Boat-sale boon likely taxing in the end

Alicia Robinson

Some vendors at the Lido Yacht Expo expect Thursday to be the day

they clean up.

Boat vendors expect brisk sales over the weekend -- especially on

Thursday, because shoppers may rush to buy a yacht before the state

law governing boat sales-tax exemptions changes.

Boat buyers can get an exemption from state sales tax if they make

their purchase offshore and keep their boat out of state for three

months. State legislators in July voted to extend the period that

boats must be kept out of state to one year, hoping that will

encourage more people to pay the sales tax. The change goes into

effect on Friday.

The 26th annual Lido show will include about 250 boats, about as

many as there were at the Newport Boat Show in April, said Duncan

McIntosh, who organizes both shows. But the Lido show will have more

new boats because 2005 models are starting to arrive on the West

Coast, he said.

“They’ll see more boats 40 feet and above than they’ll see at any

show on the West Coast, period,” McIntosh said.

To yacht brokers, the shows are important tools for getting people

in to see the boats. More and more people now browse for boats

online, but they tend to make a decision and a purchase faster at an

event with all the boats right there, said Bill King, president of

Crow’s Nest Compass Point Marine Group. His company has four West

Coast offices, including one in Newport Beach.

“We find it’s a good time for us to show customers a lot of

different products in a short period of time,” King said. “The

Internet has allowed people to go shop for boats without coming into

the dealerships or the brokerages like they used to.”

The Newport Boat Show racked up more than $60 million in retail

sales, McIntosh said. Business at the Lido show could get a boost, at

least on the first day, from the change in state law. People can

still claim the sales-tax exemption under the old, three-month rule

if they enter a binding contract for a boat by Friday.

“That’s going to stimulate the heck out of things,” Orange Coast

Yachts salesman Bob Gunderson said. “I, myself, and other people in

this office are working with clients that are bound and determined to

make a decision [by the deadline].”

But after the law goes into effect, some in the boat industry

think buyers will be driven away, and upgrade and repair services may

suffer as well.

“I think the biggest downside of that whole deal is that they’re

encouraging people to spend their money outside of the state,

McIntosh said. “They take the boat to Mexico ... and they go to the

boatyards down there and they spend money having their boats worked

on.”

It’s harder to serve existing clients when their boats are in

other countries for long periods of time, said Doug Levy, a salesman

at Phantom Marine in Newport Beach. Phantom Marine sells, installs

and repairs boat communication and navigation equipment.

“I would say we’re concerned,” he said. “It’s going to cost us

more money to service our clients.”

And while the end of the summer boating season is a great time for

a boat show, some think the industry has a saturation point. In the

spring, McIntosh’s boat show was followed by another large boat show

in Newport just two weeks later, and the Lido show was preceded last

weekend by a Southern California Marine Assn. boat show in Long

Beach.

Levy said some electronics dealers don’t bother much with the

shows anymore because it costs a bundle to participate, and they

don’t generate enough business to make it worthwhile.

“They used to be a boost for business, but they have so many of

them now, there’s no urgency to buy anything at the shows,” he said.

The Lido Yacht Expo is scheduled for Thursday through Sunday at

Lido Marina Village in Newport Beach.

* ALICIA ROBINSON covers business, politics and the environment.

She may be reached at (949) 764-4330 or by e-mail at

[email protected].