Boat value and financial Crises

[gettinthere]

There isn't a lot of profit margin on boats so there will be closures of some companies and that will eventually lead to less competition and price increases. Buy now while it's a buyers market. Just negotiate hard and stand pat.

[Palarran]

Originally Posted by GordMay

a little like saying that mankind needs a good plague or war, every now and then, to hose out the gene pool.

It's not tough love but tough business.

But in regard to 45 to 50 foot cats, I do think they will drop below $300 for certain manufactures, mainly Fountaine Pajot, Robertson and Crane, and Lagoon. I personally think an ex-charter Bahia built between 2001 and 2004 will be below $250k next year, which is way down from a year ago. And, the euro is continuing to devalue against the US dollar which could help depending on what currency the boat is listed and your buying with.

One thing thats not clear to me is if you have the money, how do you go about actually getting the boat. In real estate we deposit money with our realtor who starts throwing out bids. Some get accepted and some obviously don't. If buying a boat, do you depost say $20,000 with a broker and then start making low offers? Boat by boat or what. There are around 38 Bahia's on the market right now, about 10 of them in the low $300's to high $200's. For the right price I'd buy one and drydock it but am not sure how to start the process.

[CarlF]

If you have cash and can make a quick decision, this is the moment to buy a boat. This is because some folks are caught in a financial jamb (like a margin call) and have to raise cash right now.

A top broker told me that they got a call from a client who needs to sell a high end boat "this week" at any price.

If you are in the US the sudden strength of the dollar makes for even more incredible deals in Europe.

Most sellers will just sit tight until things calm down a bit but a few have no choice.

Carl

[opsailor]

MarkJ is correct. It's not "tough love," but an expected and needed adjustment. It's happening all the time, just for now it's happening faster.

My question is: Since many of us live on our boats (first or second home), and many of us/them finance their boats, will we (liveaboards) get the benefit of all the taxpayer largess that will be "saving" the homes of those that can no longer pay?

As an aside, this so-called bailout of every conceivable business and homeowner will go down as a major financial disaster.

[imagine2frolic]

Being in the right place at the right time with cash in hand makes deals. I am living proof of that. This is how I bought both my boat & home. There is always someone in a pinch. Right now there are even more with the numbers growing. I would personally be looking at boats that are fairly new, and NOT new boats. Let someone else take the hit on depreciation.

[kevingy]

Originally Posted by rigamarole

And, the euro is continuing to devalue against the US dollar which could help depending on what currency the boat is listed and your buying with.

I've noticed this first hand in my personal catamaran search. A couple months ago, the boats listed in euros were priced the same or more than those listed in dollars after the euro to dollar conversion. Those same boats that are still on the market, and the boats listed in euros look very inexpensive in comparison to those listed in dollars.

[Sandero]

They won't plummet, but they will slump down somewhat for sure.

[sck5]

Another factor - Fiberglass is a petroleum product. While oil is going down right now, not many new boats are selling anyway - and when the economy picks up again so will oil prices, making the inherent cost of building them rise too

[coachmiami]

Originally Posted by GordMay

That’s pretty tough love, Mark - a little like saying that mankind needs a good plague or war, every now and then, to hose out the gene pool.

But it sure seems to me the gene pool has gotten a bit weak!

(Go ahead and lambaste me -I'll accept the fact I may be one of them!)

Coach Miami

[talus]

Originally Posted by gettinthere

There isn't a lot of profit margin on boats so there will be closures of some companies and that will eventually lead to less competition and price increases. Buy now while it's a buyers market. Just negotiate hard and stand pat.

Lack of margin? I just had two offers to go to the factory (Lagoon and Leopard) with my trip paid if I buy. That money is coming from somewhere.

Boats are only going to get cheaper as the financial situation worsens.

[Vasco]

A flight is cheap compared to what the boat costs. Less than 1%!!!

[talus]

...One must also factor into the earnings equation boomers facing retirement in the wake of falling home prices and retirement accounts taking a cliff dive. Trillions in potential spending power has been wiped off the books.

Expect boomers to travel less than expected, buy fewer toys (boats, cars etc) than expected, gamble less than expected, and downsize much more than expected in every aspect. This in turn will reduce the earnings potential of non-financial corporations for decades to come. Thus expectations that a new rip roaring bull market will commence once the market bottoms is sadly misplaced.

In the meantime, remember that rising unemployment, rising credit card defaults, rising foreclosures, rising numbers of walk aways, and declining earnings of non-financials means we have not even bottomed yet.

This secular bear market will last a lot longer and be much deeper than anyone thinks. Sadly, very few are prepared for it.

Mike "Mish" Shedlock
Mish's Global Economic Trend Analysis

[anotherT34C]

So to sum up what I've read here...

New market: don't expect major price drops, but instead expect manufacturer downsizing.

Used market: boats tend to bleed their owners, so expect more distressed owners looking to sell out quick.

[Ex-Calif]

Originally Posted by opsailor

MarkJ is correct. It's not "tough love," but an expected and needed adjustment. It's happening all the time, just for now it's happening faster.

I am with you and Mark. Market space is market space. Allowing a few competitors to fail actually raises prices. Which for the health of an industry is a good thing.

Originally Posted by opsailor

As an aside, this so-called bailout of every conceivable business and homeowner will go down as a major financial disaster.

We must allow free market forces to make capitalism work. Bailing out individual players in an industry is never good for the industry in the long term. Aviation needs a few airlines to fail. Automaking needs at least one player to fail.

Financing has kept too many players is too many industries for too long.

Fewer airlines, auto makers, boat builders etc. results in economies of scale that allows business to get the labor portion lower, unfortunate for labor but really a different problem.

Instead of looking for public bailouts these guys should be merging, rationalizing and reducing operating costs.

[cat man do]

Originally Posted by MarkJ

Yes, I think you are pretty well spot on. And its a good thing that some companies will go bust in this industry as well as others... The companies with fat or rippin the customer off will get hosed out the door.

We need this sort of shake-up every decade or so as it enables the good companies to survive and the driftwood to be burned on the shore.



Mark

I think I understand what you are getting at and partially agree but disagree as well.

There are plenty of ordinary boatbuilding firms with uncaring unskilled workers who are just there for the paycheque.
They have slick marketing and a good business plan that will survive, but does this make them good boatbuilders?

In reverse I know of excellant boatbuilders, real craftsmen with a true passion for their craft who will go belly up during this downturn because they dont have the slick marketing or business skills to sucker in the sheeple with the glossy BS and paid for comment/infomercial.

They only know how to build outstanding boats.

Dave