Superyacht Market – An Exclusive Club for the Growing Wealthy Class

Unlike its smaller cousins (<80 feet) the Superyacht industry has not slowed down nearly as much. The Superyacht, being a luxury good only available to the extremely wealthy (whose worldwide population is increasing) has plenty of demand. According to IC Consulting‘s latest report on the Superyacht industry revenue in 2008 rose 0.5% while 1.7% more ships were sold.

Although since 2005 the industry has grown in double digits annually, 2008 saw the industry slowdown to some extent while maintaining gains.

What is the secret? Why in a year when most industries are limiting production, downsizing and companies going into bankruptcy, is this industry still flourishing? Simple. The wealthy are getting wealthier, their population is increasing and most important of all, there are more wealthy people than there are superyachts. Due to the size of this ships production is limited, and normally it takes no less than two years to build one of this floating giants, causing full order books.

Looking into the future, the increase in units sold will slowdown (14% growth from 2008 until 2011) but revenues will increase at a higher rate (53% for the same period) Why so? When it comes to superyachts, the bigger the better. The ships being ordered are getting larger as the rich are getting richer. This means that production periods will be longer and the amount of ships produced will decrease, but revenues should grow steadily.

Europe has always been and should remain the most important market. In 2008 this situation solidifies. Not only has the European market remained strong in demand, but taking advantage of the weak dollar, sales of US made yachts in Europe has increased. In the last year revenue has increased by 1% and the number of ships sold by 1.6% reaching the 389 ships sold.

The North American region comes in on a not very distant second. In the last couple of years, and due to the mortgage crisis, the industry has somewhat softened in demand and revenue decreased by 1.6% while units sold increased by 1.3% settling on 325 ships sold.
But the region with the most room for potential growth is the Rest of the World (ROW). Due to the growing potential of different emerging markets such as China or India, and the further development in the Middle East region, mainly United Arab Emirates, seen by many manufacturers as a gold mine. In 2008 revenue increased by 5.1% and the number of units sold by 3.6%, adding up to 115 boats sold.

Per size class, things are very evenly divided between the two main regions.

When it comes to motorboats, North America takes the lead on the smallest segment (80-89ft) and in the top segment (>150ft) while Europe takes the lead on the middle segments (90-149ft). As a whole, while Europe holds an average of 46% of the motor boat market in and North America 40%, ROW holds only 13%, but growing fast.

In sailboats Europe has a tighter grip of the market, while the ROW is taking the lead over the North American market. Europe holds the lead on all segments except the largest segment, with an overall market share of 50%, while the ROW holds 27% and North America 22%.

Looking into the preferences per sizes, there is a trend that clearly sees the demand on the smaller segments decreasing (from 30% to 28% market share in the 80-89 ft segment in the next 3 years) while the larger ships increase in popularity (16% to 18% market share during the same period)

On the competition side, there has been a slight concentration with the Top 10 holding 42.1% of the market while, up 4.1% in shares.

It would not be realistic to say that the current economic slowdown has not affected the industry at the least. It has, but not to the extent of showing red figures. While 2008 still enjoyed profits, these were not to the extent as in the past years, were profits came in double digits. The industry should remain profitable in the years to come but at a much lower pace and always depending that the international markets stabilize

March 10th, 2009

Category: Industry