THE PRICE OF BOATS IN 2023
According to all the economists, we are heading for a recession in 2023, but of what magnitude?
What will be the boat market (purchase, resale) in 2023. According to the latest statistics from Wells Fargo, (a major creditor of dealer inventories), sales in the last few months of 2022 were down quite a bit and 2023 should continue the trend.
To fully understand boat prices, one must first understand the currency game.
Analysis made on January 9, 2023 for currency values
At the time of writing, here are the values:
$1 CAD = $0.74 USD
1 euro = $1.07 usd or $1.44 cad
1 pound sterling = $1.20 usd or $1.64 cad
The floating of the European market currencies that we saw a few months ago is now back to normal. The Euro and the Pound Sterling have regained their value.
AMERICAN, EUROPEAN AND UK YACHTS.
It still costs a little more to buy a new yacht from Europe sold in America than a yacht built in the USA.
But paradoxically, why is it that boats sold in Europe, new or used, are always less expensive than here? There are several reasons for this.
A yacht built for the European market:
– The production volume is much higher for this market, so the cost of ownership is much lower. 75% of the yachts are intended for this market and they are built in Europe. In fact, the three largest manufacturers in the world according to BOATS magazine are in Italy.
– They are all manufactured with the same electrical standard, 230V, 50 hz.
– The availability of parts and components is much easier and faster.
– They have, in general, less air conditioning capacity, less generator power, so the cost is lower.
– Yacht delivery is local (no need to cross the Atlantic Ocean).
For a yacht built in Europe, but destined for North America:
It is said that America consumes about 25% to 30% of the world production with electrical peculiarities (220/110V, 60 hz), which causes higher costs to consider these electrical parameters and moreover, the Americans require more air conditioning (in BTU) and more electrical capacity (including the generator(s)).
It is therefore necessary that the manufacturer installs on board his boats (intended for America) components with the American standard. He must have in hand during the construction (therefore import from America) of the devices which will be adapted to this market (all the household appliances for example). Without forgetting, the standard of display NTSC for America which is different from that of Europe nicknamed, PAL. We are talking about multifunctional screens (GPS), TVs, cameras, to name but a few.
We quickly realize that the production cost will be more significant for a yacht destined for America, not to mention the cost of transportation on a container ship.
For the transport of a yacht to America, say 50 to 60 feet, it is necessary to count approximately $50,000 to $60,000 USD for the transport.
The currency game depending on the manufacturer:
If the yacht is built by a Euro zone manufacturer, you must put 6% more on the base of any price compared to the USD currency. Several manufacturers are affected such as: Azimut, Ferretti, Pershing, Riva, Absolute Yachts, Prestige, Beneteau, Jeanneau, Galeon, Fountaine-Pajot, Sessa and for those manufactured in England, Princess, Sunseeker, Fairline, Sealine, it is necessary to add 21% more compared to the USD currency.
In order to seduce boaters, manufacturers, especially in the UK, have to innovate and produce more innovative yachts, both in terms of design and engineering, in order to get a good share of the market and justify the higher price to boaters.
Without referring directly to the concept of DUMPING, some manufacturers have a price list tailored to America because of its very active market and fierce competition.
Currently, European prices are very competitive compared to American prices for both new and pre-owned yachts.
The sales market is slowing down in Europe, which is causing prices to drop significantly for yachts from 2015 to 2022 and even 2023.
For example, a pre-owned yacht sold for $3 million USD in America can be sold for $2.5 million USD in Europe with the same engine and equipment.
There is also the advantage of taking delivery of your yacht in Europe, sailing there in the Mediterranean for one or two seasons before bringing it to America. Why not… this scenario is very often retained and very much appreciated by yachtsmen. Sailing the Mediterranean or the Adriatic Sea on your own yacht is a great experience.
Amalfi, Italy (Mediterranean Sea)
Rovinj, Croatia (Adriatic Sea)
European manufacturers have significantly increased the price list of yachts for the 2022 season (compared to 2021 and below). The pretext was of course Covid (which has a broad back for justification) and the supply chain. It is true that less production generates less profit. But let’s say that some of the increases were difficult to explain to the consumer.
The manufacturers have adjusted their production by prioritizing the very well-equipped boats that generate a higher profit.
It will be interesting to see how manufacturers react at the next Miami Yacht Show in February 2023 with the prices asked considering the economic slowdown.
In the event of purchasing a yacht in Europe (including or not a stay in Europe) the installation of an electrical transformer should be considered to ensure a connection to the electrical terminal of the pier in America. The approximate cost is $30,000 to $50,000 USD depending on the power conversion required. This can be done before departure or once in America.
We must not forget the boats coming from Australia, where the currency is less strong than the Canadian currency, which is rather rare. There are two major manufacturers Riviera and Maritimo.
$1 cad = $1.09 aud
In addition, we have free trade agreements with Australia and Europe, including temporarily Great Britain for yachts coming from these areas.
Yachts built in China or Taiwan or in a country with which Canada does not have free trade agreements are subject to a 9.5% customs duty, I am thinking of the Aquila catamarans, the Nordhavn, Ocean Alexander and Horizons yachts for example.
So, the currency game has a great influence on the prices of yachts depending on their origin. It is also necessary to consider the market trends for each of these regions.
An experienced broker familiar with import/export concepts can guide you through all the possible options and assist you with all the tax and transportation rules for all markets, whether they are close to the United States, Europe or elsewhere in the world.
For example, in the situation where the yacht does not return to Canada as its final destination, this can be a tax advantageous situation. Contact us for all the details.
But one thing is certain, and this without a crystal ball, in 2023 it will certainly be a market that is clearly to the advantage of the buyers and most likely the prices on the side of our American neighbors will be very interesting and negotiable, but most likely also those in Europe.
Since the Canadian market is much smaller, prices will tend to remain stable since supply is less abundant. For the new boat, we must see what the repercussions will be, especially for the 2019 and more, given the famous luxury tax on new boats in effect in Canada since September 1, 2022.
Do not forget that the sale of boats between individuals is not subject to this luxury tax.
We will know very soon in the spring.
In the meantime, it will be our pleasure to discuss boats with you at the Montreal Boat Show at the Palais des Congrès and at the Miami Boat Show next February.
It’s a rendezvous…