Where are the customer's yachts?
U.S. yacht dealers ride economy's big wave
By Jan Paschal
NEW YORK, Jan 16 (Reuters) - On Wall Street, as the legend goes, a tour guide was showing a visitor the harbor in lower Manhattan, pointing out the bankers' and brokers' yachts, when he got stopped by a question.
``Where are the customers' yachts?'
They may have been scarce then. But now, with the U.S. economy booming, the customers' yachts dot harbors around the world and through Sunday, they can also be found at the New York National Boat Show at the Javits Center.
A well-dressed man with a thick mane of white hair and young son in tow stopped by the Sunseeker exhibit to look at the 50-foot, 7-inch Camargue 50, an elegant slice of white and dark blue fiberglass that can cruise at about 30 knots (34-1/2 mph) and sells for just under $1 million. Like others waiting in line to tour the Camargue, they took off their shoes so no marks would be left on the boat's teak deck. The yacht comes with crystal and Royal Doulton china. Its sleeping accommodations for owner and guests have cedar-lined closets.
``It's not just the individual broker' or banker who's buying a yacht now, ``it's the people who've earned money in the stock market,' said Jim Ross, director of The Sunseeker Club at Castaways Inc., in New Rochelle, N.Y., the dealer in the northeastern United States for Sunseeker yachts and racing boats, custom built in Poole, England.
``What the advance of the markets means is that there's consumer confidence,' Ross said. ``Right now, we're doing very, very well. The last three years have been very, very strong.'
With the Dow Jones industrial average closing Friday at its third record high this week -- after five straight years of double-digit gains -- the economic climate for selling yachts and other luxury boats is downright balmy, dealers and salespeople say.
``A woman who was chairman of a large clothing company decided to buy a boat, instead of a home in Florida,' Ross said. ``We outfitted the state room with a computer and fax machines. So when you rang her secretary in Manhattan, she forwarded you to her boss's office on the water.'
The Sunseeker catalog, which could easily be entitled ``Sea of Dreams,' shows yachts that exceed 84 feet in length, with customized leather and wood interiors that look like the living room in a Fifth Avenue penthouse. Clients who stopped by to see Ross during the boat show included a former officer of the New York Stock Exchange and the owner of several restaurants.
Attendance at this year's New York National Boat Show is`` up about 24 percent,' said Michael Duffy, show manager for the National Marine Manufacturers Association, or NMMA, the industry trade group that produces and hosts the show.
In 1999, the retail value of the 6,800 inboard motor boats and cruisers sold, the group that includes yachts and other luxury models, totaled approximately $1.98 billion, according to the Chicago-based NMMA. The average unit cost was $291,375. Those figures mark an increase from the previous two years in the number of boats sold and total retail value.
In 1998, however, when the stock market took a hit from the Russian ruble crisis and the near collapse of the hedge fund, Long-Term Capital Management, the average unit cost of luxury boats sold fell to $254,365 from $264,937 in 1997, the NMMA statistics show. The retail value of boats sold and unit sales, however, rose slightly in 1998 to $1.68 billion and 6,600 units from $1.67 billion and 6,300 units in 1997.
``Even the slightest fluctuation in the market' affects yacht sales, Ross said, ``because we're such a luxury item. This comes after the home, the cars, the summer homes are paid for.' And often, he added, the boat purchase follows the children's graduations from college.
Darren Matthews, general manager of Staten Island Boat Sales' yacht dealership in Freeport, N.Y., was beaming Saturday night when he recounted that sales made during this year's New York show ``included two $750,000 boats -- almost unheard of.'
Consumer confidence is ``very strong,' Matthews said. The effect of the strong economy has been ``dramatic. Our business is unfolding. We're having some record-breaking years.'
As Matthews put it, ``a guy who bought AOL (NYSE:AOL - news) five years ago, he's in good shape, right?' Or ``someone who put 20 grand in the market 30, 20 years ago, they're doing all right.'
Matthews' clients range from key executives in the music industry and other powerful people to those who aren't in the public eye, including plumbers, who earn good money and want to spend some of it on a boat to enjoy with their families.
Wall Street types, Matthews said, ``are very shrewd and take their time' to buy. They usually just browse at the boat show, instead of coming in ``with a big bonus check in hand, ready to buy.' Instead, ``they buy from the dealership.'
Investment bankers, traders and brokers tend to look at a boat as ``a source of solace, a stress reliever. It's their condo on the water. From an income-tax standpoint, you write it off as a second home.'
Husbands and wives, some with teenagers along for the show, walked through the 42 Convertible and the 410 Sport Bridge,
two new yacht models from Silverton Marine Corp., while Matthews and his sales force answered questions. The quality of workmanship, they said, is high because Silverton, of Millville, N.J., is an employee-owned company.
``Just look, there's a lot of craftsmanship,' said Raquel Celi, pointing out the cherry wood in the living and dining areas. She sold three boats, at about $250,000 each, in the first four days of the boat show, which opened Jan. 8 and was scheduled to close Sunday at 6 p.m. EST.
The 42 Convertible, priced at under $300,000, is designed for the water sports-loving family, with concealed, overhead
storage in the living area for fly-fishing rods. The 410 Sport Bridge, which sells for over $300,000, is oriented to couples who want a boat for entertaining; its living area has a cream-colored ultra leather recliner in one corner, opposite a color TV and VCR in recessed cabinetry.
Interest rates for boat loans are so low now -- 5.99 percent during the New York Boat Show and slightly under 8 percent year round -- that more people are financing boats now than ever before. The typical down payment is 20 percent.
``For a $200,000 boat, the monthly payment is about $1,500 a month,' Matthews said. ``We can put someone in a boat for about the same terms as if they were buying a 5-series Mercedes-Benz, or a Lexus.'
And with that, he adds, come Mercedes- or Lexus-style service, including the availability of a licensed captain to go over the boat's systems and controls with the new owner until he's completely comfortable with it.
West Marine
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