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