Buying a new yacht
When you think about buying a new yacht, there are a number of ways you can go about this. That decision will be largely driven by the type of yacht you are buying. An off-the-shelf production boat, a semi-customised yacht or a bespoke superyacht? Clearly when you build a yacht which is bespoke, you will have an intense relationship with the shipyard. You will employ a naval architect and various specialists to manage the project and deliver your one-off specification. Probably, you will have your design in mind. You will then, most likely, go out to tender to find a shipyard capable of delivering what you want.
At the other end of the scale, when you buy a production boat from a boat dealer, you have very little to say about the specification. Perhaps there will be some standard choices to make. Teak or cherry interior? White or black counter tops? Choice of engine size? There could be a fairly long list of options to choose from, but they will be fixed. You won’t be able to redesign the boat or specify equipment outside of the standard list.
Customers normally order this type of boat from a local boat dealer. They may even have stock boats and you will get delivery of your new boat in a fairly short timescale. You will have no contact with the shipyard or manufacturer and this buying process is similar to buying a car. All boats of the same model look identical, apart from a few minor choices.
Semi-customised yachts
In the middle of these extremes is the growing market for semi-customised yachts. Selene most definitely falls into this category as every single boat is different and owners can make all nature of modifications to suit their wishes. The shipyards for these types of boats base the designs on a standard yacht. This is usually a basic boat for which they have a set of moulds (for FRP boats) and designs.
When comparing different builders, check what they include in the basic specification. This can vary a lot and may artificially make a particular boat look cheap or expensive. Technically, its possible to buy a standard boat – but nobody does. There are always some changes owners want to make. When comparing prices, make sure you are comparing apples with apples.
A semi-customised yacht is normally unique – with every owner having different design ideas and technical requirements. Often the same model boats are quite significantly different from each other! It depends on the cruising grounds and individual owner tastes. An owner who plans to sail the world has very different needs to a coastal weekend cruiser.
When you buy a semi-customised yacht, there could be a fairly long process of design. The complexity will depend entirely on you. When you place your order, the shipyard lay the hull since the structure of the boat is not changeable. You also make some of those standard option choices for the base construction. Then you start going through each and every system onboard. You can make modifications to the factory standard wherever you want to – within the constraints of the integrity of the hull.
The dealers have to work for their money!
Rather than simply working through a standard order form, the boat dealer of a semi-custom yacht needs to work with you to find out what you need and help you specify your boat. If you don’t have a lot of technical knowledge, the dealer will share his experience of other owners, and help you find solutions. They will liaise with the shipyard on your behalf to instruct them on the build decisions. These boats are built to order – there is no stock. The build process for a semi-customised yacht is generally 18 months to 2 years. During this time most owners make several trips to the shipyard with the dealer to see the yacht taking shape. Your contract is with the dealer and your stage payments go to them – they deduct their slice before passing money over to the shipyard.
There is no doubt that buying through a dealer reduces your stress and enables a less experienced boater to still end up with a boat that satisfies his needs. The dealer margin is normally around 20% – which is added directly on top of your quote. This money is well deserved given the work they need to do but some owners simply don’t need this level of support and baby-sitting.
There is another way!
Cutting out the middleman
Instead of working with a local boat dealer you can cut out the middleman and order directly with the shipyard. If you are fairly knowledgeable about what you want, then there is not much value to be added by putting a dealer in between yourself and the shipyard when it comes to design decisions. You can get in touch with other owners, try to look at their boats for ideas and research yourself online for different technical solutions. It takes time, but if you have that time available and the experience and technical knowledge, it could be worth the effort.
Cost savings
The price will evolve as you go through the process because the shipyard price each modification individually. It’s very easy to get carried away adding gadgets to your boat and end up with a final price much higher than you planned! Some dealers will try to push you this way – they may tell you to sign the order on the basic boat and we’ll work out the rest afterwards. We would recommend you don’t do that. Instead have at least the layout and main systems designed before you sign. This keeps the shipyard sharp on the pricing of extras, but it demands a reasonable level of knowledge from you in advance.
Of course, you save a lot of money when you buy a new yacht direct. Sometimes that can be up to 20% of the boat price (the boat dealer margin). If you don’t ship the boat to your home country, you may save even more money in shipping costs and import taxes. This can be as much as several hundred thousand dollars for shipping and 20%-30% again for taxes, depending on where you live. Sometimes there are ways of reducing the tax burden – such as registering the boat on a foreign flag.
Everybody’s situation is different and there are downsides to foreign registration. In the USA, this would mean you have to take the boat out of the country (to Canada or Mexico, for example) every year and there are considerations when you want to sell the boat again in the future. In Europe, using a non-EU flag does not help if the owner has EU nationality. We can help to find the best solution for each individual owner based on their own cruising plans and nationality.
Technical Skills
The money you can save on a semi-customised yacht when you purchase direct from the shipyard is a big prize – it can be up to 40% cheaper. However, you must be prepared for the additional work which comes with that and the additional money you will need to invest to get the boat into the right state on delivery. Believe me, the boat dealers do earn their money after delivery! For some people who don’t have the skills or the time to take this on themselves, paying this additional dealer fee is worthwhile.
So – if you decide to go into the direct purchase arrangement with your eyes open, you can benefit from huge savings on your boat purchase. But, you then need to think through certain decisions. These decisions will be driven by the level of your technical skills, your plans for future cruising and your personal situation in terms of the time you have available and where you want to be.
Build Process
Throughout the build, you will need to have the time and money available to make regular trips to the shipyard. We would recommend spending a week at the yard every three months, and towards the end of the process more frequent, shorter visits. You will work directly with a factory project manager to confirm the specification instead of working with a local dealer. You may even get to know the people on the shop floor who are physically putting your boat together.
The benefit of being at the yard is being able to monitor in person that the workers properly understood the instructions. You can make sure they make the modifications as you intended. When you do this, there are no surprises on delivery – and you will see everything in the boat from the bottom up. This can be a good thing or a bad thing – the process will be stressful and fun! You will probably end up knowing every inch of the boat, which can be very useful when it comes to being a self-supporting cruiser.
Procurement
As soon as they lay the hull, the shipyard will open a “tax free book” with the Chinese authorities. Everything purchased for your boat goes through this book – so equipment imported from abroad arrives tax-free into China. Only locally procured materials are subject to Chinese tax.
This means that you can make all your own purchasing decisions if you wish. Having determined exactly what water pump you want (for example), you can find it anywhere in the world where you can get the cheapest price and ship it to the yard for installation. You can procure equipment yourself which may not be available locally or you can ask the shipyard to procure on your behalf. Buying it yourself is likely to be cheaper but as with everything, there are some pitfalls.
When making these decisions, you need to include the shipping costs in the equation. But don’t forget there is also the technical support, or lack of it, which may be available to the shipyard for installation. Remember, they won’t necessarily know how to install every make and model of equipment available. Reading manuals in English is not really an option as the shop floor installers can only read Chinese. So, if you decide to buy equipment they have not installed before you will need to oversee the process in some way.
Delivery Process
When it is complete, a semi-customised yacht built in China has to be exported from the country as “goods” by the shipyard – in order to make use of the tax-free construction. It is therefore impossible for you to take over your boat in China – the shipyard has to export it to you somewhere else and this is normally Hong Kong.
If you are buying directly from the shipyard, and not buying via a boat dealer local to you, then you need to decide where you will take delivery. From a legal contractual point of view, handover will undoubtedly be Hong Kong – whether you actually receive the boat there or put it on a ship to be sent to you. Cutting out the cost of the middleman (boat dealer) means you also cut out the checkpoints the dealer provides. You have to take responsibility yourself for acceptance testing and deal with any warranty issues directly with the yard. This could be with the help of a surveyor or not, as you choose.
You will also have to familiarise yourself with the regulations in Hong Kong – you will be responsible for the import process there, even if you ship the boat onwards. This can be a bit of a minefield and you will almost certainly need the help of two different types of agents to achieve this. One will deal with the customs side of things in Hong Kong – to convert the “goods” to a “yacht”. Once it becomes a yacht, you then need a different type of agent to apply for the necessary permits.
We have been through this process ourselves with our own boat and we have also helped several other owners to navigate the pitfalls. When you know what you are doing, and who to speak to, there is a lot less stress!
Snagging and Warranty Issues
There will always be a long list of snagging issues with any new yacht, no matter the brand. The boat dealer is used to seeing them. They know the quirks of the shipyard and the things which are often wrong. When a dealer receives a new boat, they will just solve these problems well before the owner sets foot onboard. With no boat dealer, you have to be prepared mentally for what you will see. It can be upsetting! You also need to be ready for the work involved to fix things yourself. Many of these snagging items are small things that you would expect to be common sense. This can be a source of frustration and annoyance.
If you buy from a dealer, the boat will be shipped to them first. After they have done their checks, you, as the owner, take delivery. There normally follows a period of shakedown cruising. The dealer will also fix all the issues you find during that time (and there will be lots of them)! Only after then are you on your own – or working under the normal warranty system.
When you buy a yacht direct, once again you have to deal with all the shakedown issues yourself or by negotiating with the shipyard for them to make repairs. We have been involved with many different new owners over the last years – not just Selene owners, but many other top brands as well. In our experience, even the most expensive new yachts have the same issues – the difference is in how they resolve them.
We know how Selene works. We can help to mitigate many of the issues which often come up and we can help you to plan for a smoother delivery and commissioning process into Hong Kong.
Or – bring the boat home ….
If you need your new yacht closer to home, you could put the boat directly onto a ship and send it wherever you are. In this case, you will still transfer legal ownership in Hong Kong, perhaps without even seeing the boat or perhaps with just a cursory check. You load it on a ship to your home country and you deal with your commissioning and shakedown in your home waters. Of course, you would then incur the shipping costs and the import taxes wherever you are. But you still save the dealer margin, have the benefit of cruising where you know and working with your own local suppliers.
But how do you deal with all the warranty issues which will come up?
Warranty and Snagging List
However you plan to take delivery, when warranty issues come up the shipyard will be happy to send you replacement parts (where you can prove there is a fault) but you won’t necessarily have access to their technical teams or manpower outside of Hong Kong.
If you stay long enough in Hong Kong, the snagging list can be dealt with by the yard as they will send their team over the border easily enough.
If you ship the boat home, the local dealers won’t be inclined to help you as you have chosen to by-pass them with a grey import! Maybe you decide that buying with a dealer is not such a bad idea after all? Or maybe you have a solution for this in your home waters.
How can we help you to buy a new Selene?
There is another solution for all of the issues discussed in this article. A middle ground where you can still take advantage of the cost savings of a direct purchase, but reduce the risk and the workload involved.
Kismet Services grew from our personal experience of building our own Selene 60 – and since then we have assisted other owners to build their yachts and take delivery direct to Hong Kong. Our clients get the dealer benefits in terms of design and support during the build process from us, without having to pay the dealer margin. This means that even if you are not a very experienced yacht person or clear about what you want/need, you can still take advantage of buying direct. We can fill in some of those gaps for you at no cost to you.
Our Technical Director has 30 years experience of boats of all shapes and sizes – both power and sail. He has been a weekender, a coastal cruiser, a long-term liveaboard, a sailor and a speed king. He has in-depth technical knowledge of all the systems onboard having maintained his own yachts all his life, specified and built his own Selene and helped several others do the same. He also spent nearly two years at the shipyard working with the shop-floor workers and the management of Jet Tern. He understands how the yard works and the pitfalls of a direct delivery.
Supporting him, the rest of our team are also experienced yacht people and understand the different needs of cruisers. Along with a good technical understanding, they have a wide knowledge of the procedures needed for a direct purchase and a good overview of the tax requirements worldwide to help you find the best structure for your situation. Whilst we are not tax advisors, we can help you understand the issues and point you in the right direction. We have an in-depth understanding of how things work in Hong Kong and contacts for all the people you will need. You can think of us as your guiding hand – saving you time, stress and hassle trying to re-invent the wheel to work out what you need to do.
If you are interested in building a new Selene, get in touch with us first!
