Profit margins....
Seems many conversations on these forums relate to cost cutting corners taken by RV manufacturers'... undersized tires / wheels / axles , electric vs. disc brakes , insulation materials, frame ty...
Forum Discussion
Margins on sale of product or service, and return on investmet are two different things, different accounting rules. It might take a 30% to 60% margin on the product to produce a 1-2% return on investmest, for a company burdened by debt service, taxes, inflation, pensions, etc.
As an investor, I'm looking for 3 to 8 percent above inflation rate, but the way the money supply is being managed today I have to be satisfied with any positive return.
For the RV industry today, it is hard to say how they are doing because most of the smaller businesses are privately held, and some of the biggest players are wholly owned by holding companies that do not have to report financials for subsidiaries.
The dealer per unit margin is the difference between what the dealer pays the manufacturer and the selling price. Not all of that is profit, because dealers have the same additional costs as any other retail business: payroll, benefits, taxes, rent, debt service, etc. Calling the 30-50% gap between invoice and MSRP a "profit" is unrealistic, and even calling it a margin is bogus, because the MSRP is bogus. Both the dealerand manufacturer know the dealer is not going to be able to sell at that price.
As an investor, I'm looking for 3 to 8 percent above inflation rate, but the way the money supply is being managed today I have to be satisfied with any positive return.
For the RV industry today, it is hard to say how they are doing because most of the smaller businesses are privately held, and some of the biggest players are wholly owned by holding companies that do not have to report financials for subsidiaries.
The dealer per unit margin is the difference between what the dealer pays the manufacturer and the selling price. Not all of that is profit, because dealers have the same additional costs as any other retail business: payroll, benefits, taxes, rent, debt service, etc. Calling the 30-50% gap between invoice and MSRP a "profit" is unrealistic, and even calling it a margin is bogus, because the MSRP is bogus. Both the dealerand manufacturer know the dealer is not going to be able to sell at that price.
