Luxury yacht order book up 28.4% • 14 miles of yachts under construction • Italian industry continues to surge • U.S. & Asian orders up dramatically • 80-foot to 89-foot segment up 59% • Open yacht market up 256%

VICTORY AT SEA
From an historical point of view, ShowBoats International’s 2005 Global Order Book is nothing short of staggering. Consider that since 1997, the year that 80-foot to 90-foot yachts were added to the database, the global market for luxury yachts has more than tripled. This year’s 144-yacht increase over 2004 is almost the same size as the entire global yacht market of 1992. The increase alone represents an estimated U.S. $1.22 billion jump in the value of the industry’s new-yacht construction.
 
While the numbers speak clearly and eloquently for themselves, understanding the reasons behind the dramatic growth the industry is enjoying is not so easy to fathom. Continued economic growth in the U.S., Europe and Asia is a contributor, as well as an extraordinary level of new large-yacht orders from the Russian market.  Perhaps the most important factor, however, is the stability of the Euro/U.S. dollar exchange rate. Though it has stabilized at a level higher than many European builders would wish, its predictability has allowed companies and consumers on both sides of the Atlantic to adjust their expectations and pricing. Thanks to significant recent investment in their manufacturing infrastructure, Italian production and semi-custom shipyards have increased their efficiency sufficiently to enable them to price their yachts competitively and still retain adequate profit margins. The existing exchange advantage has proven a boon to U.S. builders, who are also in-vesting heavily in infrastructure that they hope will continue to pay dividends in future order books.

ITALY STILL LEADS
In 1992, Italy’s luxury yacht order book included 33 boats totaling 3,359 feet. This year’s increase in Italy’s order book alone totals 6,489 feet. Italy is up 32% over 2004 and continues to own bragging rights as the leading luxury yacht-building nation with 249 units and 27,595 linear feet of boats – or 5.2 miles – under construction.  In 1992, Azimut and Benetti were separate companies with a total of five yachts under construction. Today the world’s largest builder, the Azimut-Benetti Group has 64 yachts over 80 feet under construction and on order, up 14% (by unit production) over 2004. Back in 1992, Ferretti wasn’t even on the luxury yacht radar screen. Twelve years later, the Ferretti Group (including Ferretti, Pershing, Custom Line, Riva and CRN) is ahead of Azimut-Benetti in unit production with 69 yachts, though it remains in second place in overall builder rankings due to 291 fewer linear feet of yachts under construction. Still, the Ferretti Group, thanks to its aggressive introduction of new yacht series, showed a dramatic 78% increase in total 80-foot-plus production over 2004.  Showing similar growth – especially in semi-custom production at ISA, its burgeoning new large-yacht facility in Ancona – is the Rodriguez Group, which posted a 96% order increase over 2004.

The United Kingdom, due in part to new model lines at Sunseeker, showed a strong 75% increase in orders. Sunseeker International, with the biggest increase among the industry’s major production manufacturers, rose 116% this year and remains fourth in the top-builder rankings.
 
ASIA ON THE RISE
Perhaps the most dramatic increase in the builder nation rankings is in Asia with Taiwan rising one notch from sixth to fifth place and China, in eighth place, making its first top-10 placement. China’s 2004 production increase totals 217%, calculated by linear feet. Taken together, the China/Taiwan order book would place them third in the rankings based on unit production, and fourth on the basis of linear feet.

RUSSIAN INFLUENCE
Without question the most dramatic and meteoric consumer market is in Russia. Yachts have become the highest symbol of wealth among Russia’s small but ultra-wealthy elite. Several individuals own not one but two or more superyachts. One family has placed an order for five yachts at Sensation Yachts in New Zealand and another has placed two orders at Burger Boat Company. Russian owners, many relatively new to the market, have a passion for performance and are helping to fuel the rapid growth in the market for offshore or open-style yachts.
 
Once a class of yacht relegated to the under-80-foot market, open boats comprise the fastest-growing segment in the industry, evidenced by the 256% increase from 25 orders last year to 89 units in 2005. Leopard, Codecasa, Palmer Johnson, Pershing, Baglietto, Mangusta and Sunseeker all are building 100-foot-plus open yachts.

View the complete 2005 Global Order Book here.



SAILING IS SOFT
The only segment of the market showing weakness for 2005 is sailing yacht construction. Overall, the segment fell 5%, a total of three orders off from 2004. Sailboats from 90 feet to 99 feet stayed even at eight orders, while sailing yachts from 100 feet to 119 feet increased 77% to 16 orders. All the other segments of the sailboat market, including the 150-foot-plus market, decreased. Expedition-style yachts, which had enjoyed a steady increase in popularity in recent order books, remain constant in 2005 at 20 orders.
 
SIZE MATTERS
The 59% increase in the 80-foot to 89-foot motor yacht segment, coupled with the launch of several enormous yachts, including numerous 230-foot-plus yachts in Holland, Germany, Greece and England, helps explain why average size of yacht under construction in the global order book fell from 122.4 feet to 116.7 feet, or 4.7%.  The impact of launching two monster-size yachts is evident in Lürssen’s numbers. The German builder’s 2005 order book grew by three contracts to a total of 10 and is up 17.9% in linear feet of construction. Yet its average size of yacht under construction fell from 284 feet in 2004 to 234 feet this year. Still, Lürssen remains at the top of the builder rankings by average size of order.

ORDERBOOK GROUND RULES
The purpose of this listing is to provide a body of data - complied in a systematic fashion at the same time every year - showing the scope and breadth of economic activity within the luxury yacht community. The cutoff for the order book is September 1, although shipyards are permitted to add new orders that materialize prior to October 1. Every effort is made by the editorial staff of ShowBoats International to assure the accuracy of the data. Whenever possible, the data is cross-referenced with other industry sources. However, collecting this information in an unregulated international industry is difficult at best. Nevertheless, the editors believe this order book listing and analysis is an accurate reflection of existing economic conditions in the luxury yacht industry. The editors will continue to update and clarify this listing as necessary during the year when new information becomes available.

CUSTOM BUILT RANKINGS
Editor’s note: It is always problematic to distinguish between custom and semi-custom (or series production) yacht manufacturers. Some companies, such as Benetti, build yachts on both a production and a custom basis. Other companies, particularly yards manufacturing large fiberglass yachts, build custom interiors (and even superstructures) in a series production hull. In making their deliberations for the top custom builders ranking, the editors drew the distinction between semi-custom and custom production based on their knowledge of the builder’s willingness to substantially customize individual projects, particularly their willingness to move bulkheads and install owner-specified equipment.