Market Report 2018 (Opening Remarks)

‘2017 was good for Berthon’

BY SUE GRANT

2017, the year that was, saw the performance of the Berthon Sales Division put in a 14% increase in revenue. And what a year it was. The market was busy in all segments – sail, power, performance, pre-owned and new. It saw the team working all hours to manage the business in progress and the market remained strong throughout with no sign of any seasonal variation.

So we closed the year with a mixture of emotions; surprised that despite the shadow of Brexit, unrest in the middle east, problems in the Korean arena, a new focus for China, the rise of Russia’s sphere of influence, a busy programme at the White House, and a minority government in the UK, that our small marine world was still turning, and with exhilaration that so many yachtsman were diving into our sport and enjoying it at all levels. Excitement still prevails at the opportunities that we enjoyed to hone our skills in the craft of yacht brokerage and concern (as with all sales teams) about how long our luck will last!

So far, for 2018, these same positive trends are much in evidence and we are still busy. The biggest challenge that we face is the shortage of yachts. This applies to both pre-owned and new yachts in many sectors of the market.

As far as new yachts are concerned, the way that manufacturers build and supply yachts has changed exponentially from the days pre 2008 – not so long ago when they built for stock and forced dealers to take their stock using big stocking loans which were readily available as yacht sales were brisk. Today, manufacturers are in the most part building for end users so that availability of stock is a thing of yesterday and the days of making a stink bid for a stock yacht that needs shifting for cash and a quick sale are all-but gone. Our biggest challenge with the new yachts that we sell is offering reasonable delivery times, as all the manufacturers that we represent offer between 6 months and 2 year delivery – the world has indeed changed. So if we tell you that the build slots are in short supply, this is not a salesman’s ploy – it is because it is true. There is nothing more frustrating than to experience the unbelieving stare and knowing wink by the client, followed by the disappointment of having to tell them that actually there really are no available build slots for the next season, when he or she calls a couple of weeks later. Cash flow is King and memories of the sudden fall-off in demand that occurred in 2008 are still vivid.

There is also scarcity on the brokerage market in many segments, although there are some parts of the market where yachts are still sticking. These are normally anything that can be assigned to the too difficult to deal with pile – large old yachts needing refit and or big crews, and which are difficult to manage at sea and in port. For everything else we are still seeing the effects of reduced yacht production and delivery from around 2009 to about 2014 which means that there simply aren’t the number of early middle aged brokerage yachts in existence.

This shortage has been further amplified by currency shift taking many yachts out of our traditional markets and into areas like Scandinavia and the Southern Hemisphere where they become part of new developing markets.

This scarcity has led to a lot more travel for the sales team and since personal knowledge of the yachts that we sell across the board is a key part of what we do, travel to view and accurately assess prior giving the correct advice on asking and likely selling price.

Speaking of new yachts, Windy Boats had a stellar year in the UK and France with clients enjoying the quality, sea keeping and fantastic driving experience offered by the whole Windy fleet. Windy continues to innovate and to deliver elegant dollops of Windy DNA to a brand that will never be out of style. Even though we had good weather for most of last season in the UK, many of our clients continue to boat in the more reliable climates of the Mediterranean to ensure that they make the most of their investment. We also continue to work with Windy on the custom tender projects which are the perfect support yachts for either a super yacht or a villa close the water’s edge.

We are excited about the planned launch of the Advanced 80#2 this year. Constructed of carbon composite she is a fast cruiser, using cutting edge technology to provide a comfortable, fast and rewarding sailing yacht which will nonetheless shine on the regatta circuit.

We have worked with Richard Baldwin for many year and he has always been an important part of the Berthon family. In 2017 we took the decision to co-join with him on the Solaris Yachts account and we are now working together to represent these great performance cruising yachts in the UK. Solaris has developed hugely in the past 5 years and offers a range of elegant, powerful cruising yachts that are easily handled by a family or husband and wife combination. They are also the essence of style both externally and internally.

In the USA it was another strong year although concerns about Mr Trump’s agenda did result in a slow-down in the early months of the new administration, as American clients, although interested in yachting, kept their wallets firmly in their pockets. However, this improved as the year matured and we are busy at our Newport office already in 2018. The American domestic market, although relatively small is dynamic and a continuing trend is the willingness of American yacht owners to adjust price to take into account the international market, and to also allow for currency advantage in order to be able to attract domestic buyers to their yachts. This has made the area very competitive on price so now, despite currency we are still selling American owned yachts to Europeans – on grounds of price and condition. How bizarre is that? The recent dollar weakness has of course helped.

At Berthon USA we represent a number of European New Yacht manufacturers and we continue to enjoy success with Contest and Rustler. European build quality and design is appreciated in the USA. However, the new yacht market as a whole in this area favours the production market which is perfect for the local waters. Therefore our representation of Moody has been most successful with their deck saloon, easy handling, volume and competitive pricing.

It was a year of great change for the FPB Programme. After a good run with 18 hulls either cruising or in build, Steve and Linda Dashew took the decision to retire from the FPB Programme. Not an easy thing to decide to do, the launch of their FPB 78#1 COCHISE last year was the decider as once they were at the helm, they decided that it was far too much fun cruising and that they didn’t want to stop. Their maiden voyage from Fiji to Fort Lauderdale (because they didn’t like long haul flying and didn’t want to miss the basketball season in Arizona) says much about FPB but also about these iconic and committed sailors. Because of their level of involvement with every detail surrounding the Programme, it simply wasn’t feasible to continue without them and so we announced that no more orders for FPBs would be taken in the autumn of 2017.

Blue water cruising continues to be very in vogue. We believe that this trend will continue as communications and technology enable us to go further, do more and remain in contact with family and the business with less effort. Our friends at the World Cruising Club and ARC continue to be at the vanguard of this sector and they deliver outstanding events giving confidence to yachtsmen to cruise further. We expect to see more rallies and events in the southern hemisphere as well as more interest in both our planet’s poles.

Of course Brexit raises the spectre of yet more confusion and anguish relating to the VAT treatment of yachts for Brits once the UK exits. As we will exit the Customs Union, the answer is that we currently have no clue of the final outcome. You will read more of the challenges and upsides surrounding this subject later in this publication as it’s fun to speculate – but that is all that it is.

Likewise the whole of Europe is also struggling with a new statute nattily named GDPR which are new regulations designed to prevent cold calling and the fantastic amount of junk mail and email that confronts us at every turn. A jolly good thing I hear you cry. However, it does mean that positive opt-ins will be law from May. This means that if you hear nothing from Berthon after the 25th May it won’t be that we are rude or not paying attention, it will be that the new regulations prevent us from being in touch. If so, do respond promptly to our soon to be sent email goading you to either pen a short line or opt in by clicking the relevant boxes that will have yacht particulars, blogs, lifestyle and the rest, all winging their way by email and if you wish, on the doormat too.

So far so good – but what about the balance of 2018? We attempt the crystal ball trick at the end of this publication. Of course we are natural optimists but we are also aware of the laws of gravity. Whilst demand remains with scarce supply, yachts will continue to sell. The danger from the brokerage perspective is that yacht owners will see that there are fewer yachts on the market and will as a result decide to hold price at unrealisticlevels. This is not cool as a yacht is a totally discretionary purchase (and subject to the laws of depreciation) and a highly priced yacht will not sell in the market place even if she is the only option. We therefore work hard to remain in tune with the market place and continue to give the right advice to our client owners.

The delivery of information will be the most important thing that we do this year. Our in house full time photographer and film maker was at Dusseldorf Boat Show for 4 days videoing the yachts that we represent. The use of moving imagery and good granular and technical information will continue to be key and we are working hard to understand the technology and to master it. We believe that these new technologies will affect buying habits in 2018 and beyond and we mean to be in the vanguard of this effort.

The demise of the Oyster Group in February was a tragedy for the whole yachting industry as well as for the men and women who have worked for over 40 years to create this world class brand. We wish them all well and hope that the business can be reinvigorated in new ownership. At Berthon we will continue to sell and refit Oysters.

For all the rest of it – Brexit, China, Russia, Korea, minority governments and very high tides – here at Berthon we look forward to continuing to offer informed and accurate market advice and to being very straight forward about what we think will work and what will not. Whatever the ups and downs of political and economic cycle, the fact remains that there are very few things in life as worthwhile as getting out on and enjoying the water; here at Berthon all of us in the sales team look forward to being of help with the necessary passage planning to make that a reality in 2018.

Read Another Article
Download Market Report 2018 (2.1MB)