Global Outlook: U.S. Driving Higher Values

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2 Global Outlook: U.S. Driving Higher Values In the latest edition of YachtWorld.com s Market Index, we cover brokerage sales results through June Since our previous edition, reporting on first-quarter sales, the global market for brokerage yachts has shifted significantly, according to the sold-boat reports by most of our 2,670 member brokerages worldwide. The greatest change has been in the much higher total sales value of boats larger than 55 feet in the U.S. market, which lifted the gross valuation of global brokerage sales to $2.91 billion, a 12 percent increase compared to sales in the first half of Underscoring the big-boat nature of this values boom was the fact that 19,114 boats were sold in the first half of the year, a slight decrease compared to the 19,289 sold in the same time period in The number of boats sold across much of the middle of the market has not varied significantly, year over year; some growth has occurred in this segment in Europe, offset by declines in the U.S. We re glad to produce this edition in time for the fall selling season and encourage suggestions for the improvement of future editions. John Burnham Editorial Director, Dominion Marine Media 2

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4 European Brokerage: More Boats Sold in Q2, But at Lower Prices The top-line numbers for brokerage boat sales in the second quarter of 2011 were positive, according to YachtWorld.com member brokers reporting sales in 20 European countries: 2,131 boats were sold, 113 more than in the same quarter of And for the year to date, sales were more than 200 boats higher than in the first half of 2010, a 6-percent gain. However, unlike in the first quarter, the total value of the boats sold in the second quarter was lower than in the same time period in The 373 million in sales value was down significantly from 469 million. This reversed a positive trend in sold-boat values from the first quarter, but for the year to date, total value of sales was still ahead for the year, with 749 million in sales. 4 Yachtworld Market Index

5 Leading this marketplace shift were those boats over 55 feet long, which in the first quarter had shown growth both in numbers sold and total value of sales. Unit sales in this category were up again compared to the second quarter of 2010, by 28 percent, with 145 boats sold. But the value of the sales for the same period was down 26 percent, to 197 million. The value of sales of boats 46 to 55 feet were down a similar amount, 15 percent, although in the case of that size range, the number of boats sold was virtually flat compared to the previous year. Among some of the smaller size boats, the market made modest gains both in units and total value in the second quarter, reflecting a more stable market segment. Seven percent more boats feet changed hands and at a value just over 8 percent higher than a year earlier. Among boats under 26 feet, unit sales were up 12 percent and total valuation, 8 percent. European Brokerage: More Boats Sold in Q2, But at Lower Prices 5

6 Sales of powerboats were stronger than for sailboats when compared against in the second quarter of The total value of those sales was down in both categories, but sailboats were the worse off of the two. Powerboats sales were up 10 percent, with 1,193 boats sold in the quarter, although total sales value dropped 8 percent to 272 million. Sailboats sales were flat with 939 boats sold, and total sales value fell 17 percent to 101 million. Both power and sailboats had made strong gains in the first quarter of 2011, and year to date, the total value of each type sold remained positive half way through the year. Powerboats sales were up 8 percent, with 2,006 boats sold at a total value of 558 million, a 14 percent gain over Sailboat sales were up 3 percent, with 1,743 boats sold, and total sales valuation had dropped 2 percent to 188 million. 6 Yachtworld Market Index

7 Sunseeker and Sea Ray Lead in the U.K. As the fall boat-show season opened, we looked at brand popularity through year-to-date searches on YachtWorld.com in the U.K. that specified a brand. Sunseeker was the top brand, based on a report of the mostsearched brands, through the end of July. The iconic luxury yacht brand attracts dreamers and serious buyers, alike, and out-distanced the other Top 5 brands Sea Ray, Beneteau, Princess, and Azimut by a 30 percent or greater margin. Of the U.K. brands in the group, Princess (4), Fairline (9), and Moody (11) also fare well, although Moody are now built in Germany. Strong sail-and-power brands Beneteau and Jeanneau are fourth and sixth, respectively, while Bavaria and Swan are the top sailboat-only brands, at seventh and eighth Top-Searched Brands in the U.K. 7

8 U.S. Brokerage: Big-Boat Sales Reverse Values Trend Through the first quarter of 2011, sales of brokerage boats in the United States were slightly behind 2010 and the total value of sales was off 16 percent, but that changed in the second quarter. According to brokerage members of YachtWorld.com, while unit sales remained flat, the value of those sales increased dramatically thanks to a rise in luxury big-boat sales. For the first two quarters combined, 15,370 boats were sold for $1.86 billion, the latter a 14-percent increase for the year to date. The turnaround in big-boat sales was extraordinary. Unit sales of boats over 55 feet were down 14 percent in the first quarter of 2011 compared to the same period in 2010, but were up 5 percent for the year by the end of the second quarter, with 457 boats sold. The total value of those sales went from $200 million in the first quarter (36 percent behind the first quarter, 2010), to $773 million after the second quarter, $232 million or 43 percent ahead of the first six months of Yachtworld Market Index

9 Also ahead for the year were sales in the 46 to 55 foot size range, improving in the second quarter from being 4 percent ahead of 2010 to 7 percent. The total value of sales in that size range was down 3 percent after the first quarter, but jumped ahead in the second quarter for a year-to-date total of $244 million, a gain of 9 percent. Sales in other size ranges were flat or slightly lower for the year in unit sales, with the under-26-foot size range down the most, off 7 percent in number of boats sold compared to The total value of sales was also flat or incrementally lower in all sizes of boat under 45 feet. Both among powerboats and sailboats, the number of brokerage boats sold in the U.S. market remained behind 2010 through the first two quarters. Powerboats sales were off 2 percent, with 12,558 boats sold, and sailboats sales were 5 percent lower, with 2,812 boats sold. This represented an improvement in both sales and valuation for brokers selling sailboats, and a gain in valuation for those selling powerboats. The latter can be largely attributed to the turnaround in big-boats sales mentioned earlier. For sailboat brokers, it seems likely that the market, which has been weak for some time, finally stabilized and spring purchases began to improve the picture somewhat. U.S. Brokerage: Big-Boat Sales Reverse Values Trend 9

10 U.S. Perspective on Top 50 Brands Searched Editor s Note: In this issue, we invited longtime U.S. magazine editor and publisher Peter Janssen to offer his perspective on the mostsearched brands on YachtWorld.com. In these uncertain times, it shouldn t be a surprise that the big get bigger, that potential boat buyers turn to the brands they know and trust. Still, given all that, I was surprised by the dominance of large, long-standing brands in the recent YachtWorld list of boats power and sail that people searched for in the first six months of this year. Take a look, for example, at the five leading manufacturers on the YachtWorld list of the Top 50: 1. Sea Ray - 311,607 searches in the January to July period 2. Hatteras - 233, Viking - 180, Searay (again, this time spelled, incorrectly, as one word) - 150, Catalina - 142,306 The Sea Ray dominance is even more impressive if you add together the company s two postings on the list, getting a total of 461,935, or almost double the searches for the second-place brand, Hatteras. Both, of course, are Brunswick companies, distributed though MarineMax (the largest boat dealership in the world, with 57 locations around the U.S.), although both Viking and Catalina are independently owned. Not surprisingly, Sea Ray was proud of their position. Sea Ray is the most frequently searched brand because we have a very broad, high-quality product offering, said Rob Noyes, the company s VP of marketing. Our dealer network offers the best service in the industry, along with incredible opportunities for owners to enjoy their boats, and people trust the Sea Ray brand. The YachtWorld Top 50 list, of course, is only one measurement, perhaps a used-boat popularity contest of sorts. (The overwhelming majority of searches on the site 75 percent, or more than 26 million did not enter a particular brand, or search phrase at all. The Top 50 list reflects only searches for a particular builder.) It certainly is not a list of boats actually sold (the boating business would be celebrating a bonanza if it were). By Peter A. Janssen 10 Yachtworld Market Index

11 But it can be read as an indication of brand awareness and strength, longevity, dealer networks, name recognition, advertising, presence at boat shows and, perhaps most significant of all, the dream factor. Many more people (by a very large percentage) will dream of owning a Hatteras or a Viking than will ever actually buy one. The searches do indicate that reputation counts. After more than 50 years in the luxury yacht market, it s refreshing to see that Hatteras remains a highly sought after brand, said Eric Cashion, the company s marketing director. That anglers and cruising enthusiasts alike would continue to place the Hatteras brand at the top of their wish list speaks to the quality and beauty that our generations of craftsmen and designers have invested in each vessel. Despite the continuing dominance of powerboats in the market, I was impressed with the strength of sail on the list. Indeed, Beneteau was only two spots behind fifth-place Catalina, with 141,804 searches, while Hunter registered number 13, with 88,509. Again, the big players got the hits. Tartan was halfway down the list at number 26, with 54,014 searches. Jeanneau was three behind with 46,982, just one ahead of Island Packet with 45,965. Swan was next, number 31 with 44,315, while C&C and Pearson were numbers 34 and 35, respectively. Sabre scored well at number 21, but the list did not differentiate between searches for power and sail, and the company has been making far more powerboats than sailboats in recent years. The same is true for Hinckley, at number 38. Cruising powerboats, a growing market segment given the Baby Boomer demographics, scored well. Cruising powerboats, a growing market segment given the Baby Boomer demographics, scored well. Carver was number 9, followed immediately by Grand Banks (now there s an indication of a price-point/dream-factor mix). Mainship, once a dominant company, came in at 18, one ahead of Silverton. Nordhavn was number 36 on the list, indicating that the round-the-world dream is alive and well for both power and sail. In fact, the blue-water sailboat manufacturer Pacific Seacraft was just one spot behind, at 37. Among production boats, I was surprised that Bayliner, at number 11 (101,202 searches) was significantly behind its Brunswick sister company Sea Ray. Years ago, when Bayliner s product line stretched from the mid-teens ($9,995 for boat, motor and trailer) to the upper-40-foot level, the two companies were much closer. Today, however, Bayliners are smaller, with the line running from 16 to 35 feet, while Meridian, another Brunswick company, is making cruising boats from 34 to 54 feet; Meridian scored at number 45, one ahead of Cruisers Yachts. Overall, the scores reflect the strength and diversity of the used-boat market. In fact, companies on the second half of the list were bunched fairly closely together. Still, I was surprised by the showing for Fountain, which was nearly dead last (No. 48). Even though he doesn t own it any more, Reggie Fountain, who created the company and built it through his many world championships on the offshore racing circuit, never finished last in his life. Peter A. Janssen is the former editorial director of Yachting, editorial director of MotorBoating, and editor-in-chief and publisher of Motor Boating & Sailing. U.S.: Perspective on Top 50 Brands Searched 11

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