Dealer Costs

[StrongJava]

Hello!

A local sales rep indicated the cost of an RV purchased by a dealer for resale can vary significantly by dealership. By this, I mean the cost TO the dealer, not the cost to the end consumer (which I know is a function of several things). Can someone confirm there might be significant price differences? From my research, a 50-55% dealer markup (equating to a 33-35% discount from MSRP) is not unreasonable.

I'm not looking for specific numbers regarding the Bighorn line, but can anyone confirm if there are significant cost differences between dealers?

Thanks.

Tim

 

[danemayer]

If I remember my business classes correctly, the 1934 Robinson Patman Act requires that manufacturers sell at the same price to customers in the same classification. I would think that might require the same wholesale pricing to all dealers.

But, I think at some larger dealerships with multiple locations, the locations may not be working off the Heartland wholesale price. Rather, they may be working off a price given to them by their headquarters. If I'm right about that, you might run into differences from one dealer to the next that might appear to reflect a difference in wholesale pricing.

 

[StrongJava]

Thank you Dan. And I'll go research the Robinson Patman Act. The sales person indicated rules like that existed for automobiles but that RV's were generally unregulated, at which point he stated anyone could go start manufacturing RVs, blah blah blah. As soon as he started trying to shift the conversation, I knew there was probably some inaccuracies.

I like that manufacturers want us to buy local, and for many people it makes total sense. But for us nomads, I'm more interested in the rep of the manufacturer and their commitment to warranty repairs. I don't need a lot of local support after delivery.

I am also searching for online brokers that can handle transactions between the manufacturer and me, but that may not result in the best PDI.

Tim

 

[Bohemian]

There are many ways to give differing prices.

Licensing
Volume discount, per order,,per month, per year, sales goals and rewards, etc.
Prices dependent on partner relationships, memberships, etc.

 

[2psnapod2]

Plus you have to add in the fact that if a dealer sells a huge amount, they can have a smaller profit margin than one that only sells a few.

 

[StrongJava]

Thank you for the additional comments.

I read about the Robinson-Patman Act; at this point, I am Wikipedia-smart, which is smart enough for this purpose I believe. From the article it appears different prices cannot be offered if it will reduce competition. As a manufacturer's network of distributors is already pretty well controlled, I would think it would be fairly trivial for discounts to be given to a larger dealer without violating the reduced competition clause as long as there are no other dealers in the immediate area. This is the situation here in South Central Texas. But, I'm not an expert, and I'm probably getting to the marrow anyway

When I asked the sales rep about the pricing when ordering a unit, he stated, as I expected he would, that those will cost more because I wouldn't get the "dealership's discount." As a buyer, I look at this differently. They don't have to hold the inventory or take the risk on the unit not selling. Basically, I'm paying them a transaction and PDI fee. For them, it is pure profit. So, I think we'll have to look wider. I do see some dealers over by Houston and down on the coast.

Don't get me wrong, I want whatever dealer I purchase from to make a little money. But, I want it balanced so I can still afford the fuel for my truck, and to absorb some of the instant depreciation

Cheers, Tim

 

[NHCelt]

Tim...

My recent experience shopping three east coast dealers from NH to FL indicated that there is clearly a bottom line (cost to dealer?) below which none of the dealers would venture. These were all large dealers. When asked to compete for the sale, several smaller dealers had no interest. I heard the comment that their cost was more than the price I was quoting them...don't know. I also was told by one of the larger dealers that they do get volume discounts when ordering...so either not all dealers pay the same or smaller dealers are not willing to work that particular business model and would rather depend on local traffic and repeat business.. Of course, existing overhead plays some role. While my experience was clouded by a trade, one dealer worked hard to get the deal and the other two waited and tried to jump the deal in the end... but wouldn't beat it. For me, that's when I knew I was as close as I was going to get.

I guess it didn't matter to me either way. My goal was to find the bottom price in the geographical areas I was shopping...which for me was the area I regularly travel through. I did find that internet/telephone negotiating is now the norm...even on trades.

Best of luck...Celt.

 

[StrongJava]

Thanks Celt. I will try to work the other dealers in the region.

And I've read where people have had good luck getting bids from an "online dealer" and then taking that quote to a local to give them a chance to beat it. I'm still trying to find an "online dealer". I assume this means they don't have a showroom and deal with minimal inventory, allowing them to reduce costs?

Tim

 

[NHCelt]

Tim....sorry, I meant a dealer with a dedicated internet sales team. They are, or seem to be, more up to speed on selling over the phone and working up your trade based on photos. I ordered my new Heartland and traded my rig without having yet stepped foot on the dealers lot. Taking delivery next week, so we'll see how it,goes but so far it has been a very good experience. Same negotiating etc., but they know you are doing the same thing with their competition so it really just makes it easier for you....just sit at your desk and work the phones .

Have fun...Celt

 

[Bob&Patty]

Tim, try this as a rule of thumb. Download the HL MSRP from the forum. Check all the options you want plus the base price and forced options. Add those up.....then subtract 30% off that price and you will be close. You also have to consider the shipping cost from Elkhart to a dealer which is about $1.75 a mile. Dealers make a decent profit at that price. RV's are not regulated like cars and trucks are. Dealers make up their own MSRP's.

 

[mlpeloquin]

Tim, try this as a rule of thumb. Download the HL MSRP from the forum. Check all the options you want plus the base price and forced options. Add those up.....then subtract 30% off that price and you will be close. You also have to consider the shipping cost from Elkhart to a dealer which is about $1.75 a mile. Dealers make a decent profit at that price. RV's are not regulated like cars and trucks are. Dealers make up their own MSRP's.

Bob you are correct. When one of our local dealers have some on sale, the price is 30% to 33% lower depending on model. And I did exactly as you stated prior to purchasing. If a dealer doesn't want to deal, it is because he thinks and does get the higher price in your area.

 

[macjj]

In 2011 we were looking into the Bighorn. Prices carried between dealers, but the local dealer had a bad reputation. We went to a RV a 100 miles away, almost made the deal, but My wife asked "I bet you can find a better deal. 3 hours of effort wasted, but she was right. Went on line and saved 33% more ($20k). Had to travel across country, but worth the effort. When asked how he could do it, he stated he just goes up and takes what the got, vrs ordering ahead of time and he has no freight/shipping costs. Something to think about.


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[Bohemian]

Thank you for the additional comments.

I read about the Robinson-Patman Act; at this point, I am Wikipedia-smart, which is smart enough for this purpose I believe. From the article it appears different prices cannot be offered if it will reduce competition. As a manufacturer's network of distributors is already pretty well controlled, I would think it would be fairly trivial for discounts to be given to a larger dealer without violating the reduced competition clause as long as there are no other dealers in the immediate area. This is the situation here in South Central Texas. But, I'm not an expert, and I'm probably getting to the marrow anyway

When I asked the sales rep about the pricing when ordering a unit, he stated, as I expected he would, that those will cost more because I wouldn't get the "dealership's discount." As a buyer, I look at this differently. They don't have to hold the inventory or take the risk on the unit not selling. Basically, I'm paying them a transaction and PDI fee. For them, it is pure profit. So, I think we'll have to look wider. I do see some dealers over by Houston and down on the coast.

Don't get me wrong, I want whatever dealer I purchase from to make a little money. But, I want it balanced so I can still afford the fuel for my truck, and to absorb some of the instant depreciation

Cheers, Tim

1) There have been very few controls on corporatiin pric8ng
2) In practice there are none. Difficulty in prosecution. Lack of interest in prosecution. Increasing de facto administrative deeregulation since Reagan became president through reduction in inspectors, increase in paperwork.

Fair-trade and antitrust have long ceased to ecist.