New Builds Yacht Margins?

Profit margins..?

Should check this.

http://www.yachtforums.com/forums/g...9-what-margin-new-build-production-yacht.html

This could have been true before 2009. Ask yourself how many builders are still around and how many boats do they build compare to then..? I think very few are making net profits these days...

Glad you think it's "fair" for all, but come on, let's be real. The market really dictates the price, it is up to the builder to seek his own profit levels.

I bet those Rolex watches or plenty of other luxury goods are running way above 20%, hell I know t-shirt designers/sellers making a higher profit than that. You think Nike and Addidas are running at 15%? I would worry less about the builder's "fair" profit margin and focus on a profitable company that is going to be around to support the product and buy a boat that meets your expectations AND budget.

Let me paraphrase Kevin O'leary from the Shark Tank just last night. Most business today are looking for a 45% profit margin. Now some of that comes from things like underpaying their workers or cheaping out where it can't be seen or syphoned off in executive pay packages, but that's the number businesses are looking for. All that however will do nothing for your bargaining position.
The first purchaser of a yacht is expecting to take a bath when he sells however. That, and the low hours yachts get put on them, are why I would never buy a new yacht in this category unless I wanted something custom or I had stupid money.

How do you define profit in this case? ...gross profit or net profit?

What is the builders overhead? ...leveraged within an inch of it's life? ...or, well capitalized with no debt? ...it's something a buyer has no control over.

Maybe the builder will decide to re-pave the yard and re-roof the building on a project - I'm kidding, but you may remember Art Buchwald famously sued Paramount Pictures Studio for ripping off his screenplay on the movie Coming To America and was awarded a part of the profits. Paramount claimed that despite a box office of $288 million dollars the movie made no net profit. Buchwald responded that he would fly to Hollywood and expects to see a fresh coat of paint on the entire Paramount Studios lot.

I can't imagine how this information would be useful in helping to decide if you want to go new or used. As our former Secretary of State screeched recently "What difference does it make?" ...all that matters is what value the product has to a buyer. Whether a builder ultimately ends up with a profit or loss is irrelevant to market value.

Hi,

Boat bought in 2005 costs X

Same basic boat bought in 2008 costs X x 2

New one this week up 50% of size of 2005 one, with all the news of no wage rises and negative growth filling the TV this one costs X x ?

I will be interested to see who gets it first.

That would be gross profit which is why I added: "All that however will do nothing for your bargaining position." The 2nd paragraph was the actual advice part.

Exactly.

Magazines/Advertising, Boat Shows, Special Events, Factory supported Warranty Centers, maybe even in multiple locations, Factory Captains, Websites, Dealer Training, Customer Training, special "Policy" considerations, Flooring allowance/assistance, etc. It has to come out of somewhere.

Trying to determine a yacht price on a cost plus basis is a dead end. In the old days. you could find a custom builder who would allow a buyer to basically pay the monthly costs of goods, plus a predetermined labor rate for payroll, then agree to a "fair" margin at delivery. But the owner never knew what the yard paid his employees, and there was built in profit on that rate that went to the builder. And there was always side deals with the large product suppliers for "rebates". Elliot Yachts in Santa Monica comes to mind for those on the West Coast.

Look at cars and all the blow-out pricing their dealers advertise. And lately, you just see them racking up record quarterly profits while "blowing out" all their product????

Market Conditions

In the last few years, there have been fewer new builds, because of the poor market. A buyer looking for a boat a few years old will not find anything. He or she must then buy new. Most builders in the last few years were happy to just keep the doors open. Now the market is slowly changing. The can and are entitled to a profit. Good used boats also have appreciated because of lack of supply. As someone said above, buying used is good for the marine industry, because of the maintenance that will be needed on the used boat. As to resale value, best thing to do when you purchase a boat, new or used, is to figure it is worth nothing on the day you buy it. Then when you sell, you will not be disappointed. A boat is not an investment. When you spend a beautiful afternoon, in a quiet anchorage, hard to put a value on that time.