Finance news

Yacht exporters are riding a weaker dollar and reduced prices to new markets, while domestic sellers are seeing signs that the market’s doldrums are coming to an end.

Yacht exports to Northern Europe were healthy before the recession since the dollar was still weaker than the Euro. But the international financial tidal wave left fewer buyers, especially in the previously robust Irish market.

So like many importers they have had to find new, untapped markets, namely in Australia, the Middle East, South America, Asia and countries in the Mediterranean.

“I don’t think this kind of business is going to last that long,” said Ken Overman, International Transport Logistics Inc.’s yacht transport division director. “As more brokered boats get sold, the prices will go up and the demand for new boats will increase.”

That will be good news for Northeast Florida boat dealers who have seen their sales drop roughly 20 percent this year compared with last. There has been a slight uptick in sales at North Florida Yacht Sales, said George Cassel, the company’s president.

“We started seeing the end of the tunnel at the end of September,” he said.

The increase of boat registrations since August is a sign that consumer confidence is rebounding, Cassel said. For several dealers, that return to buying comes too late since they have already shuttered, leaving dealers with at least a decade in business.

Domestic sales are still flat for Consignment City Marine, but more potential buyers are checking out the store’s used boats, although most have yet to do more than test the market waters. Those who do buy tend to take home inshore boats rather than offshore boats, said John Searles, the owner of the boat seller.

Buyers of inshore boats like that they have to spend about half as much on fuel and can get on the water for a few hours instead of making it an all-day affair, he said.

The glut of boats has hurt Huckins Yacht Corp., but the 83-year-old builder is starting to see a pick-up in repairs and retrofits and is starting to call back employees, said Cindy Purcell, the builder’s owner.

“Instead of taking two steps forward and two steps back, we’re now taking only one step back,” she said.

Before the recession, the custom boat builder built a boat and a half per year, but Huckins hasn’t had an order for a new boat in months. A 56-foot boat built by the company costs roughly $3 million.

The larger, costlier yachts have been exporting more than the smaller boats, said Andy Wiley, Coastal Maritime Stevedoring LLC’s general manager and vice president of operations. Most are headed to Mediterranean countries, such as Greece and Tunisia, and West Africa.

Most of the boats are new, especially those heading to countries in the Mediterranean region, Wiley said.

Part of the region’s demand for yachts comes from wealthy Europeans who have vacation homes or have retired in the area, said Mark O’Carroll, executive director of Global Marine Sales, an international yacht brokerage.

The company is focusing on exporting to emerging markets since the company was hurt by the weakening of European consumers’ confidence, he said. Global Marine generally exported about 100 ships annually, but this year it will be closer to 20.

Brazil and Australia haven’t been hit by the global recession as much as the United States and Europe, so there is more interest in buying luxury items. Although South America’s middle class is growing, the region’s protectionist duties make exporting tricky, O’Carroll said.

The Middle East still holds a lot of promise despite the recent financial meltdown in Dubai.

O’Carroll doesn’t expect the U.S. market to recover for some time since prices remain low. A yacht that would generally cost $125,000 sells for about $85,000 now.

“They are basically giving them away at manufacturing costs,” O’Carroll said.

He added that the East Coast is at a competitive disadvantage when it comes to attracting Asian and Australian buyers. Transport costs are less if the boat is coming from the West Coast.

Despite the news that American boat builders are calling employees back and consumers are more willing to buy, knowing what types of boats will sell and when is anyone’s guess.

“I made charts for the first three years [I was in the business] and documented what sold each month,” said Cassell, who has been selling boats for 33 years. “After three years, I threw away my charts. The only certainty in this industry is the uncertainty.”

Source

Filed under: online by Finance Boss