Mitchell: New Business Plan Spurs NuWa
NuWa Industries Inc. will begin to build luxury fifth-wheels again in May after a prospective buyer decided not to implement a business plan that NuWa Chairman and CEO Mike Mitchell helped him develop.
“He declined for personal reasons and another buyer didn’t surface,” Mitchell told RVBusiness. “As I was going through the analysis, I convinced myself that the business plan would work, and I said to myself, `If not him, why not me?”’
The new NuWa will cut the retail prices that will be “non-negotiable” by as much as 25%, sell factory direct and have fewer dealers and employees than before.
NuWa’s return to production was somewhat of a surprise. The company announced in late December that it was making “a graceful exit from the RV industry” and stopped production in January.
At the time, dealers were told that NuWa was not going bankrupt and “intended to meet its financial obligations.”
Mitchell told RVBusiness that NuWa will have between 20 and 25 dealers when 2010 HitchHiker fifth-wheels start rolling off the production line in June — down from more than 60 dealers last year. Also, Mitchell anticipates a production crew of between 50 and 100 people, plus an office staff of about 25. At one time, NuWa employed as many as 450 people in its Chanute, Kan., factory.
“It will be a fairly slow startup,” Mitchell said.
The company’s “hybrid version of direct factory sales,” he said, doesn’t intend to compete with dealers on retail prices that will be about 25% less than before. Factory-direct sales are intended to be available for customers who don’t have a dealership nearby that sells NuWa RVs. “We are not going to compete with our dealers on price, only on service,” he said.
Retail prices at the factory and at the dealerships will be the same, he said.
In a letter posted on NuWa’s website, Mitchell said, “This concept will also help us maintain more control of competitive product pricing.”
“We will eliminate the artificially high MSRP so often used by the industry to manipulate the unsuspecting customer, and too often give a false premium for the trade,” he wrote. “This present process is confusing and often detested by many buyers.
“Discounted cash/wholesale trade selling prices typically will be 25% lower than comparable 2009 model prices, but will be non-negotiable. The low cash price concept will require that trades be taken at wholesale, as the new unit pricing will be much nearer wholesale.”
Mitchell said that 175 unsold 2008 and 2009 HitchHikers remain in factory and dealer inventories that have been “well-priced” to allow dealers to make room for 2010 models.
He said that it’s likely that some floorplans will be trimmed and that some models won’t be available until the fall.