capital is not affordable for the long term cruiser. Yes, the people that sell their property and take of for 2 - 5 years could spend 10% p/a but do they really represent the average long term liveaboard cruiser? From the people we meet, when money is spoken of (and that is not often) everyone does their own work not only for the satisfaction of knowing the job was done correctly but also to save money. If they dont do their own work they seek help from another cruiser.
If you are sailing a $200,000 boat are you really going to be spending $20k every year on maintenance? On what, if you do the work yourself? We typically plan to dry out annually and do our undersides ourselves - pressure wash, using the Honda generator and Karcher, scrub & remove any loose anti-fouling, make good any damaged epoxy coating, and re-anti foul. This can take several tides but costs us just the materials used which is not very significant. We also repolish ourselves which is pretty hard work but when done annually is not so bad (oh yes it is says my wife). Similarly we invested in a rigging tension gauge, good quality polishing machines (two) and a Sailrite sewing machine and also carry all the tools & materials we need for reasonable repairs - we are not loaded down with spares but do carry spare material for canvas repairs and spare sail cloth as well as spare rigging, mechanical, electrical & refrigeration spares. These have been refined over the years and whittled down to suit our expected needs and not those that many people tell us we must carry. Our most substantial maintenance is budgeting for new sails but our last sails, carefully looked after, regularly fresh water washed and also double covered at anchor, including the roller furler, were still very, very good at 10 years of age. They had been resown just the once.

Originally Posted by SailBVI

What would your % estimate be for maintenance and repair costs for a 5-10 year old catamaran? I'm sure this is dependent upon how much work you do yourself. Is 10% assuming all work will be done by a boat yard?

[tuskie]

Originally Posted by SailBVI

What would your % estimate be for maintenance and repair costs for a 5-10 year old catamaran? I'm sure this is dependent upon how much work you do yourself. Is 10% assuming all work will be done by a boat yard?

I believe that the 10% rule is rubbish. If your repairs and maintenance bill is 10% of boat cost that is pure coincidence.

If you bought a neglected 10 year old catamaran and paid professionals to do all the required maintenance and repairs,then the annual cost would no doubt be considerably more than 10%. For several years, at least. Like wise, the newish cat currently moored next to me is professionally serviced and maintained. It is professionally cleaned and polished inside and out between trips. All linen is removed and professionally laundered. Electricians are hired to change light bulbs. I'd hazard a guess, and say that maintenance costs may exceed 10% of even the new price for that boat.

Conversely, as Bulawayo pointed out, a cruiser's boat can be maintained for much less. I pay skilled technicians where my own competence is lacking, but still manage to do my own servicing, anti fouling, cleaning and most sundry repairs. I don't race, show off or navigate like the "Costa Concordia" so things don't tend to break. Touch wood. Being live aboard cruisers we are able to travel to cheaper haul out facilities and thus avoid the exorbitant big city or "tourist trap" prices.

In calculating boat ownership costs, one has to include depreciation, interest paid or loss of interest on capital invested, mooring/storage cost and insurance as well as the repairs and maintenance we have discussed. The variables are so great that any rule of thumb, say 10% is way too dumb.

[Factor]

It can't be rubbish, all the experts on CF reckon its a fact. OH!! the humanity!!

[scarlet]

Originally Posted by Jeannius

I know exactly what the dealer made on my new boat because he sent me the wrong spreadsheet... he left on the commission details from the factory. It was 15% on the boat and 10% on the extras.

15%?!?! That is completely insane!!! even realtors don't make that high of a commission. completely ridiculous that they would make that high of a commission. So.. this is a great place to start. A $750,000 cat would be padded with over $100,000 in commission. I would say that is where the negotiations could happen. plus the 10% of the options.. well HECK 1/2 the cost of a cat is in the options. So expensive.

perhaps I need to be a boat broker!

[Cottontop]

Originally Posted by scarlet

15%?!?! That is completely insane!!! even realtors don't make that high of a commission. completely ridiculous that they would make that high of a commission. So.. this is a great place to start. A $750,000 cat would be padded with over $100,000 in commission. I would say that is where the negotiations could happen. plus the 10% of the options.. well HECK 1/2 the cost of a cat is in the options. So expensive.

perhaps I need to be a boat broker!

A "broker" and a "dealer" are two very different things. A broker never owns the boat or has any risk, other than its time. A dealer buys the boat from the mfg, has a facility and staff, stocks boats, takes the credit risk, the Non-performance risk, commissions, handles warranty claims and lots more. The 15% and 10% seem low to me.

[2Hulls]

Originally Posted by SailBVI

What would your % estimate be for maintenance and repair costs for a 5-10 year old catamaran? I'm sure this is dependent upon how much work you do yourself. Is 10% assuming all work will be done by a boat yard?

I don't know where the 10% came from, other than out of a space where the sun doesn't shine.

Here's my data point: I bought a 5 year old cat almost 9 years ago and my total expenses - everything other than my mortgage and food provisioning - has been about 7% of my initial purchase cost annually. (I must be a bit more anal than Bulawayo because all my expenses are in Quicken and it's an easy data dump.) So these costs encompass far more than "maintenance" - upgrades, improvements, fuel, insurance, customs fees, mooring balls, fishing tackle, etc., etc., etc. Yes, I do damn near everything myself, but not all of it - say 95% of it. I could not afford my boat if I had to pay for labor to do the work I put into it.

Dave

[Bulawayo]

Nah......I'm just a bit idle when it comes to placing the info on my laptop - I have this theory that the laptop shall give up the ghost and take my data with it and I am not so religious about backing it up as much as I should. I end up writing everything down in pencil instead. One day........

Originally Posted by 2Hulls

I don't know where the 10% came from, other than out of a space where the sun doesn't shine.

Here's my data point: I bought a 5 year old cat almost 9 years ago and my total expenses - everything other than my mortgage and food provisioning - has been about 7% of my initial purchase cost annually. (I must be a bit more anal than Bulawayo because all my expenses are in Quicken and it's an easy data dump.) So these costs encompass far more than "maintenance" - upgrades, improvements, fuel, insurance, customs fees, mooring balls, fishing tackle, etc., etc., etc. Yes, I do damn near everything myself, but not all of it - say 95% of it. I could not afford my boat if I had to pay for labor to do the work I put into it.

Dave

[Looking4Neptune]

Two things to say on this:
1. I recently saw an invoice for a cat (just over 40 ft) from one of the big manufacturers in France being delivered to one of the big charter companies in the Caribbean. It listed a "list price" and gave a 15% discount off that. But this was just the base model and there were "add-ons" that came to another 20% of the discounted price. Things like chartplotters, refridgerators, solar panels and winches.
2. I recently crewed for a person who had bought direct (took delivery early 2014) from another cat maker in France (not one of the bigger, good sized, more performance oriented) and it took them 7 months fighting with the manufacturer to get the boat to what they considered minimum deliverable condition. The manufacturer kept saying things like "all freezers condense water that runs down onto the floor of the saloon, we can't fix that." They got to know several other couples who were going through similar problems with other cat manufacturers in the same French city. My friend felt that buying direct saved him money but that he more than "paid" for it in the time and aggravation in trying to get the builder to respond to his needs. He says he'd never buy new and direct again (and probably would buy used).

[Bulawayo]

I would treat this with a caution.
Invoices can be raised to suit the circumstances. This could particularly be applied to suppliers into the charter market that would enable 'discount' to be demonstrated to an owner.
There are numerous manufacturers globally that sell direct. Not all manufacturers can support a distribution network. One poor experience should not be used as the yard stick. It appears as though your friend did not do his homework before making his commitment.

Originally Posted by Looking4Neptune

Two things to say on this:
1. I recently saw an invoice for a cat (just over 40 ft) from one of the big manufacturers in France being delivered to one of the big charter companies in the Caribbean. It listed a "list price" and gave a 15% discount off that. But this was just the base model and there were "add-ons" that came to another 20% of the discounted price. Things like chartplotters, refridgerators, solar panels and winches.
2. I recently crewed for a person who had bought direct (took delivery early 2014) from another cat maker in France (not one of the bigger, good sized, more performance oriented) and it took them 7 months fighting with the manufacturer to get the boat to what they considered minimum deliverable condition. The manufacturer kept saying things like "all freezers condense water that runs down onto the floor of the saloon, we can't fix that." They got to know several other couples who were going through similar problems with other cat manufacturers in the same French city. My friend felt that buying direct saved him money but that he more than "paid" for it in the time and aggravation in trying to get the builder to respond to his needs. He says he'd never buy new and direct again (and probably would buy used).

[zboss]

This is so funny... having originally come from a home building business where we priced out homes at least 100% to 300% GP, the thought that anyone would do business for 5% GP is absurd... why would anyone be in that business unless it's a huge volume play?

Heck, even my wife's store sells chotsky items they buy for 25 cents for 3 dollars.

for the selling brokers - you are much better off diverting your time to a more lucrative business.

for the buyers - ditch the 5% off new and buy a year old at 20% off.

[geoff326]

Originally Posted by zboss

This is so funny... having originally come from a home building business where we priced out homes at least 100% to 300% GP, the thought that anyone would do business for 5% GP is absurd... why would anyone be in that business unless it's a huge volume play?

Heck, even my wife's store sells chotsky items they buy for 25 cents for 3 dollars.

for the selling brokers - you are much better off diverting your time to a more lucrative business.

for the buyers - ditch the 5% off new and buy a year old at 20% off.

20% off a year old catamaran? Then the asking price must be nowhere near the selling price if that's true.

[sheldon957]

Originally Posted by Skip JayR

To give a little understanding how work intensive a boat building process is, one of the leading designers/builders of top class catamarans did a video with a time-lapse camera. The boat building process starts on 10th September and end on 30th December. Just to create the hull structure (yet not the interior and rigging done).

It shows the complexity of such a process... lots of handwork, with many specialists behing involved. You can watch this procedure in 6 minutes.
https://www.facebook.com/morrellimel...type=2&theater

Skip JayR, Unless I am mistaken, I believe there is a slight flaw in your stated timeline. From 10 Sept to 4 Nov they were building the molds for the hulls. Not the hulls. So 4 Nov is the actual start date of the hull building. So roughly 2 months less actual build time.