OUTLOOK: We can expect a complete stop in superyacht segment, stagnation with later small growth in compact class (up to 13 meters) and flat market to moderate growth in mass segment (up to 6 meters boats).

MOSCOW--The Moscow Boat Show this year was expected by many to be the failed event of the year. The

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Maxim Sakov situation in State economy, related to sanctions, devaluation of Russian Ruble and strain in credit markets were expected to combine to tumble the demand for boats. The
expecations looked to be coming true, as the fair seemed to be nearly empty at opening.

The gloomy expectations were reinforced after messages from the major dealers of leading yacht brands. The main players in the luxury segment in the boat market prepared a common message, saying they were not going to participate in the fair. Princess’ dealer representative explained, that the reason is not in any relationship issues with the fair organizers, but was caused by a total sales stop in Russia for luxury yachts. They’ve shifted their business out of Russia and invite clients to see the boats in Europe.

To my surprise, the pessimistic expectations have not come true.

A Smaller Show

Yes, the total square of the fair is shrunk twice comparing to last year. The fair was accommodated in two halls instead of three, with one hall half empty. Yes, the total number of the boats is reduced twice. In total I have counted 150 boats above 10 feet, versus 250 boats on last year’s fair. 

The largest boats do not exceed 13 meters, and the highest price boat brought to the fair was 450K Euro (it was Norwegian Marex 370). There was no boat with flybridge at the fair. And many yacht brands, which were the anchor participants of previous fairs, were gone this year.

However, the remaining participants did not show pessimism and were rather happy with the market situation. For example, Smart Yachts dealer, offering Galeon boats (made in Poland) claimed that they already sold exhibition samples (boats for 260 and 350 KEuro) and the waiting time for Galeon boats is 6-8 months. A similar situation exists for sailing Maxus boats (also Polish). Probably, the increase of demand is related to the currency exchange factor. During the last year, the exchange rate Euro/USD has moved from 1,39 to 1,05. Therefore, Euro priced boats became 25% cheaper in US dollars

Reasons For Optimism

Another wave of optimism comes from Russian boat producers. Traditionally, there are no local superyachts builders, like Timmerman or Sevmash, at the fair. However, most of the compact size boat makers (up to 12 meters) seem to feel comfortable in the current market situation. Kazan located boatmaker Velvette presented a new performance boat NGT with top speed of 120 km/h. It is equipped with gasoline Volvo Penta V8 - 430 CE (upgrade to 525hp gasoline Mercruiser is possible). Note that this boat has a sleeping cabin, galley and toilet on board.

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Velette speedboat can reach 120 km/hr Generally, Velvette is a major Russian yacht producer (55 boats per year). Their flagship, Evolution of 12,5 meters LOA with Volvo Penta V8 - 320 E, was also presented at the fair. Comparing to last year, its prices have increased by about 20% (in Rubles, which means 35% decrease in USD).

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Velvette is a major Russian yacht producer

Therefore, their production program for this year is booked completely. However, they are ready to offer “very attractive terms for the next year”.

Paritet Boat Company, based in Yaroslavl, parfticiapted in the fair for the first time. The company is making hydrofoil glass bottom boats. This

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Hydrofoil boat is powered by two Volvo-Penta 400 hp engines company is well known abroad, but almost unknown in Russia. Since 1999, they’ve made about 70 boats with a spacecraft-like appearance. At the fair, the company presented a new concept – a personal hydrofoil boat with two Volvo Penta engines 400 hp each – for 350K Euro. According to a company representative, the result of the fair exceeded its expectation.

Local small boats producers (Master, Whaleboat, Samara plant, Don boat company) noted the price growth for imported parts and for domestic aluminum (it becomes more expensive than metal from Serbia). However, the demand for boats remains and the production is going on. Additional sub-segments for recreation boat market, noticed by manufacturers are:

  • Increased internal demand. A lot of people have to cancel their foreign trips for economic or political reasons. Many of them switched to domestic tourism.
  • Changes in currency rates make sense for manufacturers to export boats (to Finland as example). Also, local products became more competitive inside the country.
  • Migrations of clients from higher price niches, due to general reduction of incomes.
At the same time, boat makers are going beyond the recreation segment and

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Master showed this MPK-2 small fire boat at the show moving into utility products. Master has shown a Small Fire boat MPK-2. The key feature of this boat: jet engines, which act as fire pumps and supply water to fire nozzles. Another advantage of these boats: the ability to work in natural disaster areas with masses of flotsam in the water, a condition unfit for regular propeller-powered boats.

Some Grim Forecasts

Grim forecasts however, also existed on the fair. They came from engine makers. A Volvo Penta representative expects a significant drop in engine sales. As a main reason, he names Western sanctions against certain enterprises, such as patrol ships for Russian Coastguard. Volvo is going to compensate losses at the cost of service. So, we expect a significant raise for Volvo parts and service prices in Russia.

Yamaha Motors notes a sales drop in 2014 versus 2013. For motorboats, the sales dropped nearly 45% – from 18,000 to 10,000 units. And a similar situation exists for motors. For PWCs, the sales decrease is smaller – 23%. However, the total  number of PWCs sold annually in Russia does not exceed 1,400 K units. A sales drop in the market goes together with price increases. Significant increase goes from Chinese and Japanese suppliers.

Generally, the most popular inboard engine maker for yachts in Russia is Volvo Penta. Most of the yachts, coming to the country, are equipped with these engines. Next by popularity is Mercruiser, mainly because of its price – it is higher with similar power and quality. However, Mercruiser also tries to gain an advantage with technical features. At the fair they presented ready solutions of inboard engine combined with jet drive, which are more suitable for exploiting in Russia. Vetus also is trying to get its part of the market with its M-line engine range up to 52hp.

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Mercruiser engine with jet drive Outboard motors were presented by Yamaha and Mercury engines, but Honda was not seen on this fair. BRP has surprised many, presenting its new Evinrude E-Tech G2 series with a range 200-300 hp, improved characteristics and new eye-catching design.

Summary

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Boat show indicates stop in supermarket yacht segment, but some growth in mass market segment So, we can see at the fair that the market for pleasure boats and its components in Russia has suffered a significant blow because of the economical and political situation, both global and domestic. However, the market has survived and started development from luxury to mass segment. PSR