Profit margins....

[cdlaine]

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 types...etc. .

Just wonder what most would think the typical 5ver/TT
corporate "profit" margin is ??? I would expect ranges
vary ..less on the low end (volume sales) , more on the
high end (larger buy-in) , but I have no idea what per cent
range we would be talking about .. 5%, 10 %, 20 %, 30%, ?

Any here with business acumen that may know what the
acceptable per unit profit margin must be to stay in
business ? And, how does the "dealer" margin figure in ?

Thanks,

Charles

[Skid_Row_Joe]

All companies and or their accountants cook their books - in one way or another. It may not necessarily br illegal, either. Nothing necessarily illegal about shifting numbers around, but it won't reliably tell you anything about profit margins. Damm few companies will risk making themselves look bad stating the true facts. I suggest the only way you will learn about profit margins is to run your own business. If you can't tell what your own profits are, no one can help you!

[Chris_Bryant]

My takeaway is that those that cut corners more (cough... thor... cough) make a larger profit margin.

[D___M]

Vulcaneer wrote:
D&M I am sorry if you mis-interpreted my post. I was not dis-agreeing with your post. I merely quoted you to demonstrate while there may be reasons for some to look at the profit picture in one dimension, there are also other considerations for profit measurements. And for different purposes.

And I was not ranting. But just indicating some examples as to how other people or other industries might have various measures for success. And while WGO and THO may be in peer industries, economies of scale have advantages, while showing vast differences in certain measurements.

Now if someone asks me about non-profits ripping off government programs. Then I might go into a rant. But since political discussion on the forum are against the rules, my rant would be in violation. So it's a moot point.

And I got no dog in this fight either. And thank you for considering me to be your Buddy.

Fair enough

[Vulcaneer]

D&M I am sorry if you mis-interpreted my post. I was not dis-agreeing with your post. I merely quoted you to demonstrate while there may be reasons for some to look at the profit picture in one dimension, there are also other considerations for profit measurements. And for different purposes.

And I was not ranting. But just indicating some examples as to how other people or other industries might have various measures for success. And while WGO and THO may be in peer industries, economies of scale have advantages, while showing vast differences in certain measurements.

Now if someone asks me about non-profits ripping off government programs. Then I might go into a rant. But since political discussion on the forum are against the rules, my rant would be in violation. So it's a moot point.

And I got no dog in this fight either. And thank you for considering me to be your Buddy.

[D___M]

Vulcaneer wrote:

D & M wrote:
I just look at Winnebago (WGO) and Thor (THO) and find that Winne is 8% net profit and Thor is about 3%.

And WGO is a $676M company. While THO is a $2.89B company. While WGO has a higher percentage Net profit. THO makes more net profit. Dollars pay the bills. Percentage measures the company's health. Both can be important to watch. But cash is king. Always was. Always will be.

Grocery stores make very low profit margins. But are highly profitable, because they sell such high volumes. So lots of dollars in profit.

You always hear media news stories of energy companies making such high profits. And they do. But those profits are published in those stories as DOLLARS. Never in terms of margin percentages. Why? Because if they spoke of margin percentages of 3 to 5 tenths of a percent, people would feel sorry for them, instead of getting upset at their HUGH profits. And as such, their PROFIT LEVELS would not be news worthy.

Lets not even get started on non-profit companies. And worse....Non-profit companies that bill medicare directly. No cost to you. Talk about a license to steal. How can they stay in business if there is no profit? You don't want to know.

Hey Buddy, I got no dog in the fight. Ranting over who makes more is a little off topic. And I could care less about Percent, dollars, whatever metric you want to use, its just information. The OP just was curious about net profits that RV manufactures make, and I gave him the best information I could find.

[Vulcaneer]

D & M wrote:
I just look at Winnebago (WGO) and Thor (THO) and find that Winne is 8% net profit and Thor is about 3%.

And WGO is a $676M company. While THO is a $2.89B company. While WGO has a higher percentage Net profit. THO makes more net profit. Dollars pay the bills. Percentage measures the company's health. Both can be important to watch. But cash is king. Always was. Always will be.

Grocery stores make very low profit margins. But are highly profitable, because they sell such high volumes. So lots of dollars in profit.

You always hear media news stories of energy companies making such high profits. And they do. But those profits are published in those stories as DOLLARS. Never in terms of margin percentages. Why? Because if they spoke of margin percentages of 3 to 5 tenths of a percent, people would feel sorry for them, instead of getting upset at their HUGH profits. And as such, their PROFIT LEVELS would not be news worthy.

Lets not even get started on non-profit companies. And worse....Non-profit companies that bill medicare directly. No cost to you. Talk about a license to steal. How can they stay in business if there is no profit? You don't want to know.

[D___M]

You can find the profit margin on publicly traded companies by going to a financial website like Yahoo Finance and looking up the manufacturer.
I just look at Winnebago (WGO) and Thor (THO) and find that Winne is 8% net profit and Thor is about 3%.

My 2nd hobby is being an amateur stocker picker. The "profits" finance my first hobby, RVing. So I want any company that I invest in to be as profitable as possible. Profits are good for everybody.

[JJBIRISH]

you just have to love it… it’s the American people, the workers, the workers increasing wages and benefits, the taxes, it’s regulations, the public’s free lunch, and Colonel Mustard in the living room with the gold pipe…

its everyone else, poor management or grossly overpaid CEO’s and upper management whose earnings have gone up 10 to 1 when compared to your employees, stock options, golden parachutes, secret foreign accounts, write-offs, credits, corporate freebees and welfare, and the purchasing of influence have had nothing to do with any of it at all… just maybe competent management and negotiators in the past would have kept you cost in line down the road…

while much of what you say is correct and you say it so eloquently the fact is it is complicated with plenty of blame to go around, but surely we can’t start at the top with the blame game now can we… no it’s the overpaid maintenance man that can’t afford his rent buying at Wal-Mart that is the root cause… gotcha…

[Skid_Row_Joe]

cdlaine wrote:
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 types...etc. .

Just wonder what most would think the typical 5ver/TT
corporate "profit" margin is ??? I would expect ranges
vary ..less on the low end (volume sales) , more on the
high end (larger buy-in) , but I have no idea what per cent
range we would be talking about .. 5%, 10 %, 20 %, 30%, ?

Any here with business acumen that may know what the
acceptable per unit profit margin must be to stay in
business ? And, how does the "dealer" margin figure in ?

Thanks,

Charles

Unless you were privy to any private or public corporation's accounting - you wouldn't begin to know. Even were you privy to this private information, you wouldn't know or understand any particular company's business plan. Viewing their Federal Tax Returns for 5-10 years would be helpful, however, you still could not exact conclusions about the firm's business plan.

[travelnutz]

cdlaine,

Most North American people are in the same boat and mindset as you say you are. The ever constant quest to buy the cheapest of anything which forces most of the good quality manufacturers to cheapen their products to compete with the other cheaply built products on the market or go out of business. At the same time, the workers strike, demand, etc to force the employer to ever increase wages and benefits which throws gasoline on the already burning hot fire. It's a crash course on how to decimate and ruin an economy and it has. Add in ever increasing taxes and stifiling regulations and a host of other costly killing factors like giving many freebies and aid of some sort for nearly half the population and look what we've created now. Not pretty is it? The chickens have come home to roost!

Cheap price and quality design, materials, and construction are very very seldom found in the same sentence. Even less in products in the marketplace. However, that's what the buying public wants and they are not and will not be getting it.

Adequate profit is NOT a dirty word, it a "must happen" requirement. No profit and the doors WILL close!

Most of the stuff sold here in our country etc is imported from 3rd world countries and you'll find gobs of them in nearly every home. Who here worked and was paid to produce those items? This in turn forced the domestic manufacturers here to move manufacturing overseas to compete or close their doors. Your reference is to RV so, in RV's, some like Carriage and several other high quality manufacturers refused to build cheap junk and most of the them are no longer in business today. I'll bet you can name 50+ past quality manufacturers no longer in business or who now import all or most of their products or the components in them. We did it to ourselves and "Walla" we're not happy now with our success?

[cdlaine]

Travelnut and Wintersun ...

Thank you for your insightful descriptions/explanation...
really good stuff. Complex subject matter. I have never
considered many of the aspects revolving around / in the RV
industry. Like some, I focus on "why can't I get more for less" ?,
and do feel guilty about never (in my life) having produced
a single widget...always on the consumer end. I can only
imagine the pressures on the CEO of privately held "family"
RV manufacturers...no thanks, not for me. I'll try to tone down
my grousing....

thanks.

Charles

[dodge_guy]

Where do you draw the line between profit and safety? 2007 Forest River pin box/frame failure!. scroll down and check out the damage to this 7 year old 5`er. I don`t care if it was 30 years old, damage like this should not happen. This is cost cutting at it`s finest to increase profit margins!

[wintersun]

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".

[travelnutz]

cdlaine,

Having had a fine business for nearly 40 years before retiring, I do know something about true profits and perceived profits. I've watched so many of my competitors get into financial trouble, go under, or closedown over the years and I have also served on the board of directors of non-competitors for many years. A business can only manipulate bottomline financial reports for so long before it becomes known and the facts rear their ugly heads! True profits in businesses are much lower than most people seem to think.

An actual true example is that if I were to tell you that one large business I know well had just under 1 billion in after taxes net profit. Sounds like WOW! until I tell you that they had over 16 billion in sales for the business year. Actual true profit was a mere 5.5% and yet they were honored as an extremely profitable business partly because the previous year's bottomline final profit was only 3.9%. Simply and wisely investing that same 16 billion would have resulted in nearly the same 5.5% proceeds and not having but a few people employed to do it. Where would the present between 10,000 and 20,000 employees be working then? (not going to give the actual number of employees as it could be traced to the business name).

The only thing that is common to ALL businesses it that the proceeds coming into the coffers must be more than the overall cost of keeping the business operating/running. If not, certain demise will take over. The healthcare costs of uncertainty over the last few years is and has created a tight fist grip turmoil on business operations and outlooks. Depending on the near future developments/decisions, it may or will most likely decimate a huge percentage of businesses viability and any future growth unless solved correctly and honestly. Remember that the monies taken to finance forced programs/actions comes directly from the purchaser's of a businesses products or services. YOU, the buying public ultimately pay these costs whether you like it or not as no legal business prints their own money. It comes to them from SALES and the debt holders/stock owners must be repaid or the businesses stock/operating capital/borrowing ability will cease! You, the public are the one who is the product/services purchasers!

westernrvparkowner prettymuch summed it up as there's no difinitive answer to your thread post overall. There are vast differences in short term profits and long term profits. Most businesses bottomline goes up and down like yo-yo. One defined time period may exhibit high profitability and the next may be deep in the red. One thing to remember is that an "in the red" period doesn't just vanish into thin air. What actions taken or financial step entered into caused by the "in the red" period are usually spread out over a long period into the future plus interest etc accrued. Only way for a business to escape repayment is to file a bankruptcy section or sellout.