Whatever your views on the Brexit vote, and whatever happens in the months and years ahead as exit terms are bashed out, one thing is certain - right now it’s boom time in the yacht sales business.
Thanks to the fall in Sterling, major British companies like Fairline and Princess are offering boat buyers brilliant “post Brexit deals”. Princess Yacht Sales are even saying, “There’s never been a better time to buy a boat”.
That is, of course, if you’re buying a British boat in US dollars, or Euros, or another currency that’s remained strong against the pound. The Cannes boat show in the South of France is one of the most important of the year, and if you went in early September you could have bagged yourself a new luxury Fairline motor cruiser for 15% less than in 2015!
Max Whale, director Princess Motor Yacht Sales, says many wealthy customers have funds in Dollars and Euros as well as Sterling. During July and August this year, immediately following the Brexit vote he said, “Our sales to European passport holders are significantly up compared to the same period last year”.
Princess are also getting interest from further afield, countries like Turkey where customers have considerable funds in US Dollars. Whale said, “We have separate US distributors so we don’t sell into America, but we are attracting sales from other parts of the world in their currency.”
Great for those outside the UK, but British buyers looking for a second-hand boat are competing with a sudden post-Brexit-vote influx of foreign buyers chasing yachts temptingly for sale in Sterling.
Yacht broker John Rodriguez specialises in ocean-going sailing yachts between around £100,000 and £200,000. He told TheYachtMarket his overseas enquiries have doubled since Britain voted Leave, “including lots from Europe and the USA and one this morning from Alaska!”
He explained, “We’re seeing a levelling. The UK was always perceived as very expensive for foreign buyers. Over the last two years we lost a lot of overseas customers when the pound was high. That was a double whammy because we also lost UK buyers as it was cheap for them to buy abroad.
“Now those foreign buyers are back, we’re selling boats for the asking price with several people in the frame. We’ve just sold a Rival 41 which had nine people after it!”
Another company enjoying a “Brexit bounce” is Oyster, builder of big, upmarket sailing yachts. According to CEO David Tydeman, "I think the 3-6 months before the referendum created anxiety and although no one predicted the Brexit vote, they deferred buying decisions just in case – now that anxiety has reduced and stock markets have made people money on their portfolios, there is willingness to consider buying again.”
Since the referendum Oyster has signed up owners for some very big new boats including an 80ft-plus Oyster 885 and is getting enquiries in the £0.5m to £1m range from American buyers who are keen to take advantage of the US dollar at a favourable exchange rate.
The other side of the coin would seem to be that if a British customer wants to buy a foreign boat the exchange rate would work the wrong way. But this is where the importer’s financial skill, experience and clairvoyant powers come into play. A vital part of the business plan is forward planning on currency. Phil Dollin, group sales director of Inspiration Marine Group explains.
“We are the UK importer for Hanse, Dehler and Fjord yachts from Germany and Greenline hybrid motorboats from Slovenia.
“After a mild panic that Brexit would put the brakes on people ordering new boats, we are very happy to report a record July/August order book with 12 new sailing yacht orders in this period alone, which coincides with a special offer launch from the HanseGroup on their Dehler and Hanse models.
“We took the decision to buy a significant Euro forward order contract in order to offer our Sterling buyers stability and insulate our boat pricing from future currency fluctuations. This has turned out to be a very good decision as any exchange rate changes have not affected our pricing. We are looking forward to the Southampton Show with a positive outlook.”
For an overview of the market I turned to Andrew Webster, Chief Executive of Mercator Media which publishes Boating Business and Maritime Journal. He too said, “Brokerage does have an opportunity welcoming German, Dutch and French buyers looking to snap up a bargain. Refit and labour-based work also looks a good place to be. I know of a number of UK yards of all sizes out actively prospecting business around Europe that are successfully writing orders.”
However, not all marine companies are smiling. Those reliant on imported materials and European labour are looking anxiously at what the Brexit terms will be. Webster says, “The unexpected vote to leave the EU was always going to lead to a time of uncertainty. Businesses have little choice but to try to be positive until our new PM and Cabinet figure out what ‘Brexit’ actually means and what the consequences will be. No-one can be sure of the outcome of trade negotiations, how long they will take and how it will affect the UK and European leisure marine business.
“Brexit, on the face of it is proving great for exports, not so good for imports. But most things we make have imported materials or parts, a lot in US dollars. Increased costs will have to be passed on or local substitutes sourced, where possible.”
Britain’s boatbuilders seem to be trying to absorb the increased costs of imported materials rather than put prices up. Oyster’s David Tydeman said, “Materials and equipment from Europe have gone up in price but this so far only seems to be about a 1% increase in our overall costs to build, so is not a major problem,” while Fairline say they will “swallow” the costs.
Broom, too, have decided not to raise their prices. The company has been building boats in Norfolk since 1898. Designed for exploring inland waters as well as going to sea, a Broom motor yacht is a popular choice for adventures on the European canals.
Just back from the Amsterdam boat show, Broom’s John Long said the Brexit effect was so strong he has left all three show models in Holland for second viewings by a stream of potential buyers.
The superyacht sector seems to weather any storm, but despite stories like the ultra-high-net-worth-individual who has made €40 million on his portfolio since Brexit and “is feeling like spending”, the leading broker I asked for his take on Brexit said, “it's too soon to report any trends. All our sales are in Euros or US dollars. This isn't a volume business so the market isn't a fast moving one plus the wealth of our clients is very diversified. I think 10 to 12 months after Brexit will be the time for us to analyse what influence it has had on the large yacht sector.”
Alice Driscoll, head of leading marine public relations company ADPR, is hearing varying sentiments from her clients. She says, "The effects of Brexit are not yet clear and will not be for some time. Some UK-based manufacturers have seen an immediate benefit because the lower Sterling rate has made export sales more attractive; while others have suffered from uncertainty of the future prices of their suppliers and the implications of their competitiveness in the future. We have not seen any massive changes in marketing or communications plans.”
The wise words from Andrew Webster, publisher of Boating Business, are “We all face a ‘risk on’ business environment for the foreseeable future. But for the brave and ambitious, change and uncertainty offer an opportunity to build market share or develop new business areas. Not changing, adjusting or working a plan is just not an option.”
Max Whale of Princess is confident about the future. “We believe the UK appears to be business as usual. Sentiment is good, customers remain interested and excited about our product range. There are some challenges down the road because we haven’t ‘Brexited’ yet but today I see a solid market place.
“The UK industry is still highly competitive so in any event customers will find good value at the Southampton Show, in both new and used boats.”
The boat show season is in full swing with Southampton, Fort Lauderdale, Annapolis, London and Dusseldorf coming up in the next six months. Britain’s boatbuilders and brokers will be there, ready to welcome customers keen to spend their dollars and euros on Brexit bargain boats.
No one knows what will happen next in the Brexit story. Boatbuilders and brokers are making hay while the sun shines, hoping their run of good fortune continues while making plans and contingencies to help them deal with whatever this great period of change will throw at them.