Understanding today’s yacht prices

Understanding today’s yacht prices

 All boaters have noticed the sharp increase in new yacht prices for the 2022 and 2023 deliveries.

How to explain this fact?

This article does not take into account the new luxury tax on boats that is expected to go into effect on September 1, 2022, this new tax will be covered in a separate article.

First of all, you have to understand the currency game in relation to the country of origin that manufactures the yacht, without forgetting the transportation costs on a container ship or on a specialized cargo ship.

 

 Several factors must therefore be taken into account, including the economic situation of the producing country (average labor rate) and its climatic conditions, for example, the cost of heating the factory.

We will consider, for this article, several well known manufactures on several continents and co yachts from 50 feet to 70 feet.

UNITED STATES : TIARA YACHTS, CRUISERS YACHTS

FRANCE : BENETEAU, JEANNEAU, FOUNTAINE-PAJOT, PRESTIGE YACHTS, LAGOON

ITALY : FERRETTI, AZIMUT, RIVA, PERSHING, ABSOLUTE, SESSA, CRANCHI

POLAND : SUNREEF, GALEON, COBREY

GREAT BRITAIN : PRINCESS YACHTS, SUNSEEKER YACHTS, FAIRLINE

AUSTRALIA : RIVIERA YACHTS, MARITIMO

ASIA (China) : AQUILA

BRAZIL : SCHAEFER

It is important to enter into the equation the involvement of overseas manufacturers in North America in order to properly evaluate the asking price for a yacht.

For example, AZIMUT YACHTS has a large parts warehouse in Fort Lauderdale for the North American market. This increases the operating costs for the manufacturer but reduces the waiting time for parts for the boaters and improves the after sales service.

Shipping a part from Europe every time, costs more than if it is in a warehouse here especially when it arrives by container and in high volume.

Let’s get back to the basics with the currency exchange.

For the purpose of this article, the reference value will be 1 Canadian dollar.

In this first table, let’s look at the exchange rate (based on data as of March 30, 2022, XE site):

Following is the exchange rate for one Canadian dollar to acquire each foreign currency :

$1 USD: $1.24 CAD

1 Euro: $1.39 CAD

1 British pound: $1.64 CAD

1 Australian dollar: $ 0.93 CAD

1 Brazilian Real : $ 0.26 CAD

1 Yaun (China): $ 0.20 CAD

Let’s try to understand how the price of a yacht is established, taking into account all the direct and indirect factors such as, currency, transportation, factory location, components and reputation.

Transportation costs alone, since the beginning of COVID, per vessel, have increased considerably and even doubled since 2020.

For example, the cost of transporting a 50′ yacht from Italy to Montreal could be done before 2020 for about $50,000 USD, now in 2022, it is more than $100,000 USD for the same transport.

But of course, the economic situation of each producing country is also very important.The hourly wage in China, Poland or Brazil can in no way be compared to that of France, England or even Italy.

So, yes, the production costs, mainly the labor, are less expensive in some countries, but not necessarily the raw material and major components such as :

  • Fiberglass resin
  • The engines and transmissions

All on-board systems such as:

  • Air conditioning
  • Gyro stabilization
  • Generators
  • Appliances,
  • Patio doors, windows (electric or manual), portholes
  • Navigational electronics
  • Hydraulic and electrical systems
  • And of course, the luxurious materials

It is not only the cost of labor that determines the value of the boat, but also the technical design, the quality of the structure, the know-how at the factory, the experience of the workforce (very determining), the prefabrication tests, the quality of the components, in short, a set of factors.

Let’s take a concrete example, excluding sales taxes:

You have a budget of $1 million CAD (still in the context of the acquisition of a new yacht):

In Euro, your Canadian million is only worth €720,000 or £609,667 or $803,376 USD.

So, if the boat is coming from Europe, the seller must add at least $120,000 CAD to the base cost of the boat including shipping costs.

Of course, this counts in determining the selling price to the customer. For this example, we assume that there is no customs tariff that applies in the case of a new yacht under the Free Trade Agreement.  (Goats coming from China and Brazil which are subject to a 9.5% customs duty).

The factory cost price is certainly lower in Poland and Asia for example, if we consider a yacht of comparable quality, which is difficult.

You also have to take into account the warranty offered here in North America. Is the warranty offered by the manufacturer or the dealer, this is a very significant difference that is overlooked by the Buyer.  Moreover, it is a one year, two years or three years of warranty.

Of course, the engines are guaranteed by the engine manufacturers themselves (VOLVO, CUMMINS, MAN, CATEPILLAR, YANMAR, etc), but there are many other systems on board that are just as important.

The reputation of the manufacturer is something very important and it can be of paramount importance especially at the time of resale.  For example, what the manufacturer has chosen construction wise and to install on the boats in the way of the capacity of the air conditioning systems, the electrical system and its generator, the ratio of the weight of the boat to the power of the engines, the interior volumes, the efficiency of the engine room, the structure, in short, many factors to consider.

Considering the possible differences, it is important to compare the prices with the systems on board. For example, a 13.5 kw generator is much less expensive than a 21.5 kw generator and it also changes the capacity of the electrical box.

Also, the BTU capacity of the air conditioning will be much lower, for example, the TROPICAL A/C option which generates more than 100,000 BTU will require more energy to operate, therefore a larger generator.

It is necessary to have a generator that amply exceeds 20 kw if on board you have more than 90,000 BTU of air conditioning. Ideally 28 kw would be better considering that other systems can be solicited at the same time (hot water for showers, refrigerators, dryer, dishwasher, stove or a grill, etc).

Stabilization with a gyro (such as Seakeeper) also considerably increases the price of the yacht. When adding additional systems it will require a much more elaborate and therefore more expensive electrical box.

It is very common that a yacht destined for Europe (navigating in Europe) has less BTU air conditioning capacity than those destined for North America, so a smaller generator is installed.

In short, there is many differences and aspects to take into account to validate a price for a yacht of the same size but from two different manufacturers.

This is why working with an experienced broker is the key to making an informed choice.

At Ita Yachts Canada, we are here to discuss your project with you. Don’t hesitate, it avoids the “I should have…’’

 

 

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