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Old 03-31-2024, 05:48 AM   #1
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MSRP question

I've been trying to find out if there is any correlation between the MSRP and the true cost of a new motorhome. It seems those 300k 400k 500k MSRP numbers are completely made up .. My reasoning is the average persons ability to make such a large cash layout purchase has at best remained flat if not gone down a little in the past 3 to 4 years, so how do the manufactures justify an increase of 20 to 30% over the same time period. The only way I see this to be a workable business plan is to reduce both your production and manufacturing (overhead) to a much small size to be able to survive by building maybe half the amount of units you use to build...I'd like to hear some input on what I may be missing....
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Old 03-31-2024, 04:39 PM   #2
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I just went to Taco Bell yesterday what was maybe $10 pre pandemic was $35. I can see inflation hitting the industry hard from transport drivers wanting more parts costing more labor costs more. Then RV are considered luxury or recreational items hourly rate to work on them are higher than most. If you have checked several different dealers in different regions and all in the ballpark then probably close.
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Old 04-01-2024, 04:44 AM   #3
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I know what your saying about the effect of this current rate of inflation on the cost of goods and services in today's world. But as in the automotive industry when pick up trucks went from 45 to 50K MSRP to 75 to 80K MSRP the market went into shock from a dealers stand point. GM Ford Ram went from 30 to 45 day inventory on the ground to now 80 to over a hundred day inventory sitting on the ground..The truck and SUV world realized at those levels of pricing they were killing their market. Survival mode for them ..dealer incentives and big factory rebates ..I don't know how it would work in the RV world. John Q doesn't need a motorhome to get to work so that factor is gone and I don't see the RV industry being able to keep producing units that only the top 2% of the public (and that's 2% of the public who are even interested in RVing) could consider purchasing...I really don't know who to blame for to place we're in now..(other than our insane current government)
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Old 04-01-2024, 06:49 AM   #4
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Inflation has skyrocketed the last few years because the #1 borrower of money also prints it. They want inflation to go up so paying down the debt is at a reduced value thus making it cheaper than when borrowed. The negative side effect is that no one gets ahead in the long run.
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Old 04-01-2024, 07:04 AM   #5
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Bottom line COVID and other things drove all prices up for nearly everything. Prices have somewhat leveled out, but will never go back to where they were.

Been saying where does it stop? Not in my lifetime. My 1992 F250 sticker was 28K now it is about 100K . 30 years ....My income did not go up that much so you buy things or don't. I do not see any big changes coming anytime soon.....

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Old 04-01-2024, 08:16 AM   #6
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The question I believe DDtravel is asking is how is "pricing" derived for RVs and implicitly for anything else. This has been a center of the plate responsibility and issue for me over the last 30 years and the Op is indeed entitled to be confused. To start with it has very little to do with Actual Cost. A term defined by different companies in different way that has many different accounting definitions. Nor is it much to do with another accounting pastime called Standard Cost. But it does have a lot to do with historical pricing, competitor pricing and perceived value as defined by marketing and other studies.

In large component pricing like RVs, boats, aircraft and autos but also home appliances and in particular and possibly surprisingly, drugs, external elements of cost do have a large influence on pricing because it makes the Actual Cost easier to pin down and the relative price point easier to choose. Items where everything is outsourced except Indirect Cost like marketing, and that favorite football: corporate overhead, Actual Cost is derived by adding up all the outsourced pricing/cost and making a guess at the overhead per item and then applying a mark up or desired profit margin. If that number falls above or below the competitor pricing, then another set of decisions have to be made to derive the MSRP which may well be nothing more than aim point. In other words a price point from which various discounts can be applied.

What has happened post Covid is that the sub contractor community, and their sub contractors down to the raw materials have discovered by how much they were below their desired margins and in many cases below the cost of their materials and labor as derived from their purchasing prices. Management panic or just logical reaction, made for a massive domino effect catch up which at the time was also based on reduced volumes (that increases unit costs), and prices exploded. A beneficial domino effect in many industries as volume returned that has produced record profits alongside demand the discourages price decreases.

Cost Accounting and Pricing are complex subjects but hopefully this gives some insight into why stuff is dozens of percentage points more expensive that pre Covid or 5 years ago and will not decline without a major recession/deflation where product has to be unloaded to generate cash.
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Old 04-01-2024, 08:43 AM   #7
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My 1992 F250 sticker was 28K now it is about 100K . 30 years ....My income did not go up that much so you buy things or don't.
Mine has. In less time too. Around 1998 I was actually making less than 28K a year. Now I'm closer to that 100K.

30 years is a lot of promotions, raises and job changes.
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Old 04-01-2024, 09:38 AM   #8
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Partial blame goes to COVID. Rest of the blame goes to policy.

Remember, if you got it, it came by truck which requires fuel.
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Old 04-01-2024, 11:12 AM   #9
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Originally Posted by DDtravel View Post
I know what your saying about the effect of this current rate of inflation on the cost of goods and services in today's world. But as in the automotive industry when pick up trucks went from 45 to 50K MSRP to 75 to 80K MSRP the market went into shock from a dealers stand point. GM Ford Ram went from 30 to 45 day inventory on the ground to now 80 to over a hundred day inventory sitting on the ground..The truck and SUV world realized at those levels of pricing they were killing their market. Survival mode for them ..dealer incentives and big factory rebates ..I don't know how it would work in the RV world. John Q doesn't need a motorhome to get to work so that factor is gone and I don't see the RV industry being able to keep producing units that only the top 2% of the public (and that's 2% of the public who are even interested in RVing) could consider purchasing...I really don't know who to blame for to place we're in now..(other than our insane current government)
Forget comparing how the Automotive Industry does it, compared to the RV Industry.
As I always say, the only thing that they have in common, are they both sell things on wheels, at dealerships.
Other than that, they couldn't be more different.
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Old 04-10-2024, 11:40 AM   #10
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It is all a calculation, and it is ALL tied to cost.

I can't speak for everyone, but my formular has not changed. The MSRP multiplier has not changed.

Chassis prices have done up dramatically, labor has gone up, raw materials went up and never came back down. 20-30% is a real number.
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Old 04-10-2024, 03:08 PM   #11
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Originally Posted by DDtravel View Post
I don't know how it would work in the RV world. John Q doesn't need a motorhome to get to work so that factor is gone and I don't see the RV industry being able to keep producing units that only the top 2% of the public (and that's 2% of the public who are even interested in RVing) could consider purchasing...I really don't know who to blame for to place we're in now..(other than our insane current government)
As Brian has highlighted, the definition of Pricing relative to Cost depends on how you define Cost. And this is far from common as between industries and participants in the industry. And so, Pricing gets set by a definition of a Price Point relative to the Features and Benefits of the competition, historical pricing and demand relative to the price setter and competition supply.

But to then define the Pricing by attributing the level as being relative to an arbitrary 2% of the population without defining which 2% of what socio-economic group makes no sense. Certainly, the customer preferences relative to their perceived need and economics makes a difference to pricing at the margin and sometimes as between cultures/nations but it's plain wrong to assume that the RV industry will suffer because its products can only be supported by 2% of the population without defining exactly what that 2% represents. And it's not income or wealth...
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Old 04-11-2024, 04:16 AM   #12
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I think we're looking way to far into the weeds of MSRP's of 5 or 6 years ago as compared to today. It's like explaining the difference of atmosphere pressure and volume inside a tire as opposed to the pressure outside.... the damn tire is just flat. Real world Joe six pack 5 years ago would be standing next to his motorhome he's owned for maybe 4 or so years already and would look at the new models and would say "yeah I'm going to have to upgrade to one of those soon". Now the response when seeing the new stuff is "Nice but at those prices I may have to keep mine for forever". Just saying explaining the formulas of how MSRP is justified is one thing but on the ground reality is another....
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Old 04-11-2024, 06:58 AM   #13
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Bottom line is any manufacturer looks at their cost of manufacturer and adds a percent for profit. I know of none that pick a number randomly out of the air. They also have to consider their competition.

For us we could not afford a 70K motorhome 30 years ago and still can not afford a 200 or 300K motorhome today. or Could not afford a new 40K pickup 20 years ago and still can not afford the same 100K pickup today.

So instead of a motorhome we bought a pull behind.

We are retired bought a new low end Honda in 2017 at 17K can not afford the same car today at nearly 30K. But that the way it is. If we want new we save or take out a loan same as it has been for ever.

But the sons were making a little under what the DW and I made 10 years ago when I retired they make double what we are today........ Its all relative.

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Old 04-11-2024, 07:18 AM   #14
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Inflation has skyrocketed the last few years because the #1 borrower of money also prints it. They want inflation to go up so paying down the debt is at a reduced value thus making it cheaper than when borrowed. The negative side effect is that no one gets ahead in the long run.
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Old 04-11-2024, 07:21 AM   #15
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Just want to make sure everyone is clear what MSRP stands for - Manufacturers "Suggested" Retail Price.

I have found the difference between "suggested price" and "actual price paid" can be significant.
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Old 04-11-2024, 08:27 AM   #16
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I never thought my questioning the correlation of MSRP to the actual buying market would produce so many replies but it did and that's good..but here's my last input on this topic...I had a very successful business for over 25 years and I credit it to a number of things but most all was my own business philosophy "When your product is constant and your profit margin is variable you'll succeed,When your profit margin is constant and your product is variable you've failed.......
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Old 04-11-2024, 09:05 PM   #17
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Just want to make sure everyone is clear what MSRP stands for - Manufacturers "Suggested" Retail Price.

I have found the difference between "suggested price" and "actual price paid" can be significant.
Yes, and that's the rub for people living in a state with a personal property tax. Many states base the tax on the published MSRP so inflated MSRPs cause customers to pay way more in tax. Every year.

People buying new Newmars are reporting a discount off MSRP of mid to high 20's. Some people are reporting 35% discounts and more on the last years models with different manufacturers. Yet 35% was not uncommon on new units five years ago.

The dealer is still not giving those previous model years away at their cost. Heck, they may be making as much profit on a one year-old model as they did on a new one five years ago.

For those of us with older motorhomes the inflated prices could help at sale time. I know someone who just paid $5,000 less in 2024 for the same model year and exact model motorhome that we have than we paid new in 2019. They were happy with the price they paid because they did not know the original prices and simply compared the used price to the current new prices, which are way up.

Then pity the poor COVID purchasers who bought with a loan. Their payments have skyrocketed while the amount remaining on their older motorhome loan is more than the asking prices for brand new ones. You can tell those easily in the ads by the very high asking prices relative to new ones.

The owner of NIRVC did a great post on iRV2 in the last year on this subject. He laid out why it's almost always better to buy new and how "percent off MSRP" is not a universal number, because different manufacturers offer different percentages for the dealer cost. I'll try to find it.

When I used to sell expensive equipment (jet aircraft avionics) we usually had a 40% discount off retail as a dealer, but a few manufacturers were only 25% so we didn't push their stuff.

So something that had an MSRP of $100,000 cost us $60,000. But the manufacturer is not giving their product away. A retiring salesperson for the manufacturer confided that they made double on most products. So their cost was $30,000, they sold to the dealer for $60,000, and the published retail price was $100,000. I suspect most products are like that or worse (for the customer, that is).

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Old 04-11-2024, 09:24 PM   #18
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1. I do know of dealers have sold at or below cost to get fresh product or to get units off their floor plan (so they can stop paying interest).

2. I would also not trust the word or a retiring salesperson for an OEM. None of my guys really know true cost. Maybe they doubled the price of the materials, but that is not making double, it is charging double the material cost, which might net a 5-10% profit depending on their overhead structure.

In 20+ years, I have never worked for or heard of a single OEM that charged the dealer double their cost (if we mean total cost). There is no way they would be competitive. Thor is publicly traded, you can read what they make.
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Old 04-12-2024, 01:07 PM   #19
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I found the Brett Davis, the founder of NIRVC, post on "% off MSRP": https://www.irv2.com/forums/f278/off...ml#post6420093

Brett Davis in Sept. 2023 on used coach pricing considerations: https://www.irv2.com/forums/f278/hel...ml#post6602045

His June 2022 post on the RV sales drop reasons, including new price increases: https://www.irv2.com/forums/f103/rv-...-583743-4.html

Mr. Davis does not post a lot however he wrote multiple posts in this thread: https://www.irv2.com/forums/f103/new...al-519847.html

Obviously, I find his comments insightful and NIRVC also does what Brian started at FR; direct employee responses to customer-expressed online concerns.

As Brian has done many times here, NIRVC employees monitor iRV2 and respond directly to customers expressing concerns over how they were treated at NIRVC. All that takes is time but it really builds current and prospective customer confidence. If we ever buy a DP we would take a long, hard look at NIRVC. For one thing, Mr. Davis has expressed may times that their primary business is service and storage, not sales. So they do not try to run the business on sales and that has to be helping them a lot in the current environment.

FWIW,

Ray
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Old 04-12-2024, 01:13 PM   #20
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Thor is publicly traded, you can read what they make.
Yup. I have not read their 10-K's for that data but I have looked at them. A few years ago they highlighted that a quality improvement effort had materially reduced their warranty costs (and thus improved both their dealer and customer experiences as well as their financials).

It was only noted in their towable division, though. I should go read the past few to see if they continued those efforts and if so, how they affected the financials.

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