Canadian Gouging?

[wincrasher]

One thing that struck me at the RV show was the escalation in prices. Do you think the Canadians are jacking up prices to cover their currency losses? Currently the rate is 1:1.33. The US makers like WGO & Coach House seemed pretty close to last year's prices. Seems like Pleasureway & Roadtrek are squandering an opportunity to have a 30% price advantage over their US competition.

[peteco]

I think it works the other way; they are at an exchange rate disadvantage.

[BobB]

Price on RT's website for Zion is $87,906 USD vs. $94,991 CND, only an 8% difference. Current exchange rates are $1 USD vs $1.33 CND, a 30+ % difference.

So is RT's Zion US price not low enough or is Canadian price not high enough? If one used the exchange rate, either Zion should be around $71.4k USD based on $94.9k CND or $116.9k CND based on $87.9k USD.

Either way, one would expect the spread to be higher, given current exchange rates.

Not knowing about importing Canadian RVs (US Customs states "most Canadian-made vehicles are duty-free"), could one go to Canada,exchange $71.4k USD to $94.9k CND and then buy a Zion and bring it back to US and register it here, thus saving over $16k USD? Or would RT not sell to a US citizen in Canada?

Yes, I understand they bought parts, etc. yesterday so it might take time for the current prices to catch up with current exchange rates, but just thinking out loud

fyi - spread on PW Lexor is only about 5.7%.

[wincrasher]

I'm not asking about the difference in their US/CAD published prices. I'm talking about the year over year increases in the US pricing over the last few years.

If they keep their profits in Canadian dollars, I suppose they have reaped a big windfall. If they have to convert back to dollars, then probably not so much.

[peteco]

I probably spoke in ignorance. There is more to this than just the exchange rate. What prompted my comment was that I met several Canadians last winter in Florida that had just bought RV/Mobile Home lots. They said the exchange rate was to their disadvantage, but they bought anyway because: 1. they wanted to be assured of a place to spend the winter and 2. the real estate prices were still somewhat depressed were they were buying in Florida.

[BobB]

Originally Posted by wincrasher

I'm not asking about the difference in their US/CAD published prices. I'm talking about the year over year increases in the US pricing over the last few years.

If they keep their profits in Canadian dollars, I suppose they have reaped a big windfall. If they have to convert back to dollars, then probably not so much.

Understand your point. Have you been tracking the price increases over, say, the last 5 years or know of anyone who has?

[mkguitar]

a microcosm of how currency rate fluctuations affect the market...

take into account that anything the CDNs were buying from the USA now costs them about 20% more over last year.
so they "save" on labor costs but buying many of the parts and manufacturing equipment cost are much higher.
Chassis costs are higher in Canada for CDN destination vehicles- there may be allowances for vehicles destined for USA



at least none of us own VW shares...


Mike

[booster]

They have been spending heavily on new models and changes, which is a much bigger burden to them than to the much larger and more efficient Winnebago, so that is probably some of it. They may be also servicing debt incurred during the recession, which can be very spendy for small companies.

The price escalation isn't new, though. Our fully optioned 07 C190 Roadtrek had a list of $77,045. A similar 2015 on the lot at Lake Region RV is over $108K, and a lot of the increase came earlier.

[BobB]

Originally Posted by mkguitar

a microcosm of how currency rate fluctuations affect the market...

take into account that anything the CDNs were buying from the USA now costs them about 20% more over last year.
so they "save" on labor costs but buying many of the parts and manufacturing equipment cost are much higher.
Chassis costs are higher in Canada for CDN destination vehicles- there may be allowances for vehicles destined for USA

Agree. I suspect it is more complicated than the simple way I was looking at it. Actually, they may get many parts - MBs for example - direct from Europe, so the CND to EURO exchange rate has to be factored in, too.

Originally Posted by mkguitar

at least none of us own VW shares...

LOL

[booster]

Originally Posted by mkguitar

a microcosm of how currency rate fluctuations affect the market...

take into account that anything the CDNs were buying from the USA now costs them about 20% more over last year.
so they "save" on labor costs but buying many of the parts and manufacturing equipment cost are much higher.
Chassis costs are higher in Canada for CDN destination vehicles- there may be allowances for vehicles destined for USA



at least none of us own VW shares...


Mike

That would apply to Canadien sales, but they get the 20% back when they sell it back to the US, plus 20% on any Canadien parts used, labor, etc. IMO the exchange rate should be a big advantage for them. That is why the trade manipulators would like to see a weaker dollar, so US products are more favorably priced in other countries.

[wincrasher]

Is their parent company Canadian or US?

[BobB]

Originally Posted by wincrasher

Is their parent company Canadian or US?

I think they are a privately owned Canadian company, headquartered in Kitchener. The only other item I could find was this regarding the investment by IOP in 2011.

Industrial Opportunity Partners Invests in Roadtrek Motorhomes Inc.

See what you can make of it. Sounds like, while they have an investment partner, they do not have a parent company, i.e. they are not owned by another corporate entity.

[booster]

Originally Posted by BobB

I think they are a privately owned Canadian company, headquartered in Kitchener. The only other item I could find was this regarding the investment by IOP in 2011.

Industrial Opportunity Partners Invests in Roadtrek Motorhomes Inc.

See what you can make of it.

IOP is Chicago based, I think, and they appear to be calling the shots.

[BobB]

Originally Posted by booster

IOP is Chicago based, I think, and they appear to be calling the shots.

Close - says Evanston, IL.

Also in the "about" section of that link, says they are "hands-on". Protecting their investment.

[wincrasher]

Well, this tells me then that the Canadian operation has to convert their profits into US dollars. That means they are getting hammered on the currency conversion, regardless if their supplies are sourced in Canada.

[gregmchugh]

Keep in mind that Roadtrek also has an extra charge for Canadian customers shown in their price sheets. What does this cover? Extra requirements for Canadian standards, difference in cost for the chassis in Canada vs the US, ?? Are the price sheets quoted in US dollars?

[tbirdman]

What a company sells a product for has nothing to do with cost. Cost only indicates where he starts to make a profit. Ideally a company will maximize production facilities with a set price.

[booster]

Originally Posted by tbirdman

What a company sells a product for has nothing to do with cost. Cost only indicates where he starts to make a profit. Ideally a company will maximize production facilities with a set price.

Well said, and so very, very true.

Most US companies leave foreign profits in the foreign countries to avoid US taxes, thus all the talk of giving a tax holiday to get them to bring the money home and use it here.

A US sold vehicle will paid for in US dollars, so the profit will also be in US dollars. The same gain going into Canada as the loss going back to the US for the profits, just like the components. I will say again, and you can read it anywhere, the weaker currency should have a price advantage in a stronger currency country

[mlts22]

What gets me is the relatively tiny price tags Europeans and Aussies pay for their rigs. Their stuff is insanely cheaper and far better quality than what RV makers sell here.

Something that is $250,000 here in the US costs around $60k in US dollars over there.]

I think both sides of the US and Canadian border are being had sometimes, especially with what is available down under.

[wincrasher]

I think the prices you see on the vans in Europe do not include VAT. Isn't that around 25%? I imagine they don't include it because it varies by country.