Boat ownership is more than just a status symbol. For many US workers, it’s an aspiration they consider part of the American dream. Unfortunately, that dream is getting more expensive every year. Increased demand for new boats and limited supplies caused prices to go up by 10% in 2021. This year, rising interest rates are making boat loans more costly.
Why are boats so expensive? There are several reasons, beginning with materials shortages and supply chain problems resulting from the 2020 pandemic. Those will eventually ease as the world recovers, but boat prices aren’t expected to go down any time soon. Fannie Mae is forecasting a 4.3% inflation rate this year. That will affect the following areas:
1.Material Costs
Material costs like wood, aluminum, and fiberglass can affect the price of a boat. Wood prices have been up 135% since 2020. Aluminum prices are on the rise too. According to the World Bank, they’ll reach $2400 per metric ton by 2035. Quality fiberglass, foam cores, and good resins are more expensive than wood or aluminum. These are the core building materials for boats. As the cost for them rises, boat prices will continue to go up.
Price is only one obstacle when it comes to boat-building materials. New home construction in the United States is up 22% this year, increasing demand for the same building materials boat manufacturers need. Meanwhile, the price of gas, which affects the supply chain, has increased by 45% in the past twelve months. Transportation and shipping costs are at all-time highs.
2.Labor Costs
Boat Building is a Specialized Skill. Unlike automobiles, boats aren’t built on an assembly line with robotic assistance and minimally trained laborers. Boat building is a specialized skill that’s limited to a small group of craftsmen. The more in demand they are, the higher the price for their services. That’s simple economics. Finding good boat builders is getting more expensive.
Poor craftsmanship can lead to leaky or rotting hulls. Aluminum boat builders need skilled riveters and welders. Wooden boat builders need to be experts on how to treat and waterproof wooden hulls. The slightest error can cause defects that may not show up until the boat is sold to a consumer. Fiberglass hulls pose the same challenges.
3.Equipment Costs
Boat Building Machinery isn’t Cheap. Those heavy cranes for lifting boats and the welding machines used to put together aluminum hulls are not cheap. They’re also expensive to maintain and need to be upgraded regularly to ensure the safety of the boat builders. That cost is passed on to the consumer. Even small boats require expensive tools and manufacturing facilities to build.
The government heavily monitors boat building equipment and labor practices to make sure that boat owners have a safe and comfortable experience out on the water. The American dream of boat ownership can quickly become a nightmare if safety isn’t a priority in the boat-building process. Consumers should take that into account when they shop for a boat.
The Bottom Line
There’s no way to sugarcoat this. Boats are expensive, and prices will likely go up over the next few years. Luckily, boat loans from local banks and credit unions help lower the rates and make payments more manageable. Online lenders also work with consumers who have less than perfect credit, but the overall price of a boat will still be high. That’s just the reality of this economy. On a positive note, a boat is an excellent way to escape that reality for a while.
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About OneMain Financial
OneMain Financial is the leader in offering nonprime customers responsible access to credit and is dedicated to improving the financial well-being of hardworking Americans.
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