Could you lease your new yacht?

Pfaff Leasing offers you an alternative way to enjoy your new yacht…and other pleasures as well, like a Pfaff 28 Super Sport for example

By Andy Adams

When I first saw the display at the Toronto International Boat Show saying that you could lease a new yacht, it stopped me dead in my tracks. While I had never considered leasing boats, we are certainly seeing growth in boat rental organizations, so leasing didn’t seem out of line. In fact, I wondered why it had taken this long to see boat leasing come to the market.

However, I have a reasonable understanding of how leasing works compared to financing a purchase and I wondered how the numbers could work for something like a yacht. The sign was in front of a 60 foot Princess Express Cruiser – about $3,000,000 worth of yacht. What would the payments be? How could anyone manage that?

You can easily understand that I would be seeing this though the eyes of a magazine editor and his annual income level, so I was skeptical about the concept except that the leasing company was Pfaff Leasing.

Background
Hans J. Pfaff started his first Volkswagen dealership on Yonge Street in Newmarket, Ontario in 1964. At the time, the population of Newmarket was a mere 3,000 people. Pfaff Motors Inc. sold 100 cars a year. That’s pretty good for such a small town and from 1964 to 1997, Pfaff was exclusively in Newmarket and doing better and better every year. Pfaff is still a family owned and operated business lead by President and CEO Christopher Pfaff, H.J. Pfaff’s son. Christopher took over the helm in 1985. Under both his and his father’s leadership, the company has excelled at building strong brand recognition of the Pfaff name – a difficult feat in the automotive industry. They’ve always wanted customers to think of the Pfaff name first, rather than just the brands they sell.

A quick glimpse of the Pfaff Reserve area, their high-end marketplace for previously owned vehicles that includes McLarens, Porsche and other vehicles available for sale or re-lease.

Volkswagen, Porsche and Audi remain mainstay brands, but the Pfaff organization now has 13 brands (not including Marine) at 20 different showrooms. The top level vehicle is the Pagani and last month they sold two – remarkable. Then, Pfaff is the only McLaren dealer in Canada, and they operate the most successful and largest volume Porsche dealership in North America in new and used vehicles, and they also have dealerships for Mercedes, Audi, Volkswagen, Toyota, Dodge Ram and more. In total they have 13 brands and they have just added Pininfarina who will be bringing out a new 1900 hp British-built all-electric super car starting at $3 million each and available only by application. It’s super exclusive.

Serving those brands and the customers they attract, the company has a number of different branches that they call Specialties; Pfaff Leasing, Pfaff Tuning, Autoworks, Motorsports (which is their racing team) and Reserve which is their high-end marketplace for previously owned vehicles.

More than just your dream car
As the business has expanded and evolved, a segment of their clientele took their relationship to a level beyond merely buying a car, especially among the Porsche enthusiasts. The racing side of the business was probably a key aspect of that.

This has opened the doors to the other luxury performance brands like McLaren and Pagani and in turn, those owners were receptive to other things.

This spring, Pfaff Leasing is launching Pfaff Marine with a new website and a consignment and brokerage service. Customers will be able to list their boats for sale with Pfaff, and they can also handle transactions on boats for customers seamlessly, with the same level of customer service and professionalism their car and bike clients get. It’s a new level of service and customer focus for the boating industry in Canada.

Doing the math
Pfaff Leasing serves a wide spectrum of customers but the new Pfaff Marine side is geared to the high-end and enthusiast markets; people who love cars and other luxuries like vintage cars, yachts and even classic boats.

The concept is to provide clients the flexibility to own or drive what they want, when they want it. And their new Pfaff Marine division, like Pfaff Leasing, will operate nationally from coast to coast and in cooperation with marinas and marine dealers.

So, owners can lease what ever they want through Pfaff Leasing and the dealer of their choice can still be their dealer, from start to finish.

I interviewed Craig Cernak who is leading the charge at Pfaff Marine and he explained to me that the business is focused on the “customer experience” and they feel they can add a lot to the world of boating.

The Pfaff Leasing building with the new Pfaff 28 Super Sport by Carbon Marine on a trailer for display.

Consider the majority of new boat buyers. It’s quite common for somebody to purchase a live aboard power yacht using a 20-year boat mortgage. The idea is to spread out the payments so they work within the normal family budget on a monthly cash flow basis.

That is certainly where most of us fit in, but there are those entrepreneurs, professional athletes, or tech disruptors that become the twenty-something billionaires.

For that very small and exclusive group of people, buying the new McLaren, Porsche or Rolls-Royce is not only not a problem financially, but replacing it the next year with something new or different, becomes a part of life’s rich tapestry for them.

The full cost of buying, and then selling a yacht just a few years later would be nasty. The GST impact alone could be significant. That’s where leasing comes into play.

Cernak was very upfront about the fact that this won’t work for most buyers but it’s brilliant for some customers. The sweet spot for new boats seems to start at around $100,000. Those customers are almost certain to be experienced boaters who are buying the boat that they want this year, but who are likely to want to change it up or out, in the next year or two.

Cernak explained that there can be significant GST benefits to leasing compared to purchasing and there could be other benefits to leasing as well.

An example he gave was a theoretical buyer purchasing a 2014 model Sea Ray 350 Sundancer at lets say, $350,000. Based on the residual value of the boat after three years and with a down payment that might be 25% of the purchase price, the monthly lease would come in a little under $3,800 a month. But, at the end of three years, the boater can buy the boat outright, re-lease or trade in with their dealer on a newer model of choice usually with positive equity.

It’s hard for an ordinary person to see things in this way. The same boat on a 20 year boat mortgage will be substantially less on a monthly basis, but even with a big down payment, it might take them 13 years of payments to become “cash positive”.

Another example Cernak gave was a buyer who has arranged to purchase a used 57 foot Marquis to try out the experience of yachting, but they’re planning to move into a new Sunseeker next year; a much larger yacht that will be worth far more. They are leasing all the way which allows them the flexibility to develop a migration plan from a smaller yacht to the yacht of their dreams. They are starting with a very small commitment compared to the new $3.5 million Sunseeker. Pretty smart really!

Pfaff 28 Super Sport by Carbon Marine
Like their exclusive on McLaren supercars, Pfaff Marine has the Canadian Exclusive for the Pfaff 28 Super Sport by Carbon Marine.

Matching the aesthetics of Pfaff Automotive’s finest supercars, the Carbon Marine 28’ Center Console will be the only boat of its kind on the water. The carbon fiber construction leads to both a premium finish and unheard of high performance handling.

Handmade in Canada, Carbon Marine boats show a dramatic advancement in performance, handling, luxury and reduction in fuel consumption. Also in keeping with the Pfaff high performance heritage, the Pfaff 28 Super Sport is powered by the latest Seven Marine 627 HP Supercharged V8 Outboard. Seven Marine is a division of Volvo-Penta and the 627 model uses a supercharged V8 to achieve top speeds in the 80 MPH range and yet a cruising speed of 51 MPH @ 2 miles per gallon.

The new Pfaff 28 Super Sport may be viewed by appointment.

For now, the leasing program is for powerboats only. For more information visit: PfaffMarine.com.