Using Exchange Rate Graphs to Find Bargain Yachts
We live in a very small world. We also live in a very competitive world, especially in industries that are export oriented. Shipyards, especially yacht manufacturers of production yachts, compete against each other world-wide. Consequently export pricing must be constantly adjusted in order to protect profits and please shareholders. An Italian yacht is not just Italian; it’s American, German, Chinese, and made up of parts from dozens of different countries. As such, when there are big fluctuations in exchange rates, all yacht manufacturers adjust their pricing either up or down in order to maintain their sales volume or protect their margins. Or must they? The fact that they usually do not is an opportunity for yacht buyers to make better deals in the brokerage market.
The graph above shows the fluctuations between the Euro and the US Dollar over the last ten years. As one can observe, the Euro was worth the most relative to the dollar in 2008, 2010, 2011 and 2014. For example, from 2005 to 2008 the Euro climbed from 1.15 to 1.60 dollars, an almost 40% increase. European manufacturers, depending on how dependent they were on purchasing parts in the dollar market, usually do not react to these fluctuations. The most profitable scenario is to do nothing in the Euro market because that will increase their profitability in their Euro zone sales. However, in the dollar zone sales they have a problem because their yachts are getting progressively more expensive for dollar buyers. Their normal reaction there too is to do nothing because sales discounts will also lower their Euro margins. The ones that generally get hurt in these situations are the dollar zone boat dealers who are required to buy in Euros. Since dealers have substantial margins, especially on bigger luxury yachts, they can usually weather these exchange rate fluctuations as long as they are not long term.
So, as the old Wendy’s commercial said, “Where’s the beef?” The opportunity for Americans is with yacht buyers in the Euro zone who paid for their new boats in 2008 Euros. Americans who bought the same boat in the US that year paid the same amount BUT in 2015 dollars that boat has an actual depreciated value of 40% more than the European buyer’s boat. To the European owner there is no difference. He will price his boat based on European depreciation tables which in 2015 exchange rates will make that boat 40% less expensive to Americans looking at the same boat bought by an American buyer in 2008. To wrap your mind around this concept is sometimes difficult So, let’s compare actual asking price differences between American and European 43 Azimuts of 2008 in 2015 dollars.
Model Year List Price Location
Azimut 43 2008 $296,297.00 Italy
Azimut 43 2008 $357,792.00 Croatia
Azimut 43 2008 $329,840.00 Adria, Italy
Azimut 43 2008 $245,982.00 Turkey
Azimut 43 2008 $279,525.00 Italy
Azimut 43 2008 $307,478.00 Italy
Azimut 43 2008 $307,478.00 Ibiza, Spain
Azimut 43 2008 $300,769.00 mallorca, Spain
Azimut 43 2008 $290,706.00 Greece
Azimut 43 2008 $307,422.00 Mallorca, Spain
Azimut 43 2008 $436,059.00 Turkey
Azimut 43 2008 $307,478.00 Mallorca, Spain
Azimut 43 2008 $262,754.00 Italy
Azimut 43 2008 $278,407.00 CESME, Turkey
Azimut 43S 2008 $399,000.00 FL, USA
Azimut 43S 2008 $525,000.00 Marina Del Rey, CA
Average $462,000.00 50.1% more
These listings were taken directly out of YachtWorld on 6/29/2015. The results are self-explanatory. The list price of the same model boat in Europe is 50.1% more than in the USA. If we add 1.5 % for duty to bring these boats in the US, plus $20,000 for shipping, we arrive at an actual price difference of $332,329 for the Azimut bought in the Med compared to $462,000 for the one bought in the USA. That’s still a $129,671 difference of 39% more for the US boats and just happens to coincide with the difference in exchange rates between 2008 and 2015. Coincidence? We think not.
The conclusion is that if you want to buy a yacht in the USA, especially one built in the Euro zone, you need to shop in Europe also. It’s actually like getting paid for a free cruise in the Mediterranean… with extra spending money left over. We specialize in these vacation packages. 🙂