“Where are the rest of the Yamaha snowmobiles?” and speculating about our future.

[DranttelSS]

Do we know if Yamaha is participating in any of the sneak peaks?

None of the manufacturers are

 

[Farmer 73]

None of the manufacturers are

Skidoo said they were going to now they are out?

 

[DranttelSS]

Skidoo said they were going to now they are out?

I just read on the "Snow Sneak Peak" Facebook page that none of the manufactures are participating in the US this year. Might be something each company does on their own?

 

[CooperT]

I believe All 4 are going to the one in Barrie Ontario. I’m going on the 23rd or 24th

 

[20/80]

It wouldn't surprise me but it may surprise you Just kidding I obviously don't know you but I do have a ton of experience in manufacturing and my gut says your cost estimate is very low. For anyone else that looks at $1500 and thinks 'man am I getting ripped off'.

The real cost of a sled is not the raw material costs or production costs or the people or the engineering or electricity or the marketing or the delivery, it is all of the above. The basic math is that to achieve 50% margins you have to sell at 3x costs, competitive pressure will always drive you back towards the basics of managing cost to manageable product margins. If you get too far above the equation (do too well) competitive pressure drags you back, if you get below then you get into trouble. Competitive Economics being the great equalizer and reality (costs) being the base upon which you build. That sets you up for basic operating parameters and different manufacturing sectors have different views of the world of course with respect to CAC (cost to acquire a customer), warranty issues (lifecycle planning), shared efficiencies (one chassis to rule them all!), and of course there is the leverage you get from selling at varying levels of scale (i.e. consumer vs prosumer vs b2b) but competitive pressures will always drive you back to the basics. In other words, if all it costs was $1500.00 to produce a sled the competitive pressure would force someone to sell them at $4500.00 and that as they say would be that but it isn't so its a bit more complicated than you would think (and more expensive). I had a quick look at the Polaris numbers and I encourage anyone interested in this tangent of the conversation to do the same. Being public they have to publish a lot of core information and they are, at least on the surface a fairly efficient company but they aren't breaking any of the above rules. Their margins might be slightly higher but maybe not, I didn't look that close but I guarantee they are in the ballpark.

I was reading some where having to do with truck costs coming off the line and ready to be sold, a F150 xlt 4x4 costs Ford $3500 bucks to build an roll it off the line to be sold, retail price off the lot here in Canada is just over $60,000, I also know somebody that owns a Chev dealership and told me one night having a few beers that all he has to do is sell one new truck a month to pay the wages and keep the lights on for two months, that's unbelievable, now I know snowmobile dealerships don't get that big a piece of the pie for selling a sled but if they can build a F150 for around 3500 bucks i'm sure they can build a sled for at least half that, the high price they charge for sleds is how they survive a shifting market.

 

[T-Bone]

Ski-Doo is scheduled to be here in Western New York at Michael's on March 12th. Polaris is in Batavia, NY on March 24th at the Quality Inn.

 

[vodoo child]

Thanks for that explanation Earthling, I'm on the manufacturing end. All I know about buisness is you have to spend money to make money!

 

[earthling]

I was reading some where having to do with truck costs coming off the line and ready to be sold, a F150 xlt 4x4 costs Ford $3500 bucks to build an roll it off the line to be sold, retail price off the lot here in Canada is just over $60,000, I also know somebody that owns a Chev dealership and told me one night having a few beers that all he has to do is sell one new truck a month to pay the wages and keep the lights on for two months, that's unbelievable, now I know snowmobile dealerships don't get that big a piece of the pie for selling a sled but if they can build a F150 for around 3500 bucks i'm sure they can build a sled for at least half that, the high price they charge for sleds is how they survive a shifting market.

Your friend had more than a few beers. The dealers are selling at near cost. The trick is the manufacturer controls cost so the cashflow is direct to the manufacturer. The dealer makes money by selling services and volume. At least that is my understanding but if I have a few moments I will look into this.

Just looked it up. According to the world wide know it all, the GM (gross margins) for a dealer on new vehicle sales are bout 2%. So on $60k that's $1200.00. They make money by selling 30 a month or $430k in GM a year. Add in services, fees, accessories, packages, etc and you probably double or triple that per vehicle model. Most dealers I have spoken with say that their service bays make all the money. Anyhow, not sure I believe its 2% GM but its not 10% either. Even if the raw material costs of a Ford truck are $3500.00 (that sounds low just on the weight of the raw goods) you still have to factor in research, design, prototype, tooling, etc to bring the total costs up to what constitutes the per-truck COGS (cost of good sold) for that vehicle which probably triples that raw material cost but I am just speculatin'.

 

[vodoo child]

Thanks for that explanation Earthling, I'm on the manufacturing end. All I know about buisness is you have to spend money to make money!

 

[mikextx]

A set of tires alone is about $1k.

 

[whitedust1]

I won’t buy anything if I can’t see it touch and feel it no previews no sellie or buyie any brand. In the 90s all the OEMs would do their own Spring presentations at area hotels. Maybe they are going back to the future?

 

[Snowaddict]

Sure was nice when the Sidewinder came out that Mr. Sled arranged for private showing at Yamaha Pleasant Prairie facility.

 

[mikextx]

CooperT is right

 

[20/80]

The manufactures around the globe have consumers so hypnotized on the cost of products and the cost on making those products, removing the layers and revealing the real cost would shock you, just look at the cost for a plastic part for your snowmobile, manufacture paid pennies for it you pay at least 100 bucks, if you went in to buy a new Sidewinder and Yamaha was selling that sled for actual cost to make it plus shipping you would buy two or three with money left in your pocket, well... enough rant, just the way of the world.

 

[earthling]

The manufactures around the globe have consumers so hypnotized on the cost of products and the cost on making those products, removing the layers and revealing the real cost would shock you, just look at the cost for a plastic part for your snowmobile, manufacture paid pennies for it you pay at least 100 bucks, if you went in to buy a new Sidewinder and Yamaha was selling that sled for actual cost to make it plus shipping you would buy two or three with money left in your pocket, well... enough rant, just the way of the world.

Again, its not the plastic which actually cost less than pennies.

If I make a mold (and I have) to create a complex bezel, similar in complexity to some of the parts I have seen on snowmobiles, it costs me about $50-80k in setup charges alone for the design, machining, re-machining, test runs, etc. Assuming of course I am making quality injected parts and not some vacuum formed throwaway.

Once I have the first mold I also know that I have to make new ones every so often so I have to factor that in as well. Then I have to commit to quantities. So, minimum order being in the range of 5-10k parts. The process of reaching this stage is often going to cost upwards of $150k-$200k depending on whether I am using eternal design resources, or I have my own employees, etc.. Once I have the parts made I have to put them somewhere where they won't get damaged, have people to manage that part and all of its cousins, etc... It has little to do with the actual cost of the plastic itself, its all part of a process from conception through delivery. Lets say I spend $300k on 10k parts, that's $30.00 each I have to recover just to break even but I don't want to break even, I want to make money so now I mark it up 3x because I need for this part to pay for itself, I need for the dealer to make some money, and I have to create room for discounting. My $30.o0 breakeven cost just became $90.00 at retail, I sold it to the dealer for $60, he makes $20.00 because he is a nice guy and gave you a discount. My $30.00 in profit has to pay my current running costs and fund next generation investment. Yes, all for $0.57 in actual plastic costs.