I was curious about how newer boats depreciate, so I looked up a bunch of values for Catalina 36s of different years at BUC Valu (
http://www.bucvalu.com). If you register with them, you can look up values for one boat at a time for free.
Here's what I got:
BUC Value Guide Prices for Catalina 36
Year Ave Retail Loss per year % per year
2006 $130,750
2005 $125,250 $5,500 4%
2004 $119,750 $5,500 4%
2003 $114,000 $5,750 5%
2002 $108,000 $6,000 5%
2001 $101,650 $6,350 6%
2000 $95,550 $6,100 6%
1999 $89,900 $5,650 6%
1998 $84,300 $5,600 6%
1997 $78,900 $5,400 6%
1996 $73,650 $5,250 7%
1995 $68,650 $5,000 7%
1994 $63,900 $4,750 7%
1993 $59,400 $4,500 7%
1992 $55,600 $3,800 6%
1991 $51,500 $4,100 7%
1990 $48,050 $3,450 7%
1989 $44,450 $3,600 7%
1988 $41,150 $3,300 7%
1987 $38,200 $2,950 7%
1986 $35,450 $2,750 7%
1985 $32,750 $2,700 8%
1984 $33,050 ($300) -1%
1983 $31,100 $1,950 6%
1982 $25,800 $5,300 17%
I made up a graph of this, but unfortunately, I can't figure out how to attach it to this post...
Anyway, I had expected the fastest depreciation to occur when the boat was newest, and that is happening, but not by much. I also expected the value to level off after a rapid drop in the first years. The depreciation does slow down, but not as much as I thought it would.
I also worked out the percent of value lost each year. It turns out the dollars of depreciation go down each year, but the percent of remaining value lost goes up.
Sooo, getting back to the original question, yes a newer boat will lose more value to depreciation each year than an older boat, but maybe not by that much, e.g., $6K vs $3K. On the other hand, the older boat will need more maintenance. I could see those costs easily averaging this $3K difference, especially if someone has to contract any of the work out.
Of course the newer boat will tie up a lot of capital. If it was invested and earned some return, the aftertax income might just pay for the maintenance on the old boat.
In any event, it's certainly not as clear-cut a decision as I thought.
Cheers,
Tim