Depreciation Curve on Production Boats?

[ohdrinkboy]

What is the depreciation curve like on the average 35-40 foot production sailboat (Hunter, Bene, Catalina)? I'm thinking the value drops fairly quickly for the first 5-10 years and then the value stabilizes. After a certain number of years the price is much more about maintenance, equipment, and location.

Anyone done any research?

Thanks in advance and fair winds,

ODB

[Kenomac]

It takes a huge dive, then keeps on going. The price never stabilizes, except for some 1980’s Baba sailboats, which for some reason go for about half their original cost today... which is weird considering their cast iron tanks. My point is... there are some exceptions. Boats are just like cars, except there’s no such thing as a collectable antique that increases in value.

[sailorboy1]

I got my 2001 Hunter in 2010. Today well maintained boats of my model at selling at almost the same price I paid in 2010.

So it just depends

[leftbrainstuff]

Steep

[boatpoker]

Not sure if attaching a pdf. will work here but I've tried to attached the "Martin Depreciation Scale" used by surveyors and appraisers. it is not definitive and there are a few other methods. A good surveyor/appraiser uses and considers all available methods/information to arrive at a value.

[bluenomads]

Hmm, how does that work with currency depreciation?
So a 20yr old boat is worth 36% of new, but would that be 36% of the original asking price (which if deprecitation is 3% CAGR would be now worth 55% more) or of the current (at sale) price?

So a 20 year old boat worth $150k, was 20 years ago new for $417k, but now would sell new for $750k purely because of economic and currency depreciation.

But I presume that the deprecitation figures in the scales are based on sales figures, which themselves take into account currency depreciation at the time of sale. So instead of the currency and item depreciation events being independent, they are dependent and thus the simplicity of CAGR won't work...

[Jim Cate]

BP, I see at the top of the graph the term "current replacement value". Does that mean what a similar new boat would now cost? If not, just what does it mean... I'm kinda ignorant about such terminology.

Jim

[Tillsbury]

That’s a very difficult calculation. A boat that cost $600k 20 years ago over here has a current equivalent that’s not far from $700k now, but it’s a way slicker boat with very different gear on it. “Replacement” is a tricky call, as a new boat from the same manufacturer of the same size will be a substantial upgrade, usually.

But to answer the OP, there is a continuous drop from a “near new” (2010s) boat to “good condition used” (2000s) to “older” (1990s) to “old” (1980s). By the end of this scale the value is entirely dependent upon maintenance — a well-maintained 1970s/80s boat still has value, but one that’s been let go could easily not be worth throwing money at and end up being a liability that needs getting rid of...

[Dockhead]

Originally Posted by Jim Cate

BP, I see at the top of the graph the term "current replacement value". Does that mean what a similar new boat would now cost? If not, just what does it mean... I'm kinda ignorant about such terminology.

Jim

Yes, it is tracking the value versus the cost today, not the original price.


You can't compare the today value in today dollars to the original cost in 2010 or 2000 dollars. That's apples to oranges. As time goes by, the price goes up in nominal dollars, with inflation, and down due to depreciation. You need to factor out the inflation, to see how much real value is lost.


"My boat is worth nearly what it cost new" is not really true -- not in 2000 dollars or whatever. You're trying to take inflation to the bank. That only works if you have a mortgage.


Query however whether these tables take into account equipment. The new price of boats may be only 80% or 70% of the total real cost, after they get properly equipped. Is the value of this equipment taken into account? It's one reason why some people prefer to buy boats two or three years old -- when you consider the cost of the equipment, the depreciation hit can be massive.

[bglad]

I study this repeatedly in the course of my work. Assuming a vessel is still desirable, a reasonable current replacement cost can be found (minus the bling), normal maintenance and wear and tear then, 8% per year seems to match up with what people are willing to pay. Low volume built to order might only be 5% to 6% but also benefit from that type buyer doing better than average on care and maintenance.

The older the boat the more complicated it becomes due to rebuilds/upgrades or lack thereof. Well informed buyers are willing to add back in 30% or so for expenditures of that type. Others who do not know better will not and in many cases those that do will not either! They are just more willing to buy your boat if it is in good shape.

Boats that have fallen way behind become unsellable unless they have some provenance. During a downturn they all become unsellable.

[MartinR]

Very steep

Steeper for charter boats than for owners versions. Catamarans do better at the moment, but that will also change when more charter boats hit the market.

[Dooglas]

While initial depreciation is steep, cruising boats are a very different discussion than cars. The typical cruising boat has many upgrades and equipment additions after it leaves the factory. Its resale value is shaped to no small degree by how it is equipped and how well it has been maintained. Two 10 year old factory boats of the same model can easily differ from one another in value by 50%.

I agree with Kenomac. The price never really stabilizes. Depreciation can certainly slow for an older boat if it is consistently well maintained, but a 1971 Columbia 34 is still a 1971 sailboat and it is getting older every year.

[jmschmidt]

I bought my used 2011 model for about 60% of the new sticker price. My last survey was $5,000 more than I paid for it used. Nothing major done in the interim, same engines, same get-set, no electronics upgrades.

[thinwater]

I've owned 4 multihulls (beach cat, Stiletto 27, PDQ, Corsair), and after 10-15 years all had stabilized at their original sale price. Obviously, you are loosing the time value of money and up-keep. Additionally, these were kept in very good condition.

• Condition. The older the boat, the more important.
• Supply and demand. In general, the boat needed to have been either of very high quality or have some unique characteristic.

In general, the better the boat, the less it depreciates.

[KTP]

Newer boats *may* use cheaper materials in some places though.

I doubt many are using bronze hatches with solid lockdowns anymore while I know a lot are using cheap plastic hatches. Plastic interior vs solid hardwoods. Things like that which are harder to put a value on.