A Line in the Sand

[Jon Wehrenberg]

Over on Phil Cooper's site under "What's New" he posts that financing is available.

But he also posts financing is available for coaches ten years old or newer.

If your coach is older than ten years (like mine) it has reached senior citizen status and two things should be noted. If you have any hope of selling it a trade may be the best way to get rid of it. If prospective buyers do not have cash in their pocket it may not matter what kind of deal you make, even at give-away prices it is going to be very difficult to get an old coach financed.

The second thing is that if this credit crunch continues, the already depressed prices will drop precipitously once a coach hits the magic ten year mark. I expect older coaches for people buying (and who have the cash to buy) will represent a tremendous buying opportunity. I think we are seeing evidence of that.

In terms of bang for the buck, well maintained 10 year old coaches will be unmatched. They represent the end of a shell that Prevost had been perfecting for years and that is about as trouble free as a coach can get. Similarly, converters also have the greatest experience with that shell and the conversions also represent proven designs and systems. The ten year thing is an arbitrary number that will have a significant impact on the market, and I suspect as the prices head downward, they are going to pull prices on newer coaches down right along with them.

[donniev]

Jon, Mike Lynch At Newcoast In Clearwater Can Still Go Back Fifteen Years On Prevost Financing..

[Jon Wehrenberg]

That needs to be in capital letters on your web site.

But it still has a major and negative impact on values for some very good coaches that are on the market. Owning a coach is not for sissies.

[ajhaig]

Jon - You are spot on with your analysis of the coach market. Not much response from the group on this one, I guess no one likes to hear that one of their most prized possessions is worth substantially less than they thought.

There is no question that the lack of financing for older coaches will have a dramatic impact on the entire coach market. If someone buys an 8 year old coach today, they do it with the knowledge that should they decide to sell it 3 years down the road, they will be selling it into a "cash only" market.

With respect to trade-ins, dealers and converters are painfully aware of what's going on in the market place.

As time marches on, people looking to buy a coach on the cheap should be very careful about what they buy. As these coaches become more "affordable" they are likely to wind up in financially weaker hands which implies that there could be deferred maintenance issues.

I'd be interested in how many (if any) older coaches Newcoast is actually financing.

AJ

[Joe Cannarozzi]

Say a guy decided to buy an older coach for cash instead of a newer one with a payment. Then he decided to take the equivalent of the payment on the new one and put it into repairs or upgrades on the older one. How many months would it take before he ran out of things to do???????????

Wouldn't take long.

[0533]

Jon - You are spot on with your analysis of the coach market. Not much response from the group on this one, I guess no one likes to hear that one of their most prized possessions is worth substantially less than they thought.

There is no question that the lack of financing for older coaches will have a dramatic impact on the entire coach market. If someone buys an 8 year old coach today, they do it with the knowledge that should they decide to sell it 3 years down the road, they will be selling it into a "cash only" market.

With respect to trade-ins, dealers and converters are painfully aware of what's going on in the market place.

As time marches on, people looking to buy a coach on the cheap should be very careful about what they buy. As these coaches become more "affordable" they are likely to wind up in financially weaker hands which implies that there could be deferred maintenance issues.

I'd be interested in how many (if any) older coaches Newcoast is actually financing.

AJ
Deferred maintenance is a very real issue when considering any bus purchase. The actual costs to get the bus up to speed can in some cases eliminate the savings on the purchase price.

I also feel that we will have to be prepared to take back paper when selling our buses in the event that financing is not available. With a substantial down payment and a good contract becoming a bank can be a profit center.

It is even possible to allow your buyer to simply pay your mortgage payment along with a large down payment. Depending on ones threshold for financial tolerance in the event of foreclosure this can work. This could be a way to move an older coach that my not qualify for financing any longer.

[Jon Wehrenberg]

This is morphing into a discussion of all of the issues relating to older coaches and it can be said with confidence that unless someone has detailed logs, maintenance receipts, or copies of invoices for parts anyone buying a coach should consider that the maintenance has not been done.

I have never had an owner say either in an ad or personally that the coach he is selling hasn't been maintained properly. When we have owners that know little more than where the key is, it follows they haven't a clue about what routine maintenance needs to take place. Demand proof of maintenance.

So if those of us with "vintage" coaches want to have a prayer of selling one in a market populated with coaches all competing for the rare cash buyer we need to be prepared to prove we have the best coach.

Hold paper on a coach???????? Bruce, the minute you do that you end up with a rock band stoned out of their minds using your coach as an alternative to leasing from a company specializing in entertainer coaches, and you may find yourself trying to find a way to retreive it after it has been trashed and abandoned in East Nowhere. You are holding paper on a depreciating asset, and when that asset has been trashed sufficiently to make its value less than the balance owed to you the "buyer" will walk away.

[0533]

This is morphing into a discussion of all of the issues relating to older coaches and it can be said with confidence that unless someone has detailed logs, maintenance receipts, or copies of invoices for parts anyone buying a coach should consider that the maintenance has not been done.

I have never had an owner say either in an ad or personally that the coach he is selling hasn't been maintained properly. When we have owners that know little more than where the key is, it follows they haven't a clue about what routine maintenance needs to take place. Demand proof of maintenance.

So if those of us with "vintage" coaches want to have a prayer of selling one in a market populated with coaches all competing for the rare cash buyer we need to be prepared to prove we have the best coach.

Hold paper on a coach???????? Bruce, the minute you do that you end up with a rock band stoned out of their minds using your coach as an alternative to leasing from a company specializing in entertainer coaches, and you may find yourself trying to find a way to retreive it after it has been trashed and abandoned in East Nowhere. You are holding paper on a depreciating asset, and when that asset has been trashed sufficiently to make its value less than the balance owed to you the "buyer" will walk away.
I agree with you about the maintenance records, and proof of service. I would not purchase a coach unless these documents could be supplied.

As for the notion of becoming a financial institution, one would have to be very careful, and very selective with whom they are prepared to lend to. I have not done this myself, but if I were to, I would engineer a very tight contract and make sure the buyer could repay the loan and was a reasonable person.

[ajhaig]

Well... Just when I was about to give up on selling the coach... it wasn't pretty, but...

SOLD, SOLD, SOLD!! CASH IN BANK!

I hope the new owner joins POG, he should fit in as he is also a pilot.

[phorner]

Congratulations on the sale! These days, that's a real accomplishment :)

[Ray Davis]

AJ,

Congratulations. Don't be a stranger. I'll wager within a year, you'll be itchin for another bus!

Ray

[Jon Wehrenberg]

AJ, show him how much you value him. Pay for his membership and just don't tell him about the inmates that occupy this asylum.

[Joe Cannarozzi]

AJ I know you are happy and I know you are very confused.

We will pray for you.

[JIM CHALOUPKA]

Glad you sold the bus, sorry we didn't get to meet!

[tdelorme]

Glad you guys sold the bus, AJ, but we will miss seeing the Red Storm from time to time. Drop by now and then and we'll put you up if you get back to Texas. Jan says HI and she will keep you in her prayers. What's that all about?? Oh wait, I think I know. :)

[Steve Bennett]

We have taken deposits on 2 coaches in the last 3 days with strong back-up deals. Nice busses are still selling, if priced well. We still have financing back 15 years, and have private money for even older coaches for the right buyer. These coaches are starting to really represent a bargain. Condition becomes more critical the older a coach is, as it does not cost any less to maintain an older bus, than a new one. In some cases it may even cost more.

[0533]

Buses, Boats, Planes and all other exotic toys are priced by the market, but lets never forget that we are mostly,in large part anyway, in charge of what the price and values should be in the bus marketplace. Unfortunately when times require that an owner must sell, and sell quickly for less than we should, a converter who needs to raise cash, a dealer who places pressure on a seller to act, and act now, an estate etc, when enough of these deals goes down then the market will float to the new level.

It is somewhat of a shame that our buses are being driven down by market pressures at this time. Our buses only represent a few 100 of the total purchase choices out there and its now time to readjust the prices again.

One would think that our buses were part of the Sub Prime housing crisis. I think it is time to relax a little about the need to sell at or below the real market values and make an effort to treat these buses like the rare commodity they are, not like a Winnebago that cranks out 40K units a year (used to anyway).

I have been shopping for a late model bus and have found some interesting things, the newer the bus, the better condition it is in, the better financial condition the seller is the less likely he is to give it away. If this is true, then these people will hold up their end of the used bus market.

We should learn from this and hold up our end. If financing is available for older buses, if those buses are well maintained then the owners should expect to get a reasonable price.

There are fraction of the number of buses for sale then the higher end boat market, the higher end plane market, why do we then panic when we actually have a rare extremely well constructed piece of history.

If everyone who has a bus for sale added $50K to the selling price than guess what that would be the new number. I have never been in a place where someone has not been interested in my bus, really wanted to learn more, maybe even take a look. each says they saw the story on TV about the fancy buses. I have never had anyone give a dam about my Porsche, Mercedes or any other automobile in the same way as they do about a well cared for bus, none.

Fuel prices are dropping the world stock market is finding its natural bottom ,the worlds banking and governments have moved as a team to reduce the cost of funds and I believe we will see a concerted effort now to stabilize the economy over the coming year.

There is nobody stealing fine art, exotic cars or anything that is rare, limited extraordinary and special.

There is only a finite number of older buses in the market, Rivet coaches and older H models, it is a shame to run the values down and on these wonderful pieces of art and craftsmanship.

[Kevin Erion]

Bruce, Thank you! I think you are spot on and the good news is I have no need or desire to sell at this time. I just sold 4 race bike for the highest price per bike than ever before, these are race bikes that people have to spend lots of money every time they use them, kind of like a bus. We need to hold the line and not give our Championship bus away!

[truk4u]

Bruce,

I'm afraid your emotionally attached. There's an ass for every saddle and when the price is right, buyers and sellers will do their deals. Those deals will be dictated by current market conditions and there is nothing we can do to influence that market.

Byers and sellers can wait until the stars and planets line up if they want, while the jerkoff's in Washington continue to steal our tax money, but when the bug bites, there is only one cure!;)

We buy a bus costing lots of money, it depreciates at outlandish rates, it sucks huge amounts of fuel at 4.00 + per gallon, the parts and maintenance are outrageous, the insurance is costly and we have to build a garage to park it. ARE WE STUPID OR WHAT!:eek:

Can we justify our buses...... SURE

[0533]

I wonder what the folks at Opec or Exxon Mobile would say in response to your comments.

I am not suggesting that we should all sit around a table and decide what the new price for each model year bus should be, but if we did then I bet there would be a very different price point and I bet all of the converters, and dealers would fall in line as well.

I am struck by the very few numbers of buses that are actually on the road today, and the very few that are actually for sale compared to other toys.

It is very important to consider who buys these big boy toys. For the most part its people who do not want to be part of the herd, who consider themselves more adventurous, willing to travel down a different path as long as its fun and interesting.

Lets face it, like my real estate broker friend once told me, 5% of a smaller deal is still a deal, even if the seller drops his price by $100K.

I find myself running into more bus owners who also are pilots, boaters, entrepreneurs, own exotic cars have lived on the edge a little, in general special people, looking for a specialized toys. This is a small group, and so is the available inventory. We should not be forced to compete with Plastic motorhomes for customers.

[Jon Wehrenberg]

There is one fly in the ointment and it goes beyond our ability as individuals to have any control.

Not too long ago some converters either went belly up or got in financial distress. Legendary and Royale left the business and their remaining inventory was sold at bargain basement prices. There was one Legendary sold that went for less than $700,000 brand new. Royale had four coaches remaining when they stepped out of the business and they went cheap.

Then Vantare slashed prices on a significant number of coaches, creating an instant and large devaluation of Vantare coaches. They took coaches listing for $1.3M and in one day valued them at $.9M retail. I'm sure glad I hadn't just bought a Vantare immediately prior to that.

In the eyes of any potential buyers the value of all coaches new and old just had a significant drop. So here is Marathon and Liberty and Millenium, and others now faced with a marketplace that uses the publicly known prices for other brands of new coaches having to defend their asking prices which are absurd compared to what people were paying for a Vantare, a Legendary or a Royale. Who among us can identify $400,000 of additional value between a Marathon and a Vantare? I sure cannot.

So after that sent a shock wave or two across the market, we begin to see the entire market soften. Every coach, regardless of age becomes tougher to sell because the folks buying coaches are a little unsure of the economy, and worse, those willing to buy right now are not finding it easy to get appropriate financing.

Whether we owners like it or not the market, not the sellers determines the value of a coach. Within a specific range we can affect the pricing, such as to maintain the coach and keep it and its records pristine. But having the nicest 1998, or 1992, or 2005 only means as a seller you can ask for the price to be at the high end of the price range. As the seller you cannot move the price range up or down because the market has proven if something is overpriced it will be available for sale forever.

I happen to think a rivet coach, with no slides and OTR, well maintained is the most desirable coach going. But the market says otherwise, and as a result I could only get the price for my coach that the market is willing to pay. If the buyers and sellers were all highly knowledgable about these coaches and their respective utility, then we would never value a coach on the basis of miles of use or year of manufacture, but on condition, maintenance history, and projected years of service as a result of the coach's previous upkeep and care. Unfortunately, a coach that has been parked in the Palm Springs sun at ORA for almost its entire life may show low miles, but because it was rarely moved, but lived in almost continuously it may have a lot of the house worn out or seriously used, but it will be valued highly by folks that don't know how damaging it is to let a coach sit.

We in POG can hope coaches retain value, but they won't and we will have little or no influence unless an entire marketplace finds it beneficial to brag about how much it paid rather than bragging about how little one paid for his coach.

[0533]

There is one fly in the ointment and it goes beyond our ability as individuals to have any control.

Not too long ago some converters either went belly up or got in financial distress. Legendary and Royale left the business and their remaining inventory was sold at bargain basement prices. There was one Legendary sold that went for less than $700,000 brand new. Royale had four coaches remaining when they stepped out of the business and they went cheap.

Then Vantare slashed prices on a significant number of coaches, creating an instant and large devaluation of Vantare coaches. They took coaches listing for $1.3M and in one day valued them at $.9M retail. I'm sure glad I hadn't just bought a Vantare immediately prior to that.

In the eyes of any potential buyers the value of all coaches new and old just had a significant drop. So here is Marathon and Liberty and Millenium, and others now faced with a marketplace that uses the publicly known prices for other brands of new coaches having to defend their asking prices which are absurd compared to what people were paying for a Vantare, a Legendary or a Royale. Who among us can identify $400,000 of additional value between a Marathon and a Vantare? I sure cannot.

So after that sent a shock wave or two across the market, we begin to see the entire market soften. Every coach, regardless of age becomes tougher to sell because the folks buying coaches are a little unsure of the economy, and worse, those willing to buy right now are not finding it easy to get appropriate financing.

Whether we owners like it or not the market, not the sellers determines the value of a coach. Within a specific range we can affect the pricing, such as to maintain the coach and keep it and its records pristine. But having the nicest 1998, or 1992, or 2005 only means as a seller you can ask for the price to be at the high end of the price range. As the seller you cannot move the price range up or down because the market has proven if something is overpriced it will be available for sale forever.

I happen to think a rivet coach, with no slides and OTR, well maintained is the most desirable coach going. But the market says otherwise, and as a result I could only get the price for my coach that the market is willing to pay. If the buyers and sellers were all highly knowledgable about these coaches and their respective utility, then we would never value a coach on the basis of miles of use or year of manufacture, but on condition, maintenance history, and projected years of service as a result of the coach's previous upkeep and care. Unfortunately, a coach that has been parked in the Palm Springs sun at ORA for almost its entire life may show low miles, but because it was rarely moved, but lived in almost continuously it may have a lot of the house worn out or seriously used, but it will be valued highly by folks that don't know how damaging it is to let a coach sit.

We in POG can hope coaches retain value, but they won't and we will have little or no influence unless an entire marketplace finds it beneficial to brag about how much it paid rather than bragging about how little one paid for his coach.
Like you say Jon, I respectfully disagree. Yes people do panic when they see other sellers panic, but lets examine what you have just said. Your examples of panic selling that is.

You have referred to two converters who have left the marketplace and had or have a few buses left in inventory, plus one or two from Vantare, but the sum total is still a handful and in these cases are as a result of distress sales or cash crunches. I would not form my business plan around a few converters who where not prepared to compete in this marketplace and are gone or have real issues that might affect their future in this business.

The big converters cannot withstand this level of price reduction, and my guess is that none will take this course of action, at least not publicly.

Converters come and go and its my understanding that several have morphed or gone away over the years.

Like stocks, it is not time to drop ones pants when the market is readjusting, hold the stock, wait for the market to return and the price will as well, same goes for the Bus market.

I do not accept the notion that POG or other bus owners should feel that when there is a blip on the radar that causes a few dealers to fall by the wayside that we all should react in a precipitous manner.

I know you do not personally feel this way, but It appears that some do I guess.

[rfoster]

It seems to me that business is good within or around the POG group. (see Steves post form the left coast) There has been several hundred thousands of dollars moving around amongst these old buses. People still want stuff and if they can get or have the lewbucks they are going to act. Its' Human Nature to want something new or different, It is Red Blooded, the American way and Tradition to buy stuff. And when a willing seller and willing qualified buyer hook up- wheels go around.

I LIke Stufff. It just happens to be a big shiney bus.

Don't listen to the poison coming from the mouths of the liberal news media, they would have you asking permission to go pee. I say pee on them..

[garyde]

I agree with you Bruce, but what I have learned over the years, sometimes painfully, is the market is the Market.

[Coloradobus]

We were told by Marathon Fla that older "H"'s with the 4 windshields just aren't selling for whatever the reason. So, we are holding onto our coach. The market has been needing an adjustment. Knee-jerking is just part of that adjustment. With the coming election, market uncertainty, its normal to panic, but Don't!!!!
Free enterprise always has its ups and downs, regardless of why, or who.
Sit tight, it's going to be interesting to see how things pan out.

[ajhaig]

I'm intrigued with this discussion and very interested in everyone's views. One of the nice things about POG is that its membership is so diverse yet one common trait is that POGers tend to be highly successful.

Most people here are so quick to share their views on things like tire brand preference and proper tire pressure yet I get the feeling that many are reluctant to chime in on the coach market.

Our decision to sell our coach was driven exclusively by the fact that we would not be able to use it the way it should be used. I think the sale price was fair market value for both us and the new owner and I believe that we sold into the "real market." I suppose we could have held on to it with the hope that the market would improve, but I determined that when you take into consideration the cost of depreciation, insurance, storage, maintenance, and cost of tied up capital we were at the point of diminishing returns, so we hit the bid.

The idea that markets always "come back" is a bit of a myth, point in case the NASDAQ market traded over 5,000 at one point, so for anyone waiting for that one to come back, it has been 8 years and counting, NASDAQ is currently at 1,650.

It will be interesting to see the fate of the converters over the next few years. Although 2001 was officially a "recession", consumer spending actually increased through that event. Many converters failed during what was perhaps the greatest economic expansion in history, how will they fair in a real recession (yet alone a potentially severe one)?

A friend of mine owned a Rolls Royce store and I recall him complaining about business during the 1991 recession. He told me that although his clientele were largely unaffected personally by the then recession, they couldn't justify driving such a fancy car while they were laying off employees.

The idea that the coach market is being punished like the sub-prime market shouldn't be a surprise. They were both driven by easy credit availability, that game is over for the time being.

The damage that has been done to the banking system is hard to fathom, the way business gets done going forward will be very different than it has been in the past. I would be careful to lightly dismiss these events as just another correction.

AJ

P.S. Our next coach will be a late 90's 40 foot with a series 60, I can't wait! For the time being I've bought a 1959 International Harvester Farmall tractor to keep me busy... Photos to follow.

[0533]

You made the correct decision, especially if you could no longer dedicate the time to use the bus.

Never look back once you have done anything, just reflect, learn and be grateful for tomorrow.

We will all look forward to your return and hope to hear from you and keep up with your Vermont Lifestyle. We love Vermont, hope to see you next summer.

[jelmore]

Interesting, this market. Ours is for sale and has been for three months. We started out on a one year adventure and got it done. There's not a financial crisis for us, so we don't HAVE to sell. Continuing what we've been doing is certainly no penalty. We'd like to sell, but the only urgency is wanting to do something else. We're not willing to take the hit to sell it immediately. The market for these is so small that I think it's more about what someone wants, like us when we bought this one. Linda said "I could live in that" and the deal was done. We were offered $245,000 the other day. Interested? No way. We'll do our part to keep the market up. I would imagine that it will cost the same each year we keep it in depreciation and upkeep and I'd just as soon use it than give it away. Of course, our "hope" is that someone will come along that sees this coach the same way we saw it. They will end up with a well maintained machine that is in far better condition than it was when we bought it. But, who knows. The entire financial market may collapse, the bank may own another coach, and I'll work at Walmart. Until then, we'll have a ball.

[sawdust_128]

How big is the market for our buses? How many new conversions are sold annually with what kind of gross sales? Anyone venture a guess. I know that services are a big part of the business, but what is the new conversion sales number?

[jack14r]

Here are the numbers that I have heard for new coaches a year ago or so.
Marathon 65
Liberty 28
Country Coach 18
Featherlite 20?
Parliament 12
Millennium 8

I doubt that these are accurate now,I bet the numbers for 08 and 09 will be much less than 07 production.What numbers have others heard?

[sawdust_128]

http://www.cbsnews.com/stories/2008/07/28/earlyshow/contributors/tracysmith/main4298883.shtml

[sawdust_128]

Here are the numbers that I have heard for new coaches a year ago or so.
Marathon 65
Liberty 28
Country Coach 18
Featherlite 20?
Parliament 12
Millennium 8

I doubt that these are accurate now,I bet the numbers for 08 and 09 will be much less than 07 production.What numbers have others heard?

151 coaches at an average of $1.3million sales price yields gross revenue at $196,300,000. At 40% margin approximately $78-million.

$118million in cost for 151 coaches yields $780k per coach at cost. (My guess)

From what I remember of the pricing-depreciation models I did with various log-log, natural log, exponential and power curve transformations, prevost conversions appeared to retain a high percentage of their purchase value for the first 3-4 years. First year values were scarce and I could not get a sufficient amount of data for any reasonable determinations. If memory serves here, after about year 8 maybe 9, prices paid for that age coach had no relationship to original price. The most direct relationship after year-8 was cost/ft plotted against age of coach which yielded a high correlation value.

Within each year grouping, the distribution appeared to reflect what Jon said, that with good condition and available records one could bubble the selling price upward. I stopped looking at that because I didn't have a coach at the time and was only guessing at something that was just common sense on this forum.

I don't remember a lot of the details but I remeber that after 10 years of age, you wouldn't want to own any other coach. The model for prevost conversions carried out to about 25 years and there was nearly zero loss of value (small sample with large variance).

First, If I can locate all those analyses, I will share them. Second, if I have a chance, I will try to add some more recent data to them to see if there is a measurable effect from the recent economic turndown (hard to do with slow sales). Lastly, I bought in a declining market and I was comfortable doing it because I concluded that I would be better off owning a Prevost over any other kind of coach out there because in the long run, I will retain more on a Prevost.

Although I agree with much of what Jon said, I would have to qualify that the fire sale pricing has more of an impact in that portion of the market for coaches between 0 and 4 years of age. Lack of sales and duress sales are about the same for every market and commodity. Hopefully, no POG member will have to deal with it. In regards to financing, what I suspect will be that as soon as things begin to settle down, a few calculating minds will adapt and figure out a way to finance anything again.

For a different perspective look here:

http://www.discoverthenetworks.org/groupProfile.asp?grpid=6967

The "Cloward-Piven Strategy" The strategy of forcing political change through orchestrated crisis.

[Jon Wehrenberg]

I have watched the ups and downs from the sideline because I am not a "player". We get the best compromise we can in a coach, and don't plan on selling it. We do that with all our "stuff".

But we also see some tremendous opportunities right now because there is no way to rebuild or build some of these coaches for the prices they are going for. The value received for the dollar spent is in my opinion unbelievably high.

I disagree with what AJ did on one level. If you can find a reasonably cheap way to store a bus for its occasional use (inside storage) that coast of ownership once the coach reaches a certain age is almost inconsequential. We aircraft owners can clearly understand that owning a bus is cheap compared to a plane of like value. With the plane, even before it is used that first hour you have the cost of annual inspections, IFR certifications, hangar rent, GPS or MFD software updates, charts, recurrent training, insurance, and hours needed just to remain legal, to say nothing of proficient.

Yet a bus that you like, that is in good shape, costs the price of insurance and license and storage. And even if you have a busy lifestyle there will always be a rally you can get to or some weekend getaway.

Yes tires and batteries age and need to be factored in, but if we can afford the bus in the first place it seems to me we need to have a drastic change in our personal finances or lifestyle to not be able to afford to hang onto an underutilized coach. Having said all that the proviso is that we have a relatively small sum invested, and not serious money needed for other purposes.