A View from Here

Bill's Sisson's weekly Trade Only blog

Pricier than a nice house

Nordic Tug dealer Ben Wilde of Wilde Yacht Sales in Essex, Conn., and Rock Hall, Md., has had a good fall. Wilde and his team have sold 10 brokerage boats since Oct. 1, with two more sales pending, most falling between $200,000 and $370,000.

“It’s been on fire,” Wilde told me over lunch two days ago. “We did a sea trial last Tuesday in the snow,” broker Paul Tortora added. The boat sold.

In that same period the dealer sold one new boat, a Nordic Tug 39, at the Annapolis Powerboat Show. “We’ve always been a new-boat dealer,” Tortora says. “We always sold more new than used. Now it’s completely opposite.” Wilde sold six new boats from 27 to 49 feet this year.

The reason?

“Definitely price,” Wilde says. “It’s a huge concern. Boats have gone through the roof.”

Industry veteran Jim Coburn, of Coburn & Associates, says new-boat prices have gone up significantly faster than the price of new cars and RVs, with the recession doing little to stop their ascent. Some boats have doubled in price during the past 10 years.

“That’s what’s driving the production boat market,” says Coburn, chairman of the Recreational Boating Leadership Council’s affordability committee. (In the spirit of full disclosure, I also sit on Coburn’s committee.) “Pontoons, aluminum boats, bowriders — that’s what folks can afford.”

There has been more rumbling of late over affordability and rising costs, particularly in light of growth strategies that focus on attracting more young people and members of minority groups.

Coburn says that when he talks with younger potential customers — people in their early 20s to early 30s — cost is a major hurdle. “Generation Y has some income issues,” Coburn says. “They’re getting on the water with friends and family, but they’re not buying boats because they say they can’t afford them. The good news is they love boating.”

Solutions: more affordable entry-level boats, fractional ownership, peer-to-peer rentals? In the meantime, used boats remain the primary pathway to boat ownership.

Wilde recalled a boat show about a year ago where he had space next to a twin-outboard 33-foot dual-console dayboat selling for about $375,000. The boat was from a top builder known for quality and strong resale value, but the price was enough to cause the trio of tug guys at the lunch to shake their heads in amazement.

But Wilde didn’t complain about his location at the show, given that the open boat was priced higher than the new 34-foot Nordic Tug his dealership was exhibiting. For the majority of people looking at both boats, Wilde believes there was no contest in terms of the perception of value between the outboard boat and a diesel tug with generator, A/C and other cruising features.

Wilde’s biggest challenge at the moment is finding more inventory, more used Nordic Tugs. “We’ve scraped the bottom of our listings,” he says, adding that his customers are looking for later-model used boats (2005 and newer).

He says Nordic Tugs has worked hard to keep costs in check, estimating that the boats have gone up about 33 percent in the past 14 years.

You can parse it any way you like, right down to monthly boat payments, but when you can buy a nice house in a nice part of the country for less than an open dayboat, it might be a sign that there’s a little too much froth on top of the latte. Cost is one thing, and the perception of value is another. You don’t want to be your competitor’s price piñata.

Comments

8 comments on “Pricier than a nice house

  1. Tom

    Maybe sooner or later the boat manufactures will see that prices are too high. I just bought a used 1988 48′trawler for less than 150K. The same boat new is between 1.5 and 3 mil! Really? I seem to have bought at the right time as my broker is now complaining there are not many used boats coming on the market and prices are also rising on used boats.

  2. Parks Masterson

    The price of boats couldn’t have gone up. The government says we have no inflation. The government wouldn’t lie would they?

  3. tom

    Unfortunately it does boil down to cost. We do everything we can to keep our costs down so we can make the sport as affordable as possible. Many of our customers are very loyal and have become friends over the many years we have been in business and it’s really a concern when they tell us that the sport has just gotten to expensive and complicated so they’re switching to an rv. The sad part is that we’re looked down upon by the “industry” because we sell quality products at affordable prices; our motives are not understood. What typically happens next is the mfg’s cheapen products which continues the downward spiral as now you’ve decreased quality and longevity (I really think they’re the same thing) and those are qualities appreciated by our customers. The industry really needs to let the market place float on it’s own, it will find it’s own equilibrium.

  4. Charles Fisher

    I offered to write an article (no charge) about the emrgency of this subject for Trade Only, but I was told to send a letter to editor. Trade Only did not seem to be too concerned about affordability

  5. Bob

    I don’t know how I fit into your demographics. I was born in 1975. I purchased a used Wellcraft (1988) 22′ cuddy immediately after college (in 1998). It was pretty beat up when I bought it, and I beat it even harder as I learned to trailer and dock. I had the 22′ for 4 years and then I purchased a used Slickcraft (1989) 31′ cabin cruiser in 2002. I just completed my 12th summer with the 31′ and I anticipate that I will have her at least another 10+ years. I have no desire to move up or down, it’s the perfect boat for me. I think I am one of the rare people that does not have 2′ disease. I am happy with the 31′ and can’t imagine a better boat to complete my mission. Plenty of room to weekend and also spend a week each summer on vacation cruising to various ports. She is also fuel efficient and easy enough to single hand, which makes her a nice day boat for an afternoon of swimming at the beach. We don’t do any fishing.

    I would love to purchase a new boat, but I don’t ever see that happening. I simply can’t afford to replace her with a similar quality vessel. My 31′ was made by S2. While I like my S2, I don’t really have brand loyalty to them as they no longer produce a boat that is interesting to me. I also recognize there are plenty of other builds that offer similar quality of fit and finish. I simply can not afford any of the brands that I perceive to have that same level of quality. I have a perception that I would be severely disappointed with one of the brands that offer lower quality for a lower price.

    I also don’t see the versatility that my boat has in any of the new builds presently on the market. I prefer Stern Drive to any other power. Economy, ease of handling, and good looks. A little extra maintenance does not scare me away for the positives that I indicated. I don’t think S2 even makes a stern drive boat right now. The other builds that I would consider, are too flashy in their design and appearance. I don’t care for the aggressive styling. I like a more traditional look and appearance, and a cockpit that has less upholstery and more simple maintenance. The traditional look that I prefer tends to be fishing oriented boats that have hardly any cockpit seating.

    Not only can I not afford the new boats, the market is really not offering anything that gets me excited anyways. That’s my 2 cents, not sure what it’s worth to you.

  6. enginecom

    Anyone price new outboards lately? They are more than diesels in the same hp range. With the cost of fuel its a no brainer which is more desirable. Then a gas inboard may be a better deal but their costs are rising with the new regulations. New boats have been a mind blower for quite some time. We used to balk at $1000/ft back in the 70s. Now its upwards of 10x that. Buyers need to evaluate their needs finances and future use changes before taking the plunge.

  7. Jim Bower

    As a boat builder and boat owner, I believe I can address some of these issues. Yes, boats are expensive. That is because it costs a lot of money to build a quality vessel. And, it is further driven by the expectations of most consumers for more equipment and gadgets on their boat.

    There are builders who offer price point boats, but most of these vessels are junk. Unfortunately, most buyers are incapable of differentiating quality vs. junk. Thus, price point boats sell, even though they will require greater maintenance, offer a much lower life span, and will have lower resale value.

    There can be excellent value in used boats if the buyer purchases a brand that has a reputation for quality build, hires a qualified surveyor to inspect the vessel, and is willing to make a few compromises (such as owning a used boat).

    For the average boater, the best investment is a competent surveyor who has an earned reputation for knowledge and honesty. Find the surveyor first and then let the surveyor help you find the right vessel for you.

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