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Few people in this business can have a better overall feel for the state of the UK marine leisure market than one of its principal marine mortgage lenders. The UK is a big borrowing nation and loans tend to play a significant part of the new and previously owned boat sales scene, particularly at the lower end of the spectrum. So when Peter Whitehead, who heads up the Bank of Scotland’s Marine Finance Department, says things are probably not quite as good now as they were 12 months ago, he’s probably on the money. His operation arranges loans for everything from the smallest dinghies worth just £1,000 pounds or so to big superyachts worth double-digit millions.
“Our business has held up pretty well over the year,” says Whitehead. “Our figures for the year have been much the same as the year before, but then we believe we’ve done a bit better than the market as a whole owing to a little more market aggression and focus. As regards the bigger picture we certainly see a little more caution out there. People are probably holding on to their boats a little longer and taking more time over their decisions as to what to do next. The London boat show in January 2006 wasn’t exactly exciting for anybody and things seem to have struggled a little since, although we’re still talking about business at a very reasonable level... To an extent, while house prices remain strong, so too will consumer confidence... Banks finance maybe one in four boat deals in the UK and people taking money out of their houses has been very good for the boatbuilding industry. But the likelihood of imminent interest rate rises will not help.”
Since he spoke to IBI during the Southampton International Boat Show in September, the UK’s base rate was nudged up a quarter point to 5.0 per cent in late October and another few similar nudges could well be seen before next summer if the economy does not cool off sufficiently.
As regards trends, the sailboat sector has probably been doing a little better than the power sector, according to Whitehead. “Oil prices may have had something to do with that,” he says, “but it may simply be a case of the sailing community bringing a little more passion to their recreation. What we have also seen is a move to slightly smaller, lower-value boats. For instance the average balance this year has been £80,000 whereas last year it was £100,000, although the weakest sector of the new-boat scene was still the bottom end of the market. Yet, having said that the bigger boat sector over 15m (50ft) is still very positive and as yet shows no real signs of slowing.”
Most canvassed by IBI seem to concur. As has been the story for the last three or four years much of the good news seems to be at the upper end of the market, particularly among the exporters. The likes of mainstream motorcruiser and motoryacht builders Sunseeker, Princess, Fairline and Sealine and top-end sailing cruiser builder Oyster have all never had it so good — But then sales slowness now won’t impact the big buys numbers for at least a year. And, of course, the UK equipment manufacturers and distributors that have been supplying the builders of larger boats here and their competitors abroad also have very little to complain about as a consequence.
The domestic chandlery sector is not doing too well, but then much of the problem seems to concern the lack of margin rather than a lack of business. And to some extent it could be argued that the chandlery sector has bought that problem on itself by sustaining aggressive discounting.
To read Key Market Facts on the UK Click
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Taken from the UK Business Report in IBI's November 2006 issue. The full report can be purchased from International Boat Industry - Back Issues Department, PO Box 772, Peterborough PE2 6WJ, UK Tel: +44 (0) 1733 385 170. Fax: +44 (0) 1733 239 356 mailto:backissues@johndentonservices.com Copies are £15 each plus postage (£1 UK; £2 airmail Europe; £4 airmail elsewhere)
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