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
The manufacturer need to make an RV at a price point that is competitive and allow for their dealers to make enough of a profit to invest in stocking their RV's on their lots. In 2007-2008 80% of the RV manufacturers in the USA closed their doors thanks to the destruction of our economy by the bankers and Wall Street. I would expect that the few that survived did so because they had little or no debt and had not expanded their operations in the preceeding years.
Petroleum goes into making many of the plastic and fiberglass and even the cost of making aluminum extrusions and this is reflected in higher manufacturing costs for each RV company. If the RV manufacturer does not stay on top of these costs and have a product that is 10% more expensive than a competitor, unless they are in the ultra high end segment of the market, their sales will take a hit.
Problem is that when sales or retail selling prices fall by 10% the bottom line impact on profits can be 50% or more as the manufacturers fixed costs stay the same. If a 100K RV costs $70K to build and the dealer needs to make $10K the manufacturer can make a $20K profit and probably stay in business. If the cost to build that RV increases only 10% to $77k they can either increase the MSRP to $110k and lose sales to competitors and possibly even have their dealers switch to selling another company's RV's instead or they can eat the $7k and instead of making $20K per unit they are making only $13K for a 35% decrease in their gross income. If their overhead spread across their sale units is only 5% or $5k their net income goes from $15K to $8K for a decrease in bottom line profits of 46%. 10% increase in production costs creating a 46% decrease in income for an RV manufacturer is something they are aware of and it keeps them looking for ways to at least keep costs from increasing year to year.
Naturally the RV manufacturers are going to focus on items that are not obvious to the consumer and don't show up in RV construction or component comparisons. I don't mind that but it would be great if they designed their products so it was easier and required less labor to make repairs or to upgrade individual components or make additions like solar panels without it becoming a "project".
Petroleum goes into making many of the plastic and fiberglass and even the cost of making aluminum extrusions and this is reflected in higher manufacturing costs for each RV company. If the RV manufacturer does not stay on top of these costs and have a product that is 10% more expensive than a competitor, unless they are in the ultra high end segment of the market, their sales will take a hit.
Problem is that when sales or retail selling prices fall by 10% the bottom line impact on profits can be 50% or more as the manufacturers fixed costs stay the same. If a 100K RV costs $70K to build and the dealer needs to make $10K the manufacturer can make a $20K profit and probably stay in business. If the cost to build that RV increases only 10% to $77k they can either increase the MSRP to $110k and lose sales to competitors and possibly even have their dealers switch to selling another company's RV's instead or they can eat the $7k and instead of making $20K per unit they are making only $13K for a 35% decrease in their gross income. If their overhead spread across their sale units is only 5% or $5k their net income goes from $15K to $8K for a decrease in bottom line profits of 46%. 10% increase in production costs creating a 46% decrease in income for an RV manufacturer is something they are aware of and it keeps them looking for ways to at least keep costs from increasing year to year.
Naturally the RV manufacturers are going to focus on items that are not obvious to the consumer and don't show up in RV construction or component comparisons. I don't mind that but it would be great if they designed their products so it was easier and required less labor to make repairs or to upgrade individual components or make additions like solar panels without it becoming a "project".
