Too Much Froth on the Latte, i.e. Cost of Boating

Bill Sisson’s A View From Here column in Soundings Trade Only is one of my favorites. The topic covered here is something we in the industry should all be taking a hard look at: cost and accessibility. Read on and add your thoughts. -KH

By Bill Sisson, Soundings Trade Only

Nordic Tug dealer Ben Wilde of Wilde Yacht Sales in Essex, Conn., and Rock Hall, Md., has had a good fall. Wilde and his team have sold 10 brokerage boats since Oct. 1, with two more sales pending, most falling between $200,000 and $370,000.

“It’s been on fire,” Wilde told me over lunch two days ago. “We did a sea trial last Tuesday in the snow,” broker Paul Tortora added. The boat sold.

In that same period the dealer sold one new boat, a Nordic Tug 39, at the Annapolis Powerboat Show. “We’ve always been a new-boat dealer,” Tortora says. “We always sold more new than used. Now it’s completely opposite.” Wilde sold six new boats from 27 to 49 feet this year.

The reason?

“Definitely price,” Wilde says. “It’s a huge concern. Boats have gone through the roof.”

Industry veteran Jim Coburn, of Coburn & Associates, says new-boat prices have gone up significantly faster than the price of new cars and RVs, with the recession doing little to stop their ascent. Some boats have doubled in price during the past 10 years.

“That’s what’s driving the production boat market,” says Coburn, chairman of the Recreational Boating Leadership Council’s affordability committee. (In the spirit of full disclosure, I also sit on Coburn’s committee.) “Pontoons, aluminum boats, bowriders — that’s what folks can afford.”

There has been more rumbling of late over affordability and rising costs, particularly in light of growth strategies that focus on attracting more young people and members of minority groups.

Coburn says that when he talks with younger potential customers — people in their early 20s to early 30s — cost is a major hurdle. “Generation Y has some income issues,” Coburn says. “They’re getting on the water with friends and family, but they’re not buying boats because they say they can’t afford them. The good news is they love boating.”

Solutions: more affordable entry-level boats, fractional ownership, peer-to-peer rentals? In the meantime, used boats remain the primary pathway to boat ownership.

Wilde recalled a boat show about a year ago where he had space next to a twin-outboard 33-foot dual-console dayboat selling for about $375,000. The boat was from a top builder known for quality and strong resale value, but the price was enough to cause the trio of tug guys at the lunch to shake their heads in amazement.

But Wilde didn’t complain about his location at the show, given that the open boat was priced higher than the new 34-foot Nordic Tug his dealership was exhibiting. For the majority of people looking at both boats, Wilde believes there was no contest in terms of the perception of value between the outboard boat and a diesel tug with generator, A/C and other cruising features.

Wilde’s biggest challenge at the moment is finding more inventory, more used Nordic Tugs. “We’ve scraped the bottom of our listings,” he says, adding that his customers are looking for later-model used boats (2005 and newer).

He says Nordic Tugs has worked hard to keep costs in check, estimating that the boats have gone up about 33 percent in the past 14 years.

You can parse it any way you like, right down to monthly boat payments, but when you can buy a nice house in a nice part of the country for less than an open dayboat, it might be a sign that there’s a little too much froth on top of the latte. Cost is one thing, and the perception of value is another. You don’t want to be your competitor’s price piñata.