The progression of price points in the off-road UTV market would make any golf car manufacturer (and dealer) envious. In our latest report on the small, task-oriented vehicle (STOV) industry, we estimated the average gain in retail price for off-road UTVs was about 25% over the past five years. Which to say that on top of double digit growth in unit sales, revenues to the industry have been greatly enhanced by the ability of manufacturers to substantially raise their MSRPs.
Are there any parallel trends in golf cars and golf car derivatives? Recently, my company, Small Vehicle Resource, LLC, conducted a survey of dealers to ascertain, across several brands, and asked at what price they had been able to move inventory of golf cars and golf car derivatives. (This survey included only what SVR classifies as privately-owned vehicles–essentially non-fleet golf cars and LSVs, and excluding utility vehicles.)
Price Movement Presents a Mixed Picture
We looked specifically at a price threshold of $10,000 and asked dealers what percentage of sales were at this level or above. Two factors stood out in the responses we got:
• There is a wide range among dealers as to the share of sales at or above $10,000. Some dealerships report either none, or only a small percentage (<10%) of their sales are $10,000 or higher, while others appear to be aggressively expanding this price segment. Two dealers, for example, indicated sales in this category of 25% of total sales.
• LSVs are most often cited with vehicles in the $10K+ category, but some personal transportation vehicles (PTVs) are also in that price range. In addition, several dealers report that they have increased their business in customizing vehicles, bringing them into the $10K+ price range.
• Several indicators suggest there will be increased gains in the $10K+ category, in 2014. First, E-Z-GO’s 2Five appears to be doing well. It is our understanding that this vehicle goes to the dealer at about $8,200-$8,500 per unit, so a dealer’s mark -up of 20% would bring the vehicle, without accessories, the $10,000 price threshold. Second, Club Car’s Villager 2+2 LSV is priced at over $10,000 (a CA dealership prices had it at $10,329) and is likely to be strongly promoted by the company and by dealers. Note also that Club Car’s four-passenger Precedent lists at over $8,500 and accessorized will likely go beyond the $10,000 mark.
• Yamaha is strongly promoting its line of PTVs and appears to be doing very well in The Villages, the sprawling and ever-growing gated community north of Orlando. A Yamaha dealer there reported that over 25% of his business is in the $10K+ category, and virtually none of it is LSV-certified. My tour of the dealership revealed that most of the vehicles on the showroom floor were in the $11,000 to $14,000 range.
There are several competitive factors that manufacturers and dealers should keep in mind when introducing a vehicle at the $10,000 level. First, buyers of privately-owned vehicles have a wide range of choice when it comes to selecting a vehicle and most are very keen on cost/benefit trade-offs. Thus, refurbished and upgraded used vehicles (and sometimes these are costly upgrades) are a constant drag on the new vehicle market.
In certain states, Florida being the most important ex ample, state law allows dealers and individuals to individually upgrade their vehicle such that they can acquire VIN numbers and become street legal. Florida dealers are responding to customers that want to stay under $7,000 for a four-passenger, street legal vehicle. The dealer may respond by building or outfitting an ASPT (assembled from parts) vehicle. Much like used vehicles in general, lower-priced ASPT vehicles become a viable alternative to new, higher-priced LSVs.
Location can be important
Location plays a role in pricing. It is hardly a secret that the Southeast and Southwest areas of the country offer the best locations for gated communities, including the key states being Florida, Georgia, California, Arizona, North and South Carolina, Texas, Nevada and Georgia. While prices certainly vary within these states, in many of the gated communities in these states, the golf car, LSV, or PTV is a status symbol of sorts, and it is here where price points take a jump, riding the back of accessories and customized appointments.
In summary, price trends are clearly positive. The overwhelming majority of new privately-owned vehicles are in the $7,000-$9,000 range, with dealers almost unanimously reporting year-over-year price increases in the neighborhood of five percent. Not so long ago it was industry dogma that the customer would certainly not pay anything over $5,500 and $6,000 was a very tough sell. That is not the case now, and perhaps even more remarkable is the fact that this trend is taking place during a time when the U.S. economy is barely out of a much prolonged recession.
I fully expect continued price increases at the factory level, which means a general positive trend in the next three to five years. Thus, while the $10K price threshold, in terms of an average price, has not been reached, it is likely to be so in the not too distant future.