USDOC, International Trade Administration

 SOURCE:       USDOC, International Trade Administration
 PROGRAM:     Market Research Reports
 UPDATE:      Monthly
 ID NUMBER:   IT MARKET 111104799
 END YEAR:    1992
 UPDATED:     09/17/92
 | 9207
 | CC475
 | ISA
 | ISA9207
 | PLB
 | SPT
 | EC
 | EEC
 This article is derived from a report titled: "The Pleasure Motor Boat
 Market in Italy", dated July 1992, prepared by Susanna Lezzi, American
 Consulate - Genoa.  This article consists of 08 pages and contains the
 following subtopics:
 The Italian market for pleasure motorboats (including inboard, in-outboard,
 and pneumatic boats) has experienced an exceptional growth during the
 quinquennium 1985 - 1990, surging two and a half times its sales volume.  In
 1990, Italian demand for pleasure motorboats reached the peak of its high
 development phase.  This trend was even more accentuated by important laws
 issued by the Italian Parliament which somewhat alleviated tax burdens for
 pleasure motorboat owners.  After this period of astonishing expansion, the
 market has entered a new cycle, characterized by stability and even an
 inflection in its growth rate.  Nonetheless, this has not affected sector
 imports, which in 1991 experienced a 37% increase in sales volume (current
 terms) and covered approximately 50% of the market demand.  In particular,
 U.S. exports to Italy continue to play a preponderant role maintaining an
 import market share of 38.0%, and actually covering 19% of Italian sector
 market.  Notwithstanding "the party's over" atmosphere prevailing among U.S.
 domestic powerboat suppliers and a general slow-down currently affecting the
 European market, the "stars and stripes" production costs about 20% less
 than the Italian one and thus what is generally viewed as the "U.S.
 invasion" is expected to continue, with good sales for small and medium-size
 inboard/in-outboard and outboard motorboats and especially cabin cruisers
 and day cruisers.
                          (US $  MILLIONS)              (PERCENT GAIN)
                    Previous    Last    Current     Est. Avg. Annual Real
                      Year      Year     Year est.  Growth - Next 3 Years
                      1990      1991     1992
 Import Market        117       153      161                 3
 Local Production     577       466(est) 419
 Exports              367       310      301
 Total Market         327       309(est) 279                 2
 Imports from U.S.     48        58       65                 5
 Exchange rates     1,200      1,250    1,250
 Future Inflation Rate Assumed:  6%
 Last year's Import Market Share (Percent for USA and
 Major Competitors): US: 38.0%;  U.K.: 16.6%;  France: 12.6%; Germany: 6.5%
 Receptivity Score:  3 (1=lowest, 5=highest)
 Sources:  Italian Boating Association, U.S. National Marine Manufacturers
 Association, Italian Naval Register, specialized press, industry operators
 1.  Market Demand
 In Europe the pleasure boat market has experienced a cyclic growth which
 reached in 1990 the peak of its high development phase.  This trend was even
 more accentuated on the Italian market after important laws issued by the
 Italian Parliament in 1989 which contributed to further boost its momentum.
 In brief, the inductive type of personal income assessment for Italian
 resident boat owners became less substantial.  In addition, the value added
 tax, one time doubled for boats over 18 tons was limited to boats over 50
 tons (approximately 20 meters in length) and a new category was created for
 small boat owners which pay a reduced VAT, more consistent with European
 levels.  Thus a 9% VAT was applied to small boats under 3 ton and 6 meters
 and 18.5 kW, a 19% VAT applied to hulls up to 50 tons, and a 38% VAT to
 hulls over 50 tons.  It is understandable how these laws have positively
 influenced the growth of the Italian domestic pleasure boat market which
 chalked up an amazing increase of 150% from 1985 to 1990.
 Since 1990 year-end, however, the industry has been experiencing a slightly
 weaker demand for pleasure motorboats.  Several factors have contributed to
 this end, including the decline in the overall economy with slower growth of
 personal income and the reluctance of pleasure boat consumers to take on
 additional debt, skyrocketing mooring taxes, and lack of an adequate
 infrastructure to support pleasure boating.  A pleasure motorboat is by far
 a discretionary purchase that can be postponed or canceled.  Thus, when the
 overall economy weakens, the demand for pleasure boats also declines.  The
 1991 introduction of outrageously expensive and differentiated annual
 mooring tax rates (e.g. an eight-meter motorboat currently costs
 approximately $1,000 instead of the previous $160) heavily contributed to
 dampen consumer purchases.  Many observers indicate that more affordable
 marinas and other infrastructures are also badly needed to boost medium-term
 demand.  Nonetheless, U.S. products, strongly desired by Italian dealers and
 distributors because of their innovations, special features, and very
 competitive prices, registered a further increase of 26% in 1991 sales to
 Italy.  Italian demand for U.S. pleasure motorboats is expected to fare well
 in the near future, although it is not likely to reach the astonishing
 increases of the recent past.
 2.  End User Profile
 Thirty years ago, there was one boat owner in Italy every five thousand
 inhabitants,  currently, there is one boat owner every hundred;  the future
 could perhaps envision one boat owner every 20.  Italy has after all a
 sea-faring tradition coupled with acceptable weather all year round.  In
 addition, the market should benefit from the fastest growing 35-to-44 and
 45-to-54 age groups.  The latter, especially, are reaching the maximum
 wage-earning period allowing them to consider such large purchases as a
 pleasure boat.
 Pleasure motorboats sold in Italy during 1990 (last official figure
 available) amounted to 4,915 units for inboard/in-outboard pleasure boats,
 7,459 units for outboard pleasure boats, and 13,267 for pneumatic boats
 totaling sales for $ 327 million.  Close to the same amount is estimated to
 have been sold in 1991, with a 50% increase in the import of the more
 comfortable medium-size inboard/in-outboard pleasure boats.  In 1991,
 Italian demand for smaller units slightly decreased, with 10% less imports
 of pneumatic boats, and 5% less imports of outboard models, notwithstanding
 the fact that the small motorboat segment is still by far the most popular,
 or rather the more affordable.
 Diesel engines are predominant in the inboard and in-outboard
 configurations.  This trend, generalized all over Europe, is even more
 accentuated in Italy.  Fuel economy cannot be considered an influencing
 factor due to low amount of hours per year of navigation for a pleasure
 boat.  The dominant criterior is the safety factor, for the same reason that
 the installation of two independent engines has become a standard at sea.
 Gasoline engine powered boats, thanks to the increased safety factor of
 modern designed engines, are also increasing their small market share and
 find favorable application in prestige, high performance boats where high
 speed, high power concentration and reduced bulk are taken as major design
 criteria.  Outboard engines are of course practically all gasoline fueled.
 Since a pleasure motorboat is considered a luxury item anyway, it appears
 that the sale of commodious boats such as medium-size cabin cruisers, and
 the more popular small-size day cruisers (7 to 8 meters long
 inboard/in-outboards) is expected to keep up.  At the same time,
 manufacturers are expected to continue offering smaller units, both for
 logistical and economical factors, to appeal to new boating enthusiasts
 entering the market.  However, there is a weak request at the moment for
 Regarding the engines, the propeller system seems to be still the most
 popular and efficient system as long as the propeller is properly designed
 for the hull and engine characteristics.  Waterjets are somewhat increasing
 their penetration both in the small and high power segments.  While more
 appropriate for larger and faster boats, jet propulsion is well suited to
 small boats for special applications such as coast guard, fire brigades, and
 safe approach of populated beaches where efficiency of the propulsion system
 is of secondary importance in respect to safety and practical factors.
 1.  Domestic Production
 The Italian market for pleasure motorboats is split almost fifty-fifty among
 foreign and domestic suppliers.  There are approximately 600 shipyards in
 Italy, all Italian, of which about 200 cover 70% of total Italian sales.
 Among these are renowned names such as ABBATE, AZIMUT, BAGLIETTO, RIO, and
 RIVA.  The remaining 400 are small artisan-type enterprises.  Italian
 shipyards have an average export share of over 65% of their total billing,
 but in the high prestige segment, this share exceeds 90-95% with some
 shipyards working exclusively for the export market.  High technology, style
 according to the world-famous "Italian design" of the hull line and vessel
 interiors are the main reasons for achieving a high share of this market
 where price competition becomes a factor of secondary importance.
 The propulsion systems selected by Italian shipyards for powering their
 pleasure boats appear very international.  Italian engine manufacturers are
 present all along the line with diesel and gasoline fueled engines
 successfully exported all over the world.  On the other hand, Italian
 shipyards select the engine according to customer and boatbuilder
 requirements often selecting engines imported from the United States,
 Germany, Sweden, etc.  This makes import-export figures very high on both
 sides.  Italian engines used by Italian shipyards are mainly inboard engines
 in the lower power bracket (both diesel and gasoline) to mention just a few
 IVECO-AIFO, BPM, while in the medium-high power bracket the Swedish VOLVO
 PENTA and the American DETROIT DIESEL and CATERPILLAR have the highest
 market share.  The German MAN and MTU are the most popular for engines up to
 1000 kW (and above) used on luxury yachts.
 In 1990 the Italian market demand increased approximately 45% with domestic
 production rising 31% from previous year.  Domestic sales surged 39%
 chalking up approximately $210 million, while exports rose 27% totaling $367
 million.  The slight inflection in the 1991 market demand was strongly
 covered by foreign producers, to the detriment of domestic ones whose
 production dropped an estimated 16%, with consequent sales falling both
 domestically (an estimated 23%) and abroad (12%).
 2.  Imports
 In 1990, imports of pleasure motorboats totaled $117 million and accounted
 for 36% of the total market.  In 1991, they reached $153 million, covering
 half of the Italian market.  While 1990 imports rose 57% compared to
 previous year, in 1991, they increased 37%, which is still obviously
 remarkable but less than previous year due to the slight inflection in
 market demand, and to the fact that there was perhaps a readjustment by
 Italian boat dealers, who had an excess supply after the large increases of
 the past.  In addition to U.S. suppliers which take the lion's share for
 imported craft, countries which have the strongest presence are U.K.
 (representing 16.6% of total imports), France (with 12.6%, especially strong
 in the sale of pneumatic boats), and Germany (6.5%).  Imports are expected
 to continue to play a key role in the next few years.
 3.  U.S. Market Position and Share
 Not only is the U.S. Italy's principal supplier but Italy is the fourth
 largest customer in size of destination countries, after Canada, Japan, and
 Germany.  In 1990, U.S. imports amounted to approximately $48 million (plus
 54% compared to previous year), representing 41% of total imports, and 15%
 of total market.  In 1991, U.S. sales in Italy chalked up $58 million (plus
 26%), representing 38.0% of total imports, and accounting for 19% of the
 Italian market.  In particular, the U.S. respectively supplied 37% and 51%
 of imported inboard/in-outboard pleasure boats, and outboard motorboats.
 Well over one hundred U.S. motorboat manufacturers are present on the
 Italian market through local importers/distributors.  The latter include
 MOTOMAR YACHTING, VITALCO, and many others.
 Many consider the U.S. as the leader in the pleasure boating industry.
 Reflecting this trend, U.S. firms are traditionally the most numerous among
 foreign exhibitors at the renowned annual Genoa International Boat Show.
 Many observers at the show have commented that the "stars and stripes"
 production costs about 20% less than the Italian one and some members of
 UCINA (Italian Boating Manufacturers Association) are really beginning to
 fear what is generally looked at as the "U.S. invasion" of the market.
 Because U.S. pleasure boat production enjoys such an excellent receptivity,
 the U.S. import market share for the next three years is expected to keep up
 with an estimated annual real growth of about 5%.  It is unlikely however
 that it will be able to repeat the amazing performances of the recent past
 in the short term in view of the general recession currently affecting
 Italian economy with the consequent drop of consumer expenditures in the
 more "trivial" sectors.
 4.  Competitive Factors
 Competitive prices, reputation, service, and the ability to meet specific
 client needs for the optional equipment as well as timely delivery are the
 winning factors for selling U.S. sector products in Italy. A new-to-market
 U.S. supplier should strongly consider participating in the annual Genoa
 International Boat Show, traditionally held around the third week of
 October.  It is truly considered one of the best, if not the most
 prestigious, boat shows in the world.  Since the boat show is held in the
 fall, trade participation is very high--drawing under a single roof
 approximately 1,400 exhibitors, of which 35% are foreign participants, and
 330,000 visitors--and much of the annual business is transacted in Genoa as
 dealers begin to build stock for the spring sales season.
 1.  Import Climate
 In Italy, pleasure boats flying the Italian flag with a gross tonnage of
 more than 3 tons, an engine power greater than 18.4 kW, and with
 unrestricted service, must be registered in records which are kept by the
 port authorities.  Upon registration, the boat is given an identification
 number and a document which allows it to sail.  In order to obtain this
 registration, the boat has to comply with strict technical safety
 requirements, which are checked by means of a survey and tests.  The Italian
 Naval Register (RINA) is authorized by the Italian Maritime Administration
 to carry out the above.
 In order to avoid repeating the same tests on all identical boats, the law
 allows the above tests to be carried out on a prototype;  upon satisfactory
 completion of these tests RINA issues an document of approval called
 "Homologation Certificate".  Regarding the actual procedure, the following
 drawings of the boat are to be sent to RINA Head Office in Genoa for
 examination and approval:  structural drawings, drawings showing engine
 installation, fuel and bilge systems, electric plant, and drawings of the
 rudder and shaft brackets.  Once the drawings are examined, they are
 returned to the shipyard's agent, sometimes with recommendations to be
 complied with.  A physical survey is then carried by one of the RINA
 surveyors in the U.S. or directly by a surveyor from Italy.  The surveyor
 reports his findings to the Head Office in Genoa which, if satisfactory,
 issues the Homologation Certificate.  As previously stated, the certificate
 covers all the mass production of a certain model of pleasure boat.
 Prototypes of boat components which must be "homologated" include propulsion
 engines, non-metallic parts of fuel systems (including non metallic tanks),
 fans and blowers for gasoline motor propelled boats, and fire
 extinguishers.  There is no compulsory requirement for hull materials.
 Once a model has been "homologated" it is no longer necessary to submit all
 the others belonging to the same series to the tests already mentioned;  it
 is sufficient to provide the Maritime Authority with a copy of the
 "Homologation Certificate" on the back of which there must be a written
 declaration signed no longer by the U.S. manufacturer, but by his Italian
 agent stating that the product is built in conformity with the prototype.  A
 new requirement, dated July 30, 1991, issued by the Italian Maritime
 Administration, states that foreign shipyards who wish to "homologate" their
 prototypes for sale in Italy must have a legal agent resident in Italy.
 This agent must be authorized by the shipyard to carry out the
 "homologation" procedure on behalf of the foreign shipyard.  Moreover, this
 agent will indeed have to sign, on behalf of the shipyard, the statement of
 conformity for the mass-produced boats.
 For additional specifics, U.S. suppliers should contact RINA (see address in
 "Key Contacts" list.
 2.  Distribution/Business Practices
 Domestic producers usually sell directly to the end-users.  Imported
 products are generally retailed by distributors who carry a full spectrum of
 product lines.  These importers tend to represent more than one
 manufacturer, frequently three or four each one, specialized in a
 specific product segment.  There are presently approximately 3,000
 distribution outlets in Italy.  The more prestigious yachts are sold through
 As previously stated, the Italian government recently announced that only
 Italian citizens can act as agents for signing off on the homologation
 (standards) compliance documents.  This means that factory personnel of
 non-Italian boat manufacturers imported into Italy cannot sign off on the
 paperwork.  Quite often it is the Italian dealers or distributors who signs
 off, and these people are Italian citizens.  However, if the manufacturer
 terminates the Italian dealer or distributor, that party "owns" the
 homologation and may charge the manufacturer a royalty for import on behalf
 of the new dealer or distributor.  Alternatively, the manufacturer can go
 through the expensive homologation procedure anew.
 The U.S. National Marine Manufacturers Associatin (NMMA) has made a ad-hoc
 third party available as the required citizen homologation agent for any
 NMMA boat builder, who can act on behalf of multiple boat companies, meeting
 their requirements of Italian citizenship for the agent, but without the
 downside difficulties of terminating a dealer or distributor who acts as
 homologation agent.  For further information, U.S. suppliers should contact
 NMMA (see address in "Key Contacts" list).
 List of Italian distributors and agents can be obtained through the U.S.
 Department of Commerce District Offices from our Commercial Information
 Management Systems database (CIMS) and the National Trade Data Bank (NTDB).
 Intersted companies may also request, through the same channels, and
 Agent/Distribution Service (ADS) or a Comparison Shopping Service (CSS).
 Both offer excellent value-for-money contacts and market information.
 3.  Financing
 Payments by importers are usually in "cash" or in maximum 60 days with a
 letter of credit.  It is very difficult to establish the mark-up imposed by
 local distributors/importers as it greatly varies, depending on the type of
 product.  Since U.S. products are in great demand because of their
 competitive consumer prices, it is deemed that the average mark-up is not
 very high, and that dealers prefer to rely on selling  large quantities.
 4.  Key Contacts
 CONSORNAUTICA (Italian Boating Association)
 Contact:  Dr. Aldo Ceccarelli, President
 Piazzale J.F. Kennedy 1
 16129 Genoa
 Phn:  39-10-589371;  Fax:  39-10-5531104
 Contact:  Mr. Jeff W. Napier, President
 401 North Michigan Avenue
 Chicago, Illinois 60611
 Phn:  (312) 836-4747;  Fax:  (312) 329-9815
 Concerning homologation requirements and procedure, contact:
 Contact:  Eng. Salvatore Agliano, Director Port Services
 Via Corsica 12
 16128 Genoa
 Phn:  39-10-53851;  Fax:  39-10-591877
 Nautica Editrice S.r.l.
 Contact:  Mr. Lucio Petrone, Director
 Via Tevere 44
 00198 Rome
 Phn:  39-6-8413060;  Fax:  39-6-8543653
 Edisport S.p.A.
 Contact:  Dr. Giulio Palumbo, Director
 Via Gradisca 11
 20151 Milan
 Phn:  39-2-380851;  Fax:  39-2-38010393
 Gruppo Editoriale Commerciale S.r.l.
 Contact:  Mrs. Giorgia Gessner, Director
 Via G. Galilei 6
 20124 Milan
 Phn:  39-2-29002410;  Fax:  39-2-6552271
 Ed. Portoria S.r.l.
 Contact:  Mr. Luca Orioni, Director
 Via Chiossetto 1
 20122 Milan
 Phn:  39-2-76000099;  Fax:  39-2-782601
 Media Angle S.r.l.
 Contact:  Mr. Paolo Trimigno, Director
 Via M. Melloni 17
 20129 Milan
 Phn:  39-2-70638283;  Fax:  39-2-7384339
 Ed. Renoma S.p.A.
 Contact:  Mr. Giampiero Muggiani, Director
 Via P.E.M. Curie 3
 20019 Settimo Milanese (MI)
 Phn:  39-2-48915337;  Fax:  39-2-48920121
 Following are the most important pleasure boat exhibits in Italy:
 SALONE NAUTICO INTERNAZIONALE (Genoa International Boat Show)
 October 17 - 25, 1992, Genoa International Fairgrounds (annual)
 1,390 exhibitors;  330,000 visitors
 Organizer:  Consornautica
 Contact:  Dr. Aldo Ceccarelli, President
 Piazzale J.F. Kennedy 1
 16129 Genoa
 Phn:  39-10-589371;  Fax:  39-10-5531104
 NAUTICSUD (International Boat Show)
 March 1993, Naples (annual)
 Organizer:  E.A. Mostra d'Oltremare
 Piazzale Tecchio 52
 80125 Naples
 Phn:  39-81-614922;  Fax:  39-81-7258336

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