I posted this on the General RVing forum, but it focuses primarily on Class A motor homes, so I have posted a copy here.
Cloud Dancer wrote:
I would've gladly paid extra for higher-quality construction, in the few IMPORTANT areas in my motorhome that I found way too substandard. The way I figure, it would've cost no more than $8,000 additionally. Which would've brought the price (I paid) up to $178,000. Heck yeah worth it! It would've made it great,....AND I would then gladly recommend the brand.
THAT'S what's wrong with the industry! The same thing as 15 years ago.
My response.
Sometimes these threads leave the world where reality controls.
The motor home side of the RV industry, which I will use as the example, is highly competitive from a product and price standpoint, and faces the same challenges that all businesses face. Indeed, the motor home industry is more difficult than most from a cost/quality standpoint because of the very complex and expensive nature of the materials and labor required.
The goal is a competent, safe vehicle, often 40 feet or longer, with good performance; and a residence that is attractive and comfortable with the latest features. The consumer wants high horsepower, commercial grade diesel engines; heavy-duty Allison transmissions; and two or three axles with air suspension and disc brakes. High capacity, reliable generators are mandatory. Inside the house, we want high quality cabinetry, even very labor intensive precision-fitting European flush-style in the very high end; multiple large flat screen TVs with satellite TV systems; powerful heating and air conditioning systems; queen or even king beds; and perhaps even a fireplace. We have two complicated electrical systems, one AC and one DC, with complex controls that must also be user friendly. Due to relatively small production volumes, a great deal of the fabrication and assembly is done by hand.
We want solid surface counter tops; an economical laminate won't do. If not leather, we want top-of-the-line vinyl that looks and feels like leather. Tile or high-quality synthetic or re-engineered wood flooring is a must.
These days we insist on four slide-out rooms, the proper functioning of which, with multiple sensors, switches, hydraulic or electric actuators, and weather-tight seals, is a huge engineering (and later maintenance) challenge, but to the point, adding to the labor and material costs.
But we set a budget based not on the product we want but on what we want to spend.
One comment in this thread was that the difference in prices between units should be driven by the the materials, but the labor should not vary because it should all be to a high standard and the same cost. But the reality is that there are motor homes at the lower end of the price spectrum like the Winnebago gas units that are assembled in perhaps 300 labor hours or less. At the upper end, diesel pushers in the bus class or bus conversions, like a Newell or a Marathon, require more than 5,000 hours of labor, even 10,000 if highly customized.
The suggestion that a consumer would pay an extra $8000 for high-quality construction? Figuring $100 an hour, including factory overhead and a margin (the bricks and mortar are not free), that would buy 80 hours of extra labor to do the job to a high quality standard. Two extra guys for a week. The difference in the product would be hard to notice. And the ultimate purchaser will probably tell the dealer, "I'll give you $100,000 and my trade-in, not a penny more. I can buy a Brand X down the street for that. So sharpen your pencil." So where is the extra $8000? A product will bring a certain price in the market, and costs must be controlled within that reality.
Finally, the RV industry is, bottom line, a low-margin industry. Winnebago, a comparatively highly efficient operation, is earning slightly less than 5% net profit on sales. Their total profit for their last year was about $44M on about 10,000 units. Add $8000 in cost totals about $80M. If the extra labor is largely not noticable, a price increase will not stick, and their numbers are now well into the red. It doesn't get more complicated than that.
We can drink Two Buck Chuck (Three Buck now?), or we can drink a $20 cabernet. Or a $75 "reserve." We are free to drink the Chuck and complain about the quality. The choice is ours.
