It’s a big marketplace and this proves it!

For kicks I decided to take an hour and pull 50 random folders for Knot 10 sales that occurred in the last 120 days and find out where the buyers came from. This was purely random from 50 of our sales in the last 4 months. I was surprised by the spread and I’m sure you will be as well. Proof positive that your buyer can be out there and I mean anywhere.  

Boat Model	Buyer Location
2000 Rinker 272	Australia
2000 Sea Ray 270	Australia
2003 Sea Ray 460	Australia
2006 Sea Swirl 2601	Australia
2008 Grady White 180	Australia
2009 Bayliner 245	Australia
2009 Bayliner 265	Australia
1997 Cruisers 3650	Canada
2002 Sea Ray 340	Delaware
2010 Boston Whaler 150	Delaware
2008 Crownline 250	Greece
2006 Robablo 295	Maine
1987 Gulfstar 48	Maryland
1996 Silverton 312	Maryland
1998 Monterey 276	Maryland
1999 Carver 356	Maryland
1999 Cruisers 3075	Maryland
2000 Larson 330	Maryland
2000 Monterey 302	Maryland
2001 Silverton 453	Maryland
2002 Sea Ray 380	Maryland
2003 Rinker 342	Maryland
2004 Chaparral 290	Maryland
2005 Cruisers 405	Maryland
2006 Formula 292	Maryland
2006 Grady White 222	Maryland
2008 Sea Ray 260	Maryland
1998 Sea Ray 400DB	Mexico
2007 Grady White 300	New Jersey
2008 Rinker 300	New Jersey
1997 Sea Ray 330	New York
2001 Cruisers 3672	New York
1998 Sea Ray 420	Pennsylvania
2002 Chaparral 280	Pennsylvania
2004 Carver 360	Pennsylvania
2005 Boston Whaler 320	Pennsylvania
2005 Sea Ray 420	Rhode Island
2007 Tiara 3900	Rhode Island
2004 Maxum 3300	Sweden
1999 Bayliner 4087	Virginia
2000 Chaparral 260	Virginia
2000 Cruisers 3870	Virginia
2003 Parker 2520	Virginia
2003 Rinker 342	Virginia
2004 Cruisers 320	Virginia
2004 Sea Ray 340	Virginia
2005 Crownline 240	Virginia
2006 Rinker 282	Virginia
2008 Tiara 3500	Virginia
2009 Wellcraft 202	Virginia

Calculate Your Perspective

As many of you that have read my updates know I have recently went thru the sales process on our home and will be realizing a long time dream to be on the eastern shore and cut the commute from 62 miles to 5 miles. We settle on our new home in early June and look forward to being able to get back 3 hours lost in commuting and be able to enjoy the water.  In doing so we always knew we would be putting our boat up for sale and going to a different style of boating as the need for a big express boat to spend weekends on Kent Island will change being so close.

So here I am now amongst the sellers and time to practice what I preach. In doing this every day I am acutely aware that once I get to the right price point the boats time to sell shorten in direct relation to price versus the comps. Like many of you I realize the reality is that some sort of check will need to be written to cross the finish line. I could leave it at a higher price and have a longer path to a sale or take money off the price which I know will increase the chances of a 1-3 month sale substantially. In doing my thinking about this I decided to calculate something that I found extremely interesting and something I’d encourage all of you to do. That exercise is to calculate your true cost of owning your boat for a full year:

Payments=

Insurance=

Slip Payment=

Winterization=

Detailing=

Preventive Maintenance (oil, bottom paint, hauls, zincs etc)=

Fuel & Misc=

When I did this I found that I was surprised the real cost of owning for a year was more than I thought. While everyone’s numbers are relative to your own boat and situation 2 big questions can apply to all:

1)       If you could lower your price by 1 year’s ownership would you break away from the comps and have a chance to sell in 1-3 months?

2)      If you did not lower your price at all and sold it 12-14 months from now for 5-10% less than your asking right now plus adding the cost of the columns above are you better or worse off?

For my situation this was a really interesting calculation as knowing our boating will change and realizing the price I need to sell for is not going to probably improve over time but still wanting to minimize just how much I ratchet down to get a sale made me realize selling sooner than later would probably warrant dropping $10-$15k off the price and leave me ahead of selling 1 year from now after the cost above are factored in.  Every situation and desire to sell is different and one cost factor we can’t put a # on is the pleasure you derive from your boat while you still own it. Yet in many cases we see boats that are on the market for 1, 2 and sometimes 3 years so if this perspective helps some then it was an experience I am glad I shared.

Trends

The last 2 weeks have been a bit slower overall and it could be that fuel price worries are beginning to thin out the herd. Just yesterday I noticed in the narrows a jump at thePineyNarrowsfuel dock from $3.62 for diesel and $3.89 for gas to $4.08 for diesel and $4.32 for gas. The Narrows typically is pretty competitive for fuel so I suspect that places like Skipjack andGeoretownYachtBasinmay fast approach $5 a gallon. Does this mean there are no buyers being boats absolutely not it just means that people are going to start second guessing expenses and cost of daily life that make them feel less rosy about a boat purchase. The last time (2008) we had a fuel spike people sat at the docks much more, buyers looked for single engine trawlers, and a general malaise sets in of concern of “what if prices never go back down”. I’m confident we will always have boaters and boats will always be selling but market reactions of boaters will be to spend less and go conservative. This will deeply continue to impact new boat sales far worse then brokerage. The impact of fuel prices has changed the way many auto buyers and manufacturers look at the car market. Ford has been doing very well of late financially and one reason is they went after higher fuel economy across all model lines. You drive your car everyday and every social class is effected in they own a car but its doubtful the boat market can move fast enough to make fuel economy a selling feature as boats that go more than 20 knots and are bigger than 30’ can only be so efficient. Sustained high fuel prices would certainly mean less people boating and less places people with boats would be taking them.

Speaking of new boat sales in looking at trends from 2003-2006 compared to today its stunning how some segments of boat classes have almost disappeared. Aft Cabin Motor Yachts specifically almost fail to exist anymore. Take a look at Sea Ray or other production builders (Cruisers, Silverton etc.) and you will notice what used to be strong products in all companies lines have vanished. Sea Ray does not even make an Aft Cabin Motor Yacht style boat and those who still offer one or two have seen this market segment all but disappear. Yet on theChesapeakethere are hundreds maybe thousands of late model 35-48’ Aft Cabin boats out on the water. In express boats the shift went from radar arches to hardtops and now to couple style boats that all but eliminate canvas. This progression is more evolutionary and makes sense but again increases the overall cost and its proving hard to make a coupe express boat under 38’ look right stylistically. Bow Riders and small runabout boats have remained good sellers and have not changed much along the way but there is only so much you can do to a 20-25’ boat. One factor that industry sources have highlighted and its true is that boat dealers and distributors have gone out of business at a tremendous rate yet boat brands have not shut down or consolidated at as fast a rate. The factories either shut down production or furlough the workers yet the brands are still in production of some sort. Just look at center console boats and you ask yourself how many different brands of 25’ Center Consoles does the market need yet I can name 20 of them without too much effort.

April Roundup & Show Report

This weekend was the Bay Bridge Boat Show which usually is a great show with lots of enthusiasm and energy. To my surprise it had very little of either. Crowds where extremely disappointing and the boats on display where probably half if not more of what have been displayed in the previous few years. The show did fall a little later on the calendar but I have to say I’m a little disappointed as this show is usually one where Friday, Saturday and Sunday fly by as we are 4-5 deep in the booth. At 3pm on Saturday you could walk the docks and see boats with nobody on them and no lines to board even the sexiest and biggest boats. Are fuel prices starting to creep into people’s minds?

That said we have been seeing strong traffic on incoming leads for Knot 10 and our office  on Kent Island was busier over the weekend than the booth at the show. Sales have been running for us at a significantly higher pace than that of last year so I have to say I’ll take a slow boat show every year as long as the in house sales and traffic is as busy as we’ve seen this early in the season. Since April has ended I was able to run the month over month sales data for 2011 in the Mid-Atlantic (DC, MD, VA, PA) markets and the data shows  consistent #’s which also jibes with what Yachtworld and other industry reports are showing.

April Diesel Boats Settled:

2011=   71 Units

2010=   72

2009=   64

April Gas Boats Settled:

2011=   351 Units

2010=   330

2009=   291

I have another piece of data I find interesting that I will go into greater detail at a later date but it shows production units by all brands. When you compare units produced in 2007 to units in 2010 its shocking to see the fall off. The report does not show 2005 and 2006 as well which probably would have been as strong if not stronger. Regardless these numbers are really illustrative of the sharp decline of new boats. Should anyone have purchased new in 2009-2011 the extreme limited production will probably make those owners have the highest resale values two to three years from now as buyer who do not purchase new will see very few late model 2009-2011 boats on the used market. That will be an interesting trend to watch as the buyers of new boats in 2009-2011 who probably purchased at great prices may actually come close to break even as new boat production ticks back upward and cost do as well. Here is just a snippet of what the data looks like for a few brands:

                        2007    2008    2009    2010    Growth %

Sea Ray        7186   4432     2718    1802    -33%

Bayliner        6043  3586      2511    1547    -38%

Chaparral      2981  1589      1448     925     -36%

Four Winns   2334  1390      981      533      -45%

Regal           1112    823      577       433      -25%

Grady White  1028    662      394       368      -6%

Tiara              203    114       82          40      -51%