Just Plain Jeff
11-12-2006, 07:55 AM
I thought I might just drop in and bring together some of the discussions we have had both on p-stuff and on this board much earlier on.
When we first were looking at coaches, a new coach buyer could find a quality new conversion for $600-800K. There were a ton of converters in the marketplace and it seemed that at least some of them were profitable. Nice coaches, given the technology and materials which were available.
Things have changed.
About a year ago, I was able to look at the build sheet on a new, one-off H3-45 double slide coach which was just finished by a converter. The hard dollar cost of the coach was just over $1 million. ($1,086,000.00) That signalled to me a number of things.
First, that coach had to bring at least $1.3-1.4 million to provide some profit to the converter, with overhead, marketing costs, sales commissions and the like.
That's a long way away from $600-800, even with inflation and the like.
Now with about half of the number of converters in the marketplace, the old idea of producing 200 new conversions a year seems to be on the wane. There are fewer people who are going to shell out (sorry) double the money for a new bus, in my opinion. Further, the cost of a new shell is almost double and will rise dramatically with the new Volvo engine and all the work the conversion companies will be doing to accomodate EGR requirements and to have a nose up on their competition.
For those of us Po' Folks who will likely never be new coach buyers, what this means is that the guys who are shedding their perhaps slightly used coach are going to a) be taking a bigger hit on depreciation and/or b) the acquisition of a newer previously owned coach will be somewhat higher than it is at the moment.
Further, there is now a greater concentration of active conversion companies in the market. We can all think about Angola, American Coach, Executive, Custom Coach, Royale, and so on which were either abandoned or taken in by other companies. That will mean, from my uninformed perspective, that there will be heightened competition in terms of features and marketing by those who are left in the business. It should also bode well for the new coach buyer. Each and every qualified sales lead, hopefully should result in much better customer service, support and attention to detail. If you sell a guy a $1.8 million camper, that customer is going to demand seamless support throughout the buying process. And should.
The larger question is with fewer new coaches being purchased, who will remain in this tightly competitive and marginally profitable business, given the up-front investment of capital and expertise required to make a good conversion. The days of, "let's bang out another coach," are likely over.
So, off I go, something to think about.
When we first were looking at coaches, a new coach buyer could find a quality new conversion for $600-800K. There were a ton of converters in the marketplace and it seemed that at least some of them were profitable. Nice coaches, given the technology and materials which were available.
Things have changed.
About a year ago, I was able to look at the build sheet on a new, one-off H3-45 double slide coach which was just finished by a converter. The hard dollar cost of the coach was just over $1 million. ($1,086,000.00) That signalled to me a number of things.
First, that coach had to bring at least $1.3-1.4 million to provide some profit to the converter, with overhead, marketing costs, sales commissions and the like.
That's a long way away from $600-800, even with inflation and the like.
Now with about half of the number of converters in the marketplace, the old idea of producing 200 new conversions a year seems to be on the wane. There are fewer people who are going to shell out (sorry) double the money for a new bus, in my opinion. Further, the cost of a new shell is almost double and will rise dramatically with the new Volvo engine and all the work the conversion companies will be doing to accomodate EGR requirements and to have a nose up on their competition.
For those of us Po' Folks who will likely never be new coach buyers, what this means is that the guys who are shedding their perhaps slightly used coach are going to a) be taking a bigger hit on depreciation and/or b) the acquisition of a newer previously owned coach will be somewhat higher than it is at the moment.
Further, there is now a greater concentration of active conversion companies in the market. We can all think about Angola, American Coach, Executive, Custom Coach, Royale, and so on which were either abandoned or taken in by other companies. That will mean, from my uninformed perspective, that there will be heightened competition in terms of features and marketing by those who are left in the business. It should also bode well for the new coach buyer. Each and every qualified sales lead, hopefully should result in much better customer service, support and attention to detail. If you sell a guy a $1.8 million camper, that customer is going to demand seamless support throughout the buying process. And should.
The larger question is with fewer new coaches being purchased, who will remain in this tightly competitive and marginally profitable business, given the up-front investment of capital and expertise required to make a good conversion. The days of, "let's bang out another coach," are likely over.
So, off I go, something to think about.