The problem about forecasting is that people have a tendency to remember what you said and to pull you up on it. Michael Fish of BBC weather forecasting fame will be forever remembered for getting his forecasting spectacularly wrong. This makes me rather cautious about predictions. The last forecast written lies open on my desk and I re-read it with foreboding!
Luckily we did not do so badly for 2019. On currency, the highs and lows were modest with Sterling continuing to be steady despite an election and uncertainty over Brexit. Our lovely American clients continued to buy which was great news for Berthon on both sides of the Atlantic. New yachts also did well across the board with new Windys, Pearls, Iguanas, Solaris, and Moodys all delivered in abundance and as we approach the new season, there are new yachts being readied for commissioning for this season, albeit some will be delayed by inevitable temporary factory closures.
Of course we weren’t totally right about the weather – but we are British! In the round however, I feel that the best call was a policy of no predictions about Brexit or VAT. Clearly, two enormous subjects of Empire State Building proportions, and this year, we will be brave and start with these…..
There is no need to opine about Brexit. As this article is written, the UK has left the EU and has embarked upon its voyage across the sea of transition to a final departure on the 31 December this year. The passage planning for this trip is complex and there are many hazards to overcome before docking safely in Port Exit. Of course there will be arguments about fishing grounds, whether we can send France our Stilton and for how much and what we call their Brie. How many BMWs should come to us and Astin Martins go to Frankfurt, about our City and how many forms a British lorry driver must fill out in Cherbourg. However, as Europe and the UK are old friends, we predict that whilst the arguments will be well fought and at times bad tempered, the final result will be like all the best deals. The best deal is of course based on the mutual unhappiness of all the participants on their position when the deal is closed.
In amongst this, we expect to see local difficulties, new paperwork and confusion here and there, but this will iron itself out and the world will continue to turn. We have offices in France, Spain and Sweden so are passionate about Europe and our European friends. Whilst the procedures will change, the deep bond between us all as inhabitants of this continent, and the bond that we have with all those for whom getting out on the water is what really counts, will trump all…
And talking of trumps – Mr Trump has certainly had us on the edge of our seats for the next instalment of his presidency and we predict that this will certainly remain the case in 2020. With a presidential election looming, we will hear a lot from the United States this year and the international policies coming from the White House will touch us all. However, the US$ is strong and this shows no sign of changing, especially whilst the coronavirus turmoil remains. Whilst we wouldn’t dream of predicting who will be the next president of the United States – this is way above our pay grade – we do predict that, with lower tax rates bringing more money onshore, a strong currency and a confident economy, US buyers will remain an important feature in our market this year. The appetite for bluewater cruising yachts – both clockwork and rag will remain, with smaller pretty motor yachts and production cruising yachts for the East Coast and Caribbean winters continuing to be the product mix that drives this market.
And then of course there is VAT. This is a very tricky one to predict, and the only certainty is that there will be no certainty as there is no co-ordinated policy for the VAT treatment of yachts in the EU other than overarching directives mostly focused on the mundane topic of return of goods rather than wealthy owners’ yachts; member states, and their revenue authorities will call it as they see it and as suits them. However, the principle of the exit of the single market should provide to UK yachtsmen eligibility to participate in the VAT Temporary Arrangement scheme, yachting in and enjoying the EU for 18 months without payment of VAT as with all other non-European nationals. We predict that this will be the eventual outcome but that it will not be a clear path. There will be confusion and conflicting views for a period and we don’t expect things to be clear quickly. With the vast amount of paperwork, legislation and bureaucracy that has been developed over 45 years, providing clarity to a bunch of yachtsmen on the VAT treatment of their yacht will not be at the forefront of the minds of Mr Johnson and Mr Barnier….!
As for the rest, we are delighted to dive into 2020 with another new office – Berthon Scandinavia on the beautiful Island of Orust, home to some of the most gorgeous built yachts on the planet. We see this area as one of growth and development and one which you should definitely add to your bucket list for a summer cruise (or two). It is close to Norway, which again offers amazing cruising and another market for Berthon, as well as creating further reach for this new Berthon office in the international market place.
Larger motor yacht sales are a growth part of the business and our dealership for Pearl Motor Yachts in the UK and France is an important part of our strategy to build this part of the market. An English product with solid and imaginative design from Dixon and Kelly Hoppen, these yachts strike a chord with those who enjoy the benefits of a larger fly bridge motor yacht but who also appreciate the advantages of dealing with a well-funded, smaller builder for whom every order is important. It is also nice not to be in a line of another brace of more of sister ships, all of whom look exactly the same! Because of the market appetite for this sort of yacht, the brokerage market in this segment is enjoying good liquidity as yachtsmen move up through the ranges and sizes.
FPB continues to be a feature of life at Berthon. This summer there will be an FPB Summer Cruise in Greenland where a collection of these 4 wheel drive motor yachts will cruise in company in Greenland and up into the Arctic Circle. We continue to work with Dashew Offshore to support the pre-owned market and as an FPB is a scarce resource with no more being built, prices are holding extremely firm. A number of companies have brought alternatives to the market in the past year or so, but none have managed to quite replicate the magic that Steve and Linda Dashew brought, not only to yacht design but to realising the actual yachts. We predict that FPB will continue to be the last word for the ultimate in explorer yachts and that FPBs will continue to cruise far.
The performance yacht market has changed enormously in the past years as you will have read in previous Berthon Market Reports. A lot of erstwhile raceboat owners have scaled down to one design which is nimble with small crews and investment. Of course there are still Grand Prix racing yachts but the numbers are small and the trend to fast cruising yachts that are fun to sail, very comfortable and which can participate in certain regattas internationally is a trend that will continue. This trend is also growing with larger superyachts and megayachts, where the option of enjoying a regatta is becoming a given at the design stage.
In any given year, we normally sell around 12 pre-owned Discovery yachts and 2019 was no exception. As we welcomed 2020, we had 5 Discoverys under contract and they have now been handed over to their excited new owners as world class bluewater cruising yachts. We are also busy with Oyster, Contest, Shipman, Swan, Hallberg Rassy and the rest, and it is pleasing to see that they still have an excellent profile. The recent ups and downs at the Discovery Shipyard are hopefully behind them and we wish them very well. There are not enough quality yacht builders on the planet and certainly not in the UK and we hope that the best for Discovery is yet to come.
Governments scramble to be at front of the charge with reducing carbon emissions and making the planet greener. Here in the UK, diesel cars and partial hybrids are to get the boot in 2035. Yachting has not been so very affected by this, but we predict that this push is coming. Greta Thunberg’s race across the pond in a carbon raceboat was a reminder that wind power is best. Of course the build of a yacht in full carbon is hardly green but all this will come in time. We are starting to see energy generation as an environmental issue rather than a way to be self-sufficient at sea and this trend will most certainly develop and grow in 2020 and beyond.
2019 was a big year for the UK and we were delighted that our clients continued to enjoy our sport and to buy and sell – it was a very good year for us. We saw some segments slowing as we approached December with an election and Brexit in the balance. By far the most significant happening on the 12 December for many of our clients was not the confirmation of Brexit – although the clarity was nice. It was that Westminster was finally settled with a solid administration with a 5 year term and we have benefited from a number of sales concluding as a result of this clarity. As the Coronavirus gripped Europe, nervous buyers appeared reticent but after realising that the deal will simply take longer to consummate, most have settled down in anticipation of a confirmed sea trial exchange and delivery when we are released from self isolating. We predict that confidence will return based upon the extraordinary economic massaging that governments throughout the world are proposing. . Whatever your view of the political situation, having a solid government will allow businesses to plan which in turn enables those owning them, working in them and investing in them to have the confidence to do what’s really important, and that will be recovering their client base. And in our world, this means enjoying the water in whatever manner you choose.
So to recap on our forecast for this year. We expect to have weather this year which will pale into insignificance once those who were holed up at home are allowed outside to enjoy it; it won’t really matter whether it is raining or shining. We are also expecting that stability and certainty of changing weather will mean that viruses will take a back seat we will see a better second half year for yacht sales both new and second hand.
With activity comes the challenge of stock levels and we predict that both the new and pre-owned markets will struggle with this whilst production lines wind up to full capacity again when parts start being available, from China or more locally as outsourcing becomes onshoring.
Our take on VAT is that UK yachtsmen will end up as non-EU nationals yachting in Europe without paying VAT like the Americans, Norwegians, Russians, Antipodeans and the rest. However, we are not so sure that this is something that will be particularly cut and dried and we believe that it could be many months before this actually becomes clear and in the meantime, if you are a UK national and have a VAT paid yacht, take care of the advice on location on the date of exit if you wish to enter 2021 with a European VAT paid yacht.
Accurate passage planning is not exact in such momentous times, especially with multiple ports closed across Europe, so at Berthon we will be taking frequent fixes, advice and sights throughout 2020 as each front passes through; we’ll be wary of the eye where calm turns to further commotion before blue skies reappear. We look forward to working with you on your yachting projects, and whether you are in the UK, France, Spain, Sweden or the USA there is a Berthon office and members of our team, all of whom look forward to meeting you. Have a terrific season.