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  1. #1

    Default Does Red Diesel Issue = Rapid Diesel Vessel Depreciation

    Sorry guys if this changes the thread slightly but it seems linked somehow.

    Iím in the process of making a large purchase, well large to me.. A Sealine 240 / 24,, Iíve viewed 3 vessels so far 2 were 1996 models one priced at £24,000 (Petrol) and the other priced at £32,000 (Diesel).

    My question is this although I would like a Diesel for cheaper running costs the Issues over the Red Diesel prices for next year must surely impact on the valuation of Diesel Engine vessels now so by next year if the government get there own way then Diesel Engine vessel price will drop like a stone making them a risky buy this year.

    Can anyone please advise,, any assistance would be gratefully appreciatedÖ

  2. #2
    Frontier's Avatar
    Frontier is offline Registered User
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    Default Re: Does Red Diesel Issue = Rapid Diesel Vessel Depreciation

    I am in the same position, just about to buy and wondering if I am chucking £10k+ into the ocean.

    The only comfort I could find in favour of diesel was the fact that it is more available. I have been told many marinas dont have petrol, and many that do dont have it on the fuel pontoon. I didnt want to be carying it in cans from the back of the yard.

    I believe the cruising range should be further so I guess if the price ends up the same there is that. But ultimately there seems to be so much more support for diesel boats, and diesel engines are good work-horses in a marine environment, I decided to take the risk.

    I am really hoping the Red D remains though, or I will hardly ever be able to go out.

    Send an email to your MP telling him/her you expect their full support in retaining Red D, its quick and easy to do.
    You can get their address here

    http://www.locata.co.uk/commons/


    There is always chip fat I suppose !!! [img]/forums/images/graemlins/wink.gif[/img]

    Not much help to you really, but good luck!

  3. #3

    Default Re: Does Red Diesel Issue = Rapid Diesel Vessel Depreciation

    Thanks for the response,, interesting that some Marinas donít have Petrol hope thatís not becoming a trend as Iíve heard LPG is also becoming scares having failed to meet peoples expectation.
    I reckon your right about the Diesel being more robust in a marine environment and of course the increased cruising range must be considered although in my case £8000 extra for the same vessel just because it has a Diesel Engine buys an awful lot of petrol.

  4. #4
    Frontier's Avatar
    Frontier is offline Registered User
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    Default Re: Does Red Diesel Issue = Rapid Diesel Vessel Depreciation

    The info on marinas not having petrol is just what I have heard from brokers, I dont know from experience. Could be they were trying to put me off petrol.

    When looking at various marina's litrature I did notice some didnt have petrol, so felt there was an element of truth in it. maybe the guys who actully have boats can comment.

    I did think about waiting until after December, but if red diesel is retained, there could be quite a lot of people who had been waiting to see what happens suddenly looking for boats, and we could see price increases. bloody hard to know isnt it ! [img]/forums/images/graemlins/confused.gif[/img]

  5. #5

    Default Re: Does Red Diesel Issue = Rapid Diesel Vessel Depreciation

    FWIW, in the West Country at least, it's true that many Marina's and harbours don't have petrol. Frequently the only way to get the stuff is to go and find a garage. When you can get petrol it costs up to £1.25 a litre!

  6. #6
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    Default Re: Does Red Diesel Issue = Rapid Diesel Vessel Depreciation

    [ QUOTE ]

    I did think about waiting until after December, but if red diesel is retained,

    [/ QUOTE ]

    Note: derogation does not end until after December 2006 unless I've missed a possible government statement.

    It may even be that any increase may be phased?

    Anyway Diesel engines are more efficient than Petrol - despite the fuel cost, as well as being much safer - that's why marinas don't sell it... IMHO

  7. #7
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    Default Re: Does Red Diesel Issue = Rapid Diesel Vessel Depreciation

    depends where you are... but at present there may be few petrol outlets as there isnt so much demand vs all the legislative hassle of having vast amount of explosive fuel about. could be offset if the whole tax issue swings. Course, diesels will still be more efficient.not £10k more efficient perhaps! Depending on the size of your boat. But for sure, dont buy a boat that you cant refuel for miles and miles.

  8. #8
    Robih is online now Registered User
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    Default Re: Does Red Diesel Issue = Rapid Diesel Vessel Depreciation

    Phil,

    I think there is a significant risk of vessel depreciation if red diesel gets binned. I sold out of the motor boat a year ago because I didn't want to stand in for a £30k loss. I've heard that the mobo market is soft at present; part of which is due to folks standing back and watching what happens. With diesel prices having gone up significantly anyway the increase due to binning red diesel will be less of a shock when/if it happens. But I see what you mean about not going out very often - I worked out that my previoius mobo (Targa 39) would now be costing £1.60/mile - which is ok around the solent but a cruise over to Brittany (say 400 miles = £650) gets a bit rich.

    rob

  9. #9

    Default Re: Does Red Diesel Issue = Rapid Diesel Vessel Depreciation

    Hi Rob

    I just wish I could find an honest broker that could tell the truth and indicate to me my best options; unfortunately they all seem to be so desperate to sell anything they will change their story on the fuel issue almost immediately in favour of whichever vessel fuel type your looking at.
    Iím not quite in the same league as a mobo (Targa 39) but I do have £35k to spend, interesting that a Broker in Hamble Point Marina dropped from £38k to £30k when I started to walk away. They either have a massive profit margin or they are prepared at this time of year to take a loss.

    I think itís a massive profit marginÖ

  10. #10
    Robih is online now Registered User
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    Default Re: Does Red Diesel Issue = Rapid Diesel Vessel Depreciation

    Phil,

    To be honest I think there's quite a number of folk very sensitive to what might happen in the motor boat market over the next 24 months and some are bailing out and prepared to accept a loss now in anticipation of the market going worse for a while. My view is that mobo values will fall until the reduction in capital cost is sufficient to make the total cost of boat ownership equal (under white diesel) as to what it has been under red diesel.

    I reckon that the average annual consumption of diesel for a £100k leisure sea going mobo might be 800 galls. That equates to a red diesel cost of £1,800 and probably twice that under white diesel, say £3,600. Given a cost of capital of 8% on the additional annual fuel cost that's a capital cost reduction required of £22.5k to bring back financial equilibrium. That's where I got my theory that I expect to see a 20% to 25% reduction in capital values to reflect this required adjustment. It is possible to already see this discount factored in to petrol boats - so the market evidence is already there.

    If you accept this then I reckon that a boat's sale price might go:

    Asking price, say 100k
    Normal negotiating adjustment, 10% - 10k
    Therefore normal sale achieved price 90k
    Red/white diesel adjustment 20% -18k
    Maket adjusted value post white diesel 72k

    So, this would suggest a total discount (asking price to contract price) of 28% which interestingly is very close to the discount that you have been offered (27%). So, maybe the £30k price that you've seen now is about the right number - the key thng is that folks doing deals over the next 24 months need to achieve this level of discount to wash out the diesel disadvantage on to the existing owner. Not nice, but necessary.

    rob

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