Interesting take on the cost of boats - from the wake perspective

[Horton]

The video should start at about 4:50 in the video with a question from @perfski Bill Porter

[Jody_Seal]

• "Me and Mick are going to wing on over to London and jam with the Stones!

Edited April 18 by Jody_Seal

[ski6jones]

"... finance a boat for 20-30 years."  Yeah, that sounds like a GREAT idea! Good grief!!

[jpwhit]

That's why the higher interest rates have and will continue to crush the surf boat market. 20+ year financing isn't the exception on these boats, it's the norm. And you can sort of make it work when interest rates are 3-4% and boats are going up significantly every year.

With interest rates in the 7% range and with boat prices dropping it's simply not workable anymore. Payments are too high, and then the boats get underwater because of falling prices, and folks can't get out from under the 20+ year loans at that point. 

There are lot of parallels between what happened with houses and house loans in 2008 to what's happening now with surf boats. The only difference is the boat market is way too small to impact the overall economy like the housing market crash did in 2008. But I think the surf boat market has a long ways to go and I suspect it's going to get a lot worse before it gets better. 

[chaloux]

I know this is beating a dead horse but there are a few things that I think we can all universally agree on.

- We all want boats to be cheaper and more accessible. 

- Prices are very quick to rise and very slow to fall, if at all.

- Corporate greed, infinite growth, and shareholders suck.

- We don't know margins and probably won't ever, so we all sit around speculating uselessly. 

- Inflation sucks and much of it is profit driven and not genuine and because of "price spiraling" - see point 3

Personally, I'm tired of seeing things that my parents were able to achieve in their lives on a single income with more kids be completely out of reach for my 2 income, much higher earning family with less kids. I just want a goddamn boat that isn't the cost of a mortgage and the daily grind of constantly searching and surfing is getting old. Just my .02

[BSBELL]

The guy in the video makes a great point about getting a lot more features compared to boats 10-20 years ago.

I don't see a leg to stand on when blaming boat manufactures, because the product will sell or it won't. The free market decides.

Judging by the financials of the publicly traded boat manufactures, Mastercraft is running at a 10% margin and Malibu is at a 5% margin. I don't see anything out of line there...

The never ending money printer in Washington, and the ability to finance a big toy for over a decade are much more suspect to the cause of price increases.

 

[Sethro]

@chaloux I’m just curious what price range of boat you are after?  It seems like there are endless choices on the market for a boat that is affordable for a 2 income family that makes time on the water a priority. 

[chaloux]

@SethroIt does seem that way, but when you start getting into specifics it really changes. I have a few choices laid out and there are all sorts of reasons why I am unable or choose not to buy. I'm looking for any 196, any 200 except 18-19, and Prostars. It's easy to look at SIA and see a ton of boats and point the finger at me for not having purchased something yet. But let's pick any of the following dealbreakers:

- location: right boat in the wrong place, especially over the southern border (Canadian here) can add significant cost or difficulty in properly assessing a boat

- price: depends on boat, year, hours. Prices are still high but they're starting to come down. Can get reasonable prices for high hours. 

- hours, year, model, options, etc. Add a heater or heated seats to your must have options and the list shrinks again

- nuance: my funds available at any given time, life situation, work schedule, other extracurricular expenses, having to sell my current boat in a buyer's market, etc. 

Now to be fair, if I had 100k set aside these problems pretty much don't exist and I'd be able to buy the boat I want easily. That is not my current situation so I'm stuck searching for the boat that I simply can't pass on price and condition wise, and that simply hasn't come up yet. Perceived value is still high even with nothing selling - try talking a dealer down on any used boat, they're not budging. 

@Sethro sorry, I guess I never actually answered your question lol. My budget would be 20-70k CDN depending on the boat. 

[Sethro]

@chaloux  that makes sense.  I was on the hunt for years for a 2003-2006 Response LXi with the LS1 engine.  I almost "settled" for a Sunsetter LXi with the LS1, but the seller backed out when the boat he thought he was buying wasn't in the condition as advertised.  The border would definitely cause an issue, too.  I found the right boat (minus the LS1) in the wrong spot, but for $500 it was trailered to my house.  It certainly was a gamble, but I trusted the seller and all worked out well.  I think the buyer's market vs seller's market is almost a wash if you are selling and buying a boat.  Good luck on your continued search...I'm sure the right boat will pop up one of these days.

[Horton]

[S1Pitts]

This one is even cheaper and 2yrs newer so into a 200 hull. Hrs are higher but not ridiculously high. Avg is 120hrs/yr and I was doing 100+hrs/yr back in the day when I skied very day.

SIA Link here Ad does not define Cdn or US currency 

@Sethro where in Canada do you reside?

[Sethro]

@S1Pitts I don't live in Canada...Chaloux lives in Canada.

[LOTW]

C'mon, heater and heated seat??? You said you were Canadian, you should be tougher than that!

I will say though, the exchange rate is absolutely killer and has been for years, there are a few boats in Canada but you gotta be on it.

[Dano]

This one is in Canada.  https://www.facebook.com/share/D6uM4dyBpY8XWH38/?mibextid=79PoIi

[S1Pitts]

Sorry @Sethro I should not be responding to posts before I wake up.

@chaloux Where are you residing in Canada? 

@LOTW after 40+seasons my driver (wife) is pushing me to install seat heaters to compliment the traditional forced air heater. Things you have to do when 50% of your season is water under 60F and air temps in the 40's-50's on ski mornings.

[chaloux]

Hahaha, thanks for all the suggestions fellas. I'm in Ontario. I've been in touch with Ross and Vince about their boats. Vince is about 10 minutes from me and I'll be checking his boat out once it's in the water. He said he's not sure he even wants to sell it 🫠 The BC boat I haven't reached out, that's a 6 day drive lol

Those two boats are a prime example of the crap I have to deal with internally - high hour 200 for cheaper than an excellent condition 196 with ZO? Or do I just say screw it and get a cheap older 196 for now and enjoy the wake upgrade but not get ZO? There are so many pros and cons to everything, then when you add price variation in it's just a clusterF

Or for another small jump in price, check out this PS that just popped up on SIA! 

https://www.ski-it-again.com/php/skiitagain.php?endless=summer&topic=Search&category=Boat_3Event&postid=69840

[Horton]

@chaloux

Just find a clean 08 or later 196. With the money you save you can upgrade. Those boats are bulletproof and not much can go wrong that can not be replaced or refurbished. 

[chaloux]

I'll try to convince Vince to sell me his boat 😂

[Horton]

Obviously, everyone knows I have a business relationship with MasterCraft and want everyone on this website to order a new ProStar. I believe in the product and believe in the company. My current ProStar is so pretty!

I am also not stupid and understand that not everyone can or wants to pay for a new boat. We need as many skiers as possible and we need water skiing to be as affordable as possible. I sincerely wish the tournament scene would embrace the use of older boats. There is NOTHING wrong with an 08 or later 196. To be a tournament skier you do not NEED a new or almost new boat. We all want a new boat but we do not NEED a new boat.

During COVID I owned a 196 for about 9 months. It was a fine boat. My wife said it smelled funny but it drove fine and skied fine.

Yes there are some real safety and liability issues with older boats at tournaments but every year we have less promo boats. The sooner the sport works this out and accepts old boats as tournament boats the better.

[Kelvin]

6 hours ago, chaloux said:

I'm looking for any 196, any 200 except 18-19

@chaloux I'm curious.  What's your hangup with the 2018 200?  I completely get it on the 2019 200 built in TENN.  Not sure what your concerns would be with a 2018.

[RAWSki]

3 hours ago, Horton said:

Yes there are some real safety and liability issues with older boats at tournaments but every year we have less promo boats. The sooner the sport works this out and accepts old boats as tournament boats the better.

@Horton I believe that has happened.  Basically any boat previously approved by AWSA Boat Committee can be used in a class C, I am sure @MISkier can provide more details but even the ELR events have slightly less restrictive requirements.  

[Horton]

@RAWSki 

with a new promo boat, there is an assumption that boat is all up to spec and as safe as possible. One of the worries about old boats in tournaments is (as an example) the steering cable could be old and break and there could be an accident that results in an injury. 

[MISkier]

@Horton and @RAWSki

From the Towboat Policy Manual:

Record Capability (Class E, L, R) tournaments and Class C tournaments may use any prior year USA Water Ski Approved Tournament boat equipped with Zero Off (rev R or rev S). The LOC and Chief Driver are responsible to ensure the boat is in good operating condition, including required insurance.

For Regionals and Nationals:

AWSA US Nationals and AWSA Regionals may use a 2024 USA Water Ski Approved Tournament Towboat or a prior year 2023, or 2022 USA Water Ski Approved Tournament Towboat. (Current year plus 2 additional years).

[Horton]

@MISkier Yes but that is not the current culture of the sport and I know for a fact there is some level of worry about the increased liability of older boats. 

[RAWSki]

1 minute ago, Horton said:

@MISkier Yes but that is not the current culture of the sport and I know for a fact there is some level of worry about the increased liability of older boats. 

Sounds like the current culture doesn't trust people/clubs to take care of their boats beyond 2 years.  I would not have a problem skiing an 8-10 year old ZO boat at an event.  Assuming I know the Chief Judge and Driver have checked it out.  We have taken a 2015 and 16 CP to slalom events in 2020-21 when sites were short on promos.  

[chaloux]

1 hour ago, Kelvin said:

@chaloux I'm curious.  What's your hangup with the 2018 200?  I completely get it on the 2019 200 built in TENN.  Not sure what your concerns would be with a 2018.

I thought 18-19 were the Bryant built boats? Is it 19-20? My mistake

[schafer]

@chaloux there is a beautiful 2014 200 6.0 L for sale in AB. 
a friend of mine is selling. Come ski with me when you pick it up. 
 

[chaloux]

Saw that one too! There are a few boats I might need to drive out and see. There's a pretty nice '99 196 as well. So do I spend 20g or 70? Lol

[aupatking]

As it relates to the higher pricing: in 2015 you could buy a 1 year old Prostar from a dealer that used them at their school for about 300 hours for $45k. I know this for a fact because I had one. Now, the same boat is $92k. That is the same boat but now has a 6.0 liter and a 4th tracking fin. Those 2 factors do not double the cost or the price. I subtract a little in value for them removing the dash pod glove compartment. 
My big question, as it relates to sales: would more ski boats sell if they were cheaper? Maybe a handful, but the percentage would still be negligible in relation to surf boat sales

[Horton]

@aupatking

this doesn't account for the entire price increase but in 9 years what is the total inflation of the economy? More to the point, how much has the dollar devalued? In 2014 a bag of groceries was $25. Today, it's $45 +/- (anecdotal). Inflation affects different commodities differently and there's clearly other factors but you cannot compare the price of a 2015 boat to the price of a 2024 boat apples to apples.

[aupatking]

@Horton I agree on inflation. I should have included that in my statement but my point remains that I don’t see the rationale for a 104% increase. 
I definitely don’t mean to pick on Mastercraft individually, it’s just the only one I have direct knowledge of and would still buy another today. 
Just saying, that 4th tracking fin is expensive

[chaloux]

Not to mention even finding a used 14+ PS for 45k USD.... that's the part that's killing me. 10+ year old boat used shouldn't be the same price it was new. 

[Mastercrafter]

… that 4th tracking fin and rail in the hull drive SO nice though 😎
 

Driving a neighbor’s boat, I found myself with nothing better to do than peek in the mirror vs driving my 2015 drifter. 

[DW]

Why would or should either the boat manufacturers, dealers or individuals reduce their price when the market is willing to pay? 

Looking at market trends over the decades in a general sense, our purchases today are bloated versions of what we or our parents purchased decades ago - ie:  compare the average size of a home, the amenities in the vehicles we drive, the cool stuff we get to ride behind the boat, etc.  There is a component of inflation & product cost that is totally buyer driven not supplier pushed.

[DvarianDan Johnson]

Any mention of inflation in this discussion IMO is ridiculous. $100K+ boats are a high end luxury item . Period. Any inflationary impact on materials etc. is negligible . It's like saying inflation is a driver of high end fashion products like Gucci, Prada, YSL, Hermes, etc. that are all insanely expensive. Inflation is not a consideration in the pricing.    

[Hallpass]

3 hours ago, DvarianDan Johnson said:

Any mention of inflation in this discussion IMO is ridiculous. $100K+ boats are a high end luxury item . Period. Any inflationary impact on materials etc. is negligible . It's like saying inflation is a driver of high end fashion products like Gucci, Prada, YSL, Hermes, etc. that are all insanely expensive. Inflation is not a consideration in the pricing.    

Reported financials do not support this theory.  Gucci and Prada are at gross margins in the 75 to 80% range, with  net operating margin in the 30 range.  On the other hand, Mastercraft, for example, has not had gross margin exceeding 28% in the last 10 years, and that was in 2016, when, according to this thread, the boat's retail was about half what it is now.  Net margin for Mastercraft was about 10% last year, as someone said above.

[DvarianDan Johnson]

Extreme luxury items are not price sensitive. They are market driven . Gucci could tomorrow decide to raise the unit price of a bag by $2000 and it would not impact sales at all.  Mercedes could raise the price of their top of the line car by $20K with no impact on sales. Point here is "inflation" has a negligible impact on high end luxury items . Those with means and wants will but them . Period.

The boat issue is here is that this sport is just so small, and getting smaller.     

[Horton]

4 hours ago, DvarianDan Johnson said:

Any inflationary impact on materials etc. is negligible .

 

[DvarianDan Johnson]

31 minutes ago, Horton said:

 

@Horton Don't paraphrase. In context it said inflation impact of materials for luxury items is insignificant. Do you really think the cost impact of inflation is impacting Mercedes sales? Ferrari? Porche? Lamborghini? etc.....   It's not.   

[Horton]

@DvarianDan Johnson I quoted you verbatim.

[DvarianDan Johnson]

@Horton yes sir - but out of context . 

[Horton]

@DvarianDan Johnson

I can't argue that ski boats are not a luxury but I don't categorize them with the other items you mentioned.

I think your implication is that the boat companies have a ridiculous margin on ski boats.  Is that what you are saying?

[DvarianDan Johnson]

No. Not implying big margins. Only implying inflation has a negligible impact on  luxury items. 

[Blofeld]

@DvarianDan Johnson so it is not inflation and it is not corporate greed or profit margins. Is it new math economics? I am not a mathochologist but something does not add up. Could it be the cost of stuff in the supply chain has magically become more luxurious? My wife has some skin cream that she says costs extra because it is more luxurious.  

[DvarianDan Johnson]

@BlofeldStudy Ferrari……… 

[chrislandy]

Anyone who doesn't think the prices are nuts, is nuts themselves.

If the manufacturers are not operating on huge profits (not dealers, the manufacturers) then they are doing it wrong. In the video, it says (paraphrased) "If the boats are twice as big, then it costs twice as much to build", complete hogwash and shows the misunderstanding, lack of knowledge or naivety of the interviewer/ee. 

 

For context, different market, same thing though.

For example, 300k you can get a new 32ft Haines cruiser, max 26mph, 6 berth (double in bow), kitchen, lounge, sundeck, head, shower, etc... Haines 32 Offshore | 10m | 2024 - Berkshire | Boats and Outboards 

10x the boat, materials, technology than a base model 300k "surf" boat and you can guarantee they are making a decent profit with very low volume production  

[Horton]

@chrislandy

In the case of ski boats, I believe dealers try to make near 20%, but boats rarely go out the door with that much margin.

I don't exactly know how to read public disclosures from the publicly traded boat companies, but I believe the profit margins are 10 -20% ish.

Yes we would all like 40% off a new boat but no one is in the boat manufacturing or boat dealership business to not make a living. The price of manufacturing boats is a culmination of labor, materials, overhead, marketing, and regulation.  The price of all the inputs has gone up so the price of the boat itself has gone up. 

 

@DvarianDan Johnson

Ferrari net profit margin as of December 31, 2023 is 21.06% Do you think that is excessive?

Ford produces a commodity product and their profit margins historically are about 9%. 

so yes, the smaller company with the more exclusive product makes a higher percent profit per unit. The 10% Delta between Ford and Ferrari does not compare to the inflationary increase we have seen in the boat market.

[DW]

As for Ferrari - you gotta support that F1 team and your $50M/yr driver somehow and if all those tifosi are willing, well why not. 

It's a bummer that pro slalom doesn't have the following of F1 or perhaps 1 billion people cheering for the guy (Zhoe) that finished 14th in the last race.

[chaloux]

I don't want to get political here, and I don't really think I am, but it seems that we're concluding that boat costs are accurate and can't reasonably be lowered. If that's the case, the only other piece of this puzzle is very large wage increases are in order

[DvarianDan Johnson]

Well I've tried but obviously failed to get the point across here. Forget margins or inflation. Why are luxury items so expensive?  If margins are not excessive and if inflation went to 0% - does anyone think the price of luxury items would come down?   

I'm out....................