Second-hand boats keep sector afloat

The Monaco Yacht Show "acts as a catalyst" in the capital of yachting says organiser Luc Pettavino

Organised by YCM Secretary General, Bernard d’Alessandri under the label “La Belle Classe Superyachts", the dinner was also attended by Paul Masseron, Government Advisor for the Interior; Gilles Tonelli, Government Advisor for Equipment, Environment and Town Planning; Bernard Marquet, Vice-President of Monaco’s parliament, the Conseil National; and Luc Pettavino, Organiser of the Monaco Yacht Show and Chairman of the Monaco Chamber of Yachting.

According to David Legrand of Fraser Yachts, contrary to their forecasts that chartering would offset the effects of the crisis, “the opposite has occurred and it was the second hand sales of large vessels (+35 m) in Europe and countries in the East, with unheard of discounts (20% to 25%)” that enabled the company to ride out the crisis “with a bit of oxygen!"

He noted some stability in the Monaco market with consolidation in Europe being supported by the large industrial firms, in contrast to the weakness of the market worldwide. His comments were confirmed by Monaco Yacht Show organiser, Luc Pettavino: "Monaco provides a secure base for the whole process: from the start of a new project to the sale and resale. It is recognised as the capital of yachting and the Monaco Yacht Show acts as a catalyst. In these gloomy times to have recorded several sales of over 60 m in the summer of 2009 must have given the profession a shot in the arm!"

Laurent Pérignon, Marketing Manager at Camper & Nicholsons said: “For vessels of +35 m there were sales in the second half of the year for genuine opportunities, but nothing to suggest a general recovery in a market which remains sporadic and where the buyer is king".

Almost overnight the situation has gone into reverse from a position around five years ago where demand exceeded supply, encouraging boatyards to invest, to one today where supply is much greater than demand. Unsurprisingly, the boat building market has suffered and delegates feel the banks should be less cautious.

Paul Betts of the Financial Times observed that "the various European governments support industries such as banking and cars, etc, but the luxury and yachting sectors remain marginal even though they are economically strategic ". Boatyards are in a tricky situation, as the second hand market shot up by 70% between September 2008 and 2009 while demand fell. “For the boatyards it is vital to recreate a buying climate and to innovate so as to encourage new boat construction", argued Laurent Pérignon.

Some boatyards and independent designers are indeed working on new designs, notably in an environmental context which will be discussed at the next Symposium on 24th March 2010.

The conclusion was that those who were carried away by a speculative wave in the good times are suffering most with large overvalued stocks, while those who have kept a tighter rein, knowing that a delay of two to four or even five years is needed between the order being placed and the delivery, have survived the best.

Michel Ducros concluded: "We are in an industry that is naturally cyclical, so the rebound will come when the buyers are ready and prices are on the floor [….]. It’s a good opportunity for the solid companies to invest and move into places left vacant." CL