Tarrifs affecting RV prices

[BYoshida]

Originally Posted by MelRobidoux

So we have been doing some soul searching about trading in our coach for a different model. Recently we were shot down a bit because we were told the recent tarrifs have severely increased prices. We have noticed this to be true.

We were told to see the newspaper article that came out in The NY Times about the RV industry being hit hard because the tariffs on steel. Do you think it’s hype or some truth to it? Or, is it a another reason to raise prices?

We were looking at a 2019 Vegas on a dealers lot. While we were debating on what we really wanted, the RV was sold. The dealer told us they could order the same thing but it would be 1,200 more because Ford is raising the cost of the chassis. We found a new 2018 for a great price with everything we wanted.

[Cason61]

Originally Posted by Laco

If tariffs are affecting the cost of new units, and I don't know one way or the other, it would also increase the value of your current unit.

And cars, trucks, motorcycles. BTW did you see the sticker price on the window?

[Bob Denman]

Originally Posted by MelRobidoux

You and me both! About 156k

We should start out by offering them 115K.
After the salesman is unconscious from choking on his tongue: we can go beat on the Sales Manager a bit!

[saddlesore]

Originally Posted by Bob Denman

We should start out by offering them 115K.
After the salesman is unconscious from choking on his tongue: we can go beat on the Sales Manager a bit!

Hmmmmmm.............................thinking...... ..............The Class A Intent is what..$85k? ..............Hmmmmmm....... Offer $85k........... but it has to be full of gas,water and propane.....And a Cookie

[Chance]

Slowdown in larger motorized RVs started almost a year ago. So far this year Class As are down 3.4%.


SSI: Motorized Sales Flat for 7 Months, Up 0.3% | RV Business


If cost of steel was the primary culprit, I’d expect it would have affected Class Bs also, yet their sales are up 29% for same period. Granted, Class As use more aluminum.

It’s possible raw materials are having an impact on sales, but I personally feel there are other market forces that are far more influential.


SSI: 'B' Sales Stay Strong, up 29% for 7 Months | RV Business

[bry899]

The Tariffs will eventually affect the cost, but it will take a bit. The main purpose of the Tariff is to bring production back to the U.S.
You must also remember that businesses also received a nice tax break which they could use some of this money to offset the increase in costs of goods.
Inflation and rising interest rates might have an affect the costs also.

[Chance]

An RV industry CEO stated in an interview that most new RV sales are financed for 15 or 20 years, and that monthly payment was critical to affordability. If so, I’d agree that inflation and higher interest rates are important.

Slightly higher cost of fuel probably hasn’t helped much, nor reports on poor quality. There are a lot of variables to point finder solely at one.

[Cason61]

Originally Posted by Chance

Slowdown in larger motorized RVs started almost a year ago. So far this year Class As are down 3.4%.


SSI: Motorized Sales Flat for 7 Months, Up 0.3% | RV Business


If cost of steel was the primary culprit, I’d expect it would have affected Class Bs also, yet their sales are up 29% for same period. Granted, Class As use more aluminum.

It’s possible raw materials are having an impact on sales, but I personally feel there are other market forces that are far more influential.


SSI: 'B' Sales Stay Strong, up 29% for 7 Months | RV Business

So if that's true about Tariffs, then everything and I mean everything should be higher....but for the moment, nah. Then again there's lot of available steel and aluminum in the aircraft and ship boneyards. Doesn't need to be dug up either.

[Elite Washington]

The problem with the Tariffs is it will have an immediate affect on prices of new units. The manufacturers know their cost will be going up so they are going to hedge as much as they can now. They have to squeeze as much profit as they can. Once they start realizing to costs of the tariffs then new sales will have a slowing effect. A used unit will not go up or stay stable in value for a long time after, there are additional market forces that control those prices. For used units it’s a supply and demand and it’s interest rates and availability of credit that control the prices.

It’s just like in the banking world, when the prime rate goes up we change rates on credit cards, lines of credits and vehicle loans immediately. The rate you earn on your deposits does not go up immediately. Those deposit rates only go up when the market forces them to and they will go up as slow as possible. The reason why is to take advantage of the yield curve while you can because you know your going to have increased expenses in the future.

So basically just the threat of tariffs will have an affect and each manufacturer and dealer will adjust to what they forecast for the future. A smart business will take advantage of the little extra they can squeeze out now because when the market changes that little extra may be what keeps them in business at worst or allows them to lay off less people at best.

[Bob Denman]

But the Sky isn't falling just yet...

[fhenn]

no politics guys

[Larry]

Agree. But since politics came into play earlier in the post I figured it became fair game.

[Beau388]

Originally Posted by Elite Washington

The problem with the Tariffs is it will have an immediate affect on prices of new units. The manufacturers know their cost will be going up so they are going to hedge as much as they can now. They have to squeeze as much profit as they can. Once they start realizing to costs of the tariffs then new sales will have a slowing effect. A used unit will not go up or stay stable in value for a long time after, there are additional market forces that control those prices. For used units it’s a supply and demand and it’s interest rates and availability of credit that control the prices.

It’s just like in the banking world, when the prime rate goes up we change rates on credit cards, lines of credits and vehicle loans immediately. The rate you earn on your deposits does not go up immediately. Those deposit rates only go up when the market forces them to and they will go up as slow as possible. The reason why is to take advantage of the yield curve while you can because you know your going to have increased expenses in the future.

So basically just the threat of tariffs will have an affect and each manufacturer and dealer will adjust to what they forecast for the future. A smart business will take advantage of the little extra they can squeeze out now because when the market changes that little extra may be what keeps them in business at worst or allows them to lay off less people at best.

Thor industries does not build any coach or trailer that a dealer has not ordered. No RV made by Thor leaves the delivery lot until it is paid for in full. Dealer pricing is fixed at time of order. That has always been the corporations business model and is the reason Thor showed a profit during the economic downturn of the late 2000's. In fact, they made enough money to buy other RV makers in 2008, 2010 and 2015. I just toured the Airstream factory in Jackson Center to look and their new production facility (it has doubled in size). When I was first there in 2005, they were producing 48 trailers a week and 6 motor class Bs per week. As of the end of August they were producing 82 trailers and 12 class Bs per week and the dealer order backlog is 310 days.

[Bob Denman]

Originally Posted by saddlesore

Hmmmmmm.............................thinking...... ..............The Class A Intent is what..$85k? ..............Hmmmmmm....... Offer $85k........... but it has to be full of gas,water and propane.....And a Cookie

I like the way that you negotiate!

[Bob Denman]

Originally Posted by Beau388

Thor industries does not build any coach or trailer that a dealer has not ordered. No RV made by Thor leaves the delivery lot until it is paid for in full. Dealer pricing is fixed at time of order. That has always been the corporations business model and is the reason Thor showed a profit during the economic downturn of the late 2000's. In fact, they made enough money to buy other RV makers in 2008, 2010 and 2015. I just toured the Airstream factory in Jackson Center to look and their new production facility (it has doubled in size). When I was first there in 2005, they were producing 48 trailers a week and 6 motor class Bs per week. As of the end of August they were producing 82 trailers and 12 class Bs per week and the dealer order backlog is 310 days.

I'm glad to hear that they're making money: I just hope that they spend a bit of it on training their employees how to build a better RV...

[Elite Washington]

That literally has nothing to do with anything unless everyone of those was a special order vehicle that already had a price already set. But as far as the dealers just filling their lots when they are empty that doesn’t affect anything. They just order them at the time they need more. The dealers are using a flooring line to buy the vehicle and passing any cost to the purchaser. There is no way a manufacturer is saying hey we are a year out we don’t know what it’s going to cost but we will give it to you at this price even though there is a good chance we will lose money because we like you. The dealerships aren’t buying these at a contract price like how Boeing would sale a plane to an airline. Any possible future cost of good hikes are already built in that’s how you stay in business they are hedging for the worst case and hoping nothing happens that way if nothing does they just make even more. Customers are used to the new price and are okay with it.

[Beau388]

Originally Posted by Bob Denman

I'm glad to hear that they're making money: I just hope that they spend a bit of it on training their employees how to build a better RV...

Each plant is its own entity and answers only to headquarters, but they do trade employees from time to time. Currently there are 14 different plants. Thor has about 11,000 employees in the Elkhart area and another 3,800 in other areas. Your coach was made in plant 850 in Wakarusa (the only class c made there). When I was there 3 years ago, they had about 800 full time employees. About 730 were hourly employees with 690 on the day shift and 40 on the night shift. With the increased demand for the Tuscany and Challenger models plus the introduction of the Aria, I would assume they have hired a few more people. It looks like Thor is in the lead to buy Hymer caravans, make it 15 plants. I know the have doubled their size of the repair facility out back of plant 850 and built a huge paint shop, since I was there.

[Bob Denman]

I didn't know that about my rig; thanks!

[Cason61]

Originally Posted by Bob Denman

I didn't know that about my rig; thanks!

Really glad that at least some of this Tariff stuff is on hold for awhile. Up in Canada I oncet saw a refer at a snack bar which had quart size containers that said, "Boxed water is better". Staggering, had to take a picture of it.