Escalating materials costs are affecting every segment of the RV industry and could put a damper on 2005 sales as manufacturers shift rising commodity costs on to consumers, the latest RVBusiness.com Industry Poll indicates.
“The impact is that the normal everyday person will never be able to afford a motorhome,” worried one survey participant.
“I think that the prices are justified, but it will take its toll on sales for the coming year,” another surmises.
There appears to be widespread concern over the issue and there are a variety of opinions regarding the causes for the commodity price hikes affecting RV manufacturers, suppliers, distributors and consumers.
Indeed, while nearly 40% of poll respondents feel RV prices have been most affected by the escalating cost of steel, an even larger percentage – 45% – believe RV prices are equally affected by the climbing prices of aluminum, plastic and lumber.
Poll participants also offered differing opinions about what sectors ultimately were affected most by the price hikes. Nearly 55% said manufacturers, suppliers and consumers are equally affected by commodity price hikes. Less than half that – 23% – said manufacturers bear the heaviest burden from commodity price increases, and about 7% felt the greatest burden was on the industry’s suppliers. Around 15% believed consumers were most affected by commodity price increases.
Manufacturers say they are among the first to feel the effects of commodity price increases.
“It ultimately ends up on the plate of the consumer,” one wrote, “but manufacturers keep trying to hold out and not raise the prices. In the end, it is inevitable, but losses pile up on manufacturers until they actually raise the price.”
Poll participants offer varying explanations as to the source of the price hikes, with a considerable number blaming rising demand for basic commodities in the rapidly expanding economies of China and India – and to the justifiability of new pricing benchmarks.
For instance, one distributor told RVBusiness.com he thought rising commodity prices were “outrageous, uncalled for and not justified,” while another said the increases were simply inevitable.
“I think we are seeing the law of supply and demand in action and that we will see some decreases sooner or later,” one OEM executive responded. “The increases are probably justified based on demand.”
“I have no clue where this is going other than up, and I do not feel that all price hikes are justified,” said another manufacturer.
“Greed is definitely a factor at this point on the raw materials end of the chain,” another maintained.
“I do not feel these hikes are justified,” another said. “They are just taking advantage of the hurricanes and the construction needs in Iraq.”
At least one manufacturer contended the RV industry itself may have fueled some of the commodity price increases. “All the hype put out by RVIA last winter and spring about how well the industry was doing and how much growth we expected served to cause our suppliers to get well across the board,” he said. “We brought it on ourselves.”