Italian Yacht Makers Resist ‘Suicide’ Price Cuts

Italy’s largest yacht makers are resisting the price cuts started by overseas rivals and will target wealthy consumers by offering more services and eco- friendlier vessels.

“Whoever is cutting prices heavily is committing suicide, » said Paolo Vitelli, Azimut Benetti Group chief executive officer, in an interview at the Genoa Boat Show, which started on Oct. 3. “The buyer would probably think you have a product that loses its value quickly » if you resort to price cutting, he said.

Yacht makers are suffering after international boat sales fell about 30 percent last year and some customers canceled orders amid the worst recession in six decades. At the Monaco Yacht Show last month, boat builders from across Europe, including London-based Burgess Yachts, said they’re lowering prices by as much as 20 percent to spur sales.

Italy is the world’s largest maker of mega-yachts, luxury vessels longer than 70 meters (230 feet). At the Monaco show, boatmakers said sales of smaller boats are drying up as their traditional buyers such as bankers, hedge fund executives and entrepreneurs lose access to credit.

Azimut Benetti and Ferretti sell boats for as much as 80 million euros ($117 million). Azimut yachts start at 300,000 euros. Some come fitted with spiral staircases, marble bathrooms and furnishings from the Fendi Casa collection.

Opulence

Ferretti’s most opulent offerings include custom- designed CRN yachts, which can exceed 200 feet. A similar length GiVi vessel comes with a gym, helicopter pad and what Ferretti calls a “wellness area. » The company sells boats starting at about 500,000 euros under nine brands, including Riva and Bertram.

“Responding to the crisis by cutting prices, reminds me of when Italy devalued the lira to make its exports more competitive, » Salvatore Basile, CEO of Forli, Italy-based Ferretti Group, said in an interview. “That tactic lasted about six months after which inflation kicks in and you have to start all over again. It’s a little like a boomerang. »

Azimut Benetti, which introduced 15 boats this year, is offering financing for up to 15 years, no repayment for the first year, and a three-year guarantee. Ferretti has presented five boats and plans a further 10 by the end of 2010. Messina, Sicily- based Aicon SpA, which sells luxury vessels for as much as 10 million euros and sells Morgan yachts, plans to introduce a third brand.

New Kind of Buyer

A new kind of buyer is emerging, looking for greater comfort, lower fuel consumption and more environmentally friendly yachts that allow them to enter into protected areas, Aicon CEO Pasquale Siclari said, adding that buyers are tending to avoid showing off. Aicon’s third brand will be dedicated to “quality rather than just speed, » he said.

“They want more for their money, they are going slower, want eco-compatibility, and the market is going to have to adapt, » Anton Francesco Albertoni, chairman of Italy’s marine industry association UCINA, said in an interview.

“The real rich continue to buy, » and yachts for 5 million euros are doing well, while boats at the lowest end of Aicon’s range at 1 million euros are suffering the most, Siclari said in an interview on board a company yacht during the show.

Signs of Recovery

Azimut Benetti has seen signs of recovery in the U.S. linked to financing, and the Russian market may be catching up even faster after dropping to zero earlier in the year, Vitelli said. Interest has emerged from the rest of the world over the past month and the company has found replacement buyers for orders that were canceled between October 2008 and March, he said.

Ferretti has received more orders following last month’s Cannes boat show than the same time last year, Basile said. It’s in talks on two boat orders from Russia.

Basile concedes he’d be willing to sell a boat “at a strong discount » if it had been left unsold for a year, a problem many yacht makers are having amid the recession. “That doesn’t mean to say that we will build boats from scratch to sell at a discount, » he said.

Aicon’s Siclari said that its sales in Greece and Central America were going well for his company.

Sales of Azimut Benetti yachts in the year ending August may have fallen about 37 percent to almost 700 million euros, while the Ferretti Group’s dropped about 11 percent to 800 million euros, the executives said. The CEO of Aicon, whose sales in the period ending August 2008 fell more than 60 percent to 70 million euros, declined to comment on sales in the most recent period.

The Genoa boat show is the world’s biggest, taking into account the land and port area dedicated to the event, according to UCINA. The show, which ends on Oct. 11, hosts 2,400 vessels.

Bloomberg

Tags: Bertram Yachts, CRN Yachts, Green Yachting, MYS Monaco Yacht Show, Riva Yachts, Sustainable Yachting

Category: Eco Luxury Yachts, Industry, Shipyard News, Superyacht Innovations