Has The Market Peaked?

[N4061]

As with life nothing stays the same forever including trends and markets which begs the question have we seen the peak in demand for boats and RV's and are times starting to change? Last week for the first time in two years I noticed a commercial for new RV's with "discounted" pricing of 20%. The very large dealership talked about large inventories (what's that?) and are offering discounts. Sounds like the old days.

The same week the local news was talking about the increased number of RV's hitting the market due to the following reasons;
1. Gas Prices
2. Cost of storage at private yards
3. People realizing the RV life style is not for them

I also am starting to notice a couple more boats for sale on Yacthworld and other medias. While "trawlers" appear to be the exception (so far) I have to wonder how the issues mentioned above along with inflation and the war will impact the boating community? Talking with the yard who performed work on the Sandpiper last week they told me they have a few owners getting their boats ready for sale.

It will be interesting to see how fast the decline occurs and overall impact on the value of used boats. For sure there will be some great deals on newer used boats as people try to move them quickly.

John - Nordhavn 4050, 4061, 3522. Helmsman 38E - Former Owner
Sandpiper Sailboat - current owner looking to learn how to sail

 

[Comodave]

It is a crap shoot. Who knows where the market will go. Fortunately we sold high last summer and unfortunately we also bought a bit high. Usually I buy high and sell lower than I would like but that’s life, it all works out in the end. But at some point I think that boat prices will drop precipitously since so many new boat owners bought in the last year or so and when they find out boating isn’t for them, for whatever reason, they will be dumping boats. Problem with some of those boats may be a lack of a knowledgeable owner and therefore lack of maintenance.

 

[bowball]

Didn’t we go through this same discussion around Covid?

Why?

 

[FWT]

March 1 is a logical time to offer product for sale, to catch buyers who want to catch the season.

 

[Benthic2]

If timing the market was easy, we would all be rich.

An added complication to market timing for a useable item compared to an investment is if you wait 6 months to buy a boat instead of buying today, you have to put a dollar value on not having a boat for 6 months. If you are up north, that could be a whole season. If you are of a "vintage" age, that might be 10% of your boating time....

 

[JLD]

I think the crazy Covid market is over, and things will slowly begin to normalize.

I have been seeing a lot of travel trailer inventory at the RV dealer lots I have driven past. Much more than any time during the last two years. I have seen an increase of trailerable boat inventory at the boat dealer lots as well. One difference between the two, however, is that I suspect that a lot of the trailerable boats have been pre-orders waiting for a spring pick-up by the buyers.

Jim

 

[mvweebles]

If history is a guide, the brokerage boat market is mostly a buyers market, with mild exceptions for high quality examples. The last 2-years has been disrupted by Covid which is now winding down fast. I think its fair to speculate the market is clearing: those who want a boat have made a purchase or have exited the search.

It will take a while sellers to recognize the market has changed. Unfortunately, days-on-market are obscured for boats so will be difficult to tell, but my guess is the the market will be detectably changed in 6+ months or so. There are a lot of headwinds, and few tailwinds to sustain current sellers' market conditions.

Time will tell. As someone said up-thread. At the beginning of Covid many people (myself included) thought the economy would tank and people would shed assets at fire-sale prices. How wrong we were.....

Peter

 

[tiltrider1]

The Russian/Ukraine conflict and the higher fuel prices that are about to show up will send a correction through the market. Average buyers are going to do a wait and see move which will stall prices and possibly drive some down. Specific want buyers have and will continue to buy those specific vessels as they come available. The only question is, how long will the Russian/Ukraine conflict and high fuel prices last? I have no idea if this is a one month thing for a 5 year thing.

 

[BandB]

I believe it's peaked but then I believed that over a year ago, so clearly don't know. I expect to see a sizable correction. I think now, but if not now, when? Soon? It's why I don't try to time things.

 

[bowball]

I can tell you at the very high end, new boat orders have only increased. Even in the last few weeks. When investments underperform then opportunity cost isn’t that high so people buy luxuries. Now will people try to get out of their orders? Maybe. But there is real wealth out there.

And the new outboard I bought last week - 48 week waitlist.

 

[magna 6882]

It seemed like covid caused a lot of people to evaluate there life plans and jump into retirement and not look back . This war and crazy economy could be a second round for those who didnt jump on the first go. With supply chain issues,politics and high cost work just may not be fun anymore. Easy to just go fishing.

 

[mvweebles]

I can tell you at the very high end, new boat orders have only increased. Even in the last few weeks. When investments underperform then opportunity cost isn’t that high so people buy luxuries. Now will people try to get out of their orders? Maybe. But there is real wealth out there.

And the new outboard I bought last week - 48 week waitlist.

How is the market for super-yachts owned by Russian oligarchs? Guessing it's pretty soft right now.....

Peter

 

[BandB]

How is the market for super-yachts owned by Russian oligarchs? Guessing it's pretty soft right now.....

Peter

It's very soft. Huge discounts on those that can be sold. Order cancellations. Let's put the significance of this in perspective too, Russian Oligarchs account for 10-20% of new builds for companies like Feadship, Oceanco, Lurssen, Heesen and others in the megayacht range and they likely account for 5% of large production builders. Builders who had no available production slots, just had some to open up, much like when the pandemic first hit.

In smaller boats, the builders in Turkey have been hit hard. While their customers are not Oligarchs necessarily, many are Russians with worries now about their assets and concerns about banking. Several yards with Russian ownership or relationships and others don't want to do business with them now, also.

There's a lot of money pulled out of the industry right now. For how long, no one knows? And would anyone ever consider buying one of the former Oligarch's boats?

 

[moparharn]

The market has been due for a correction for some time and it has not happened. I spoke with a broker in the Milwaukee area who participated in the boat show and he said it was virtually a morgue. The wealth gap in the US is continuing and these people in the upper incomes are not going to effect things much at all. I do wonder how they intend to sell that Boston Whaler they paid over a million dollars for last year so they can buy this years model. The traditional boat market is going to go down soon I expect. I follow it closely along with the classic car world. Both have zero inventory and very high prices, although I am now starting to see more inventory come on with spring coming up. Free money in the form of low interest is going away and this will impact things. Higher fuel costs are here to stay for the foreseeable future. Baby boomers will support the trawler market for some time to come I expect. The FDMY market has really struggled, and this too is demographics I believe. Stagflation could be here soon if it not already in place, and stagflation is murderous to the fixed income crowd. Certain parts of the market will receive demographic support and the rest is in for a serious correction. All of this is contingent upon a reasonably favorable end to the Ukraine crisis. If Ukraine goes sideways.......well, use your imagination. I realize this is one fools prognostication, but I have been looking for a boat for years now. Boats I made an offer on two years ago are still for sale at the same price. Hell, one boat just raised its price this week. In a masochistic kind of way I actually thought it was cool. Go get em tiger!

 

[Shrew]

The market was already high prior to Covid. Covid introduced a crazy bubble in housing, boats and RV's. IMHO a 'bubble' is an artificially high explosion. These things are never sustainable. When the 'bubble bursts' the outcome will be a market correction. Depending on how big the bubble grew, a severe correction could bring us back to pre-covic numbers, or possible even lower.

Yes, I think the market has turned. Go to Yachtworld.com and search in the 50-70 foot size range. A large number of BIG Hatteras' motor yachts and 55+ sportfish cruisers are hitting the market. You'll also start to see price drops on anything sitting for more than a month. It will trickle down to smaller and newer boats as time goes on.

 

[SoWhat]

The boat market follows the stock market. And the stock market is down.

 

[JDCAVE]

…and then there are the increased costs of a new build that are inevitable right now. That will result in continued support for the used market. Lots to think about.

Jim

 

[NEtrawler58]

March 1 is a logical time to offer product for sale, to catch buyers who want to catch the season.

Seems to make sense, but I have been told that August is the best time for used boat buying and selling, maybe because as the season winds down, more owners decide they are done with boating and the availability of used boats increases. I've been told that by this time of year all the good used boats are already sold.

 

[bowball]

It's very soft. Huge discounts on those that can be sold. Order cancellations. Let's put the significance of this in perspective too, Russian Oligarchs account for 10-20% of new builds for companies like Feadship, Oceanco, Lurssen, Heesen and others in the megayacht range and they likely account for 5% of large production builders. Builders who had no available production slots, just had some to open up, much like when the pandemic first hit.

What’s your source? After a week?

 

[Hippocampus]

Think for large purchases how folks feel about their financial position is important. Doesn’t matter if middle class, comfortable or 1%ers. For boat purchases how they feel maybe more important than reality.
So comment about the market is quite salient. People are focused on inflation although Covid induced unemployment has cleared with current unemployment numbers quite low. Real wages have increased but are out paced COL increase. So all luxury markets at all levels are or will become soft. These concerns predate Putins atrocities but of course that is an additional negative. Given lack of response by the Saudis and OPEC fuel prices will remain high as this is priced internationally so neither Biden nor the EU can do much about it. Accelerating switch to Alt.Energy and increasing oil development, exploration and infrastructure will take years to have a meaningful impact. We’ve changed our financial model to assume a 18-20k/ yr. fuel bill for the boat. Think it will go up further in the short run but stabilize ~$6/g in the US. For a bright spot believe current market correction will revert to bull not bear within ~2 hrs regardless of Putin and possibly sooner. Biggest inflationary pressures will remain fuel and food for some time to come.

 

[Lollygag1]

My 2 cents is that you will see inventory go up and prices start to come down this fall. Many folks who purchased in the last few years will determine boating is not for them due to cost, time and availability of other options for entertainment and travel.

 

[TowLou]

This week was the first week fuel prices went down at the racks.

 

[JLD]

There are so many niches within the boat market, that it's hard to talk about the market as a whole.

I have seen the market for some small boats begin to normalize. However, it been so hot for the last two years that there is still a lot of momentum going through this year even if demand does soften.

Jim

 

[Lollygag1]

You might be able to pick up a slightly used super yacht that was formally owned by an Oligarch. I would jump but my slip only supports up to 40’.

 

[Shrew]

It's very soft. Huge discounts on those that can be sold. Order cancellations. Let's put the significance of this in perspective too, Russian Oligarchs account for 10-20% of new builds for companies like Feadship, Oceanco, Lurssen, Heesen and others in the megayacht range and they likely account for 5% of large production builders. Builders who had no available production slots, just had some to open up, much like when the pandemic first hit.

In smaller boats, the builders in Turkey have been hit hard. While their customers are not Oligarchs necessarily, many are Russians with worries now about their assets and concerns about banking. Several yards with Russian ownership or relationships and others don't want to do business with them now, also.

There's a lot of money pulled out of the industry right now. For how long, no one knows? And would anyone ever consider buying one of the former Oligarch's boats?

What’s your source? After a week?

I don't know that it takes a ton of market research. Take Feadship as a single example. Feadship vessels built by year:

2021: 8
2020: 4
2019: 3
2018: 5
2017: 6
2016: 5

All you need is 1-2 people to back out of orders or suspend a build to turn your business model on it's ear. If you have boats in molds, or sitting out in the yard, you're priority is to liquidate assets.

 

[Sailor of Fortune]

Didn't Viking yacht just have a crazy orderbook from FLIB?.... Seems like not everyone is feeling the squeeze

 

[BandB]

What’s your source? After a week?

My source is myself and those working for me and friends in the industry talking directly to several builders and also data on the splits of megayacht builders.

 

[BandB]

Didn't Viking yacht just have a crazy orderbook from FLIB?.... Seems like not everyone is feeling the squeeze

Viking has an incredible orderbook and not even close to feeling any pain. US builders are find. It's European builders feeling some pinch.

 

[BandB]

I don't know that it takes a ton of market research. Take Feadship as a single example. Feadship vessels built by year:

2021: 8
2020: 4
2019: 3
2018: 5
2017: 6
2016: 5

All you need is 1-2 people to back out of orders or suspend a build to turn your business model on it's ear. If you have boats in molds, or sitting out in the yard, you're priority is to liquidate assets.

Of the vessels built by Feadship since 2000, a total of 89, 10 of them or about 11% were for Russians. German builders hurt more as Lurssen is over 30% for Russians.

Not all Oligarchs, but even others have fears of being able to process payments from their banks to the builder's bank.

Feadship has a big enough backlog not to have immediate worry, but Lurssen, as successful as they are, still faces some challenges.

I talked to a British and an Italian builder who both had experienced one pulled order, not by any means fatal to them. However, I know of two Turkish builders of which one is very low volume but has been 70% to Russians and Ukrainians and is owned by a Russian who left Russia decades ago. Could be fatal to them as even non-Russian customers are now hesitant to deal with them. The other is about 30% builds for Russians over the last five years on their largest boats. They haven't commented on what this does to them.

Initial yachts listed on top lists of potential seizures included Galactica Super Nova from Heesen, The Amoro Vero from Oceanco, Dilbar from Lurssen, Ice from Lurssen, Quantum Blue from Lurssen, Nirvana from Oceanco, Eclipse from Blohm+Voss, Solaris from Lloyds Werft, Tango from Feadship, Graceful from Blohm+Voss, Scheherazade from Lurssen, Stella Maris from VSY, Sailing Yacht A from Nobisrug, and Motor Yacht A from Blohm+Voss.

 

[lwarden]

Initial yachts listed on top lists of potential seizures included Galactica Super Nova from Heesen, The Amoro Vero from Oceanco, Dilbar from Lurssen, Ice from Lurssen, Quantum Blue from Lurssen, Nirvana from Oceanco, Eclipse from Blohm+Voss, Solaris from Lloyds Werft, Tango from Feadship, Graceful from Blohm+Voss, Scheherazade from Lurssen, Stella Maris from VSY, Sailing Yacht A from Nobisrug, and Motor Yacht A from Blohm+Voss.

Scheherazade, possibly owned by Putin would be a good one to nab.....