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Nexus’s Donati on the Merits of Factory-Direct

Posted By RVBusiness On October 3, 2011 @ 10:31 am In Breaking News | 4 Comments

Editor’s Note: The following is an unsolicited statement from Elkhart, Ind.-based Nexus RV, a new Class C builder, on its decision to adopt a factory direct business model.

Recently, Mike Molino, president of the Recreation Vehicle Dealers Association (RVDA), wrote an editorial in the September/October issue of RV Business. This magazine is primarily an inside industry trade magazine that informs those that supply, manufacture and sell RVs of current affairs. I read with astonishment the candor in which Molino delivered the current philosophy of the RVDA.

It appears the association is concerned with sales that occur outside a dealership’s given territory and with service centers that work on RVs that don’t sell that product. Interestingly, if the association had their way, customers would pay more for their RVs because you would only be able to buy your RV from a local dealer. Consequently, they would pay more to have their unit serviced because the customer could only get their unit serviced by a stocking dealer that would charge more per hour for repairs in order to cover the large overhead associated with stocking large inventory. By restricting the options a customer has can only increase the cost of both the unit and servicing the unit after the sale.

At Nexus, we sell Class C and B-plus-style Class C motorhomes directly to the retail customers, and we have set up a network of servicing dealerships throughout the country that is more extensive than any other dealership in the industry. The fact is RVers travel throughout North America and relying on the local selling dealership to handle the service needs is nearly impossible. Many times the RVer is thousands of miles away from the selling dealer and must rely on mobile service centers and “non rolling stock service providers” to get them on the road. The current manufacturer-dealership business model has failed horribly with supplying customers with the service support they need. Removing all the politics and restrictions to making customers happy is the foundation that Nexus RV is working toward.

As for the selling of RVs directly to the retail customer, without the dealer network, will save customers money. The buying experience when buying from a factory direct cannot be matched by a dealership. The overwhelming advantages are easy to see. First, retail customers are looking for as much information on how their unit is built as possible. In fact, many retail customers want to understand each and every process and component that goes into the building of the unit. As a factory direct company, we know everything there is to know about our product and the reason behind each design. When visiting a dealership, the customer can only look at finished product and the dealership personnel have little information on each model because they represent many different companies and they have too much to remember. This lack of knowledge can cause many other problems down the road. Secondly, when buying factory direct, the retail customer has the ability to “menu customize” their unit. Picking fabrics, outlet locations, paint colors and important options makes the retail customer feel like they had some input on their unit. Contrarily, buying from a dealership, the retail customer is pushed hard into buying the “green one” on their lot because the dealership is trying to move the inventory as it has been on the lot for up to a year or more. Enticing customers to buy aged units with “rot lot” by lowering the price is a recipe for a dissatisfied customer. Buying factory direct, the retail customers gets to buy a unit with little miles on the odometer and that has been freshly built. The unit is truly new.

Finally, one of the most compelling reasons to buy factory direct is the value customers get when eliminating the “middle man.” At Nexus, we have measured the savings we have given our customers. After a year in business, we have saved our customers an average of $7,100 dollars. Imagine, a better buying experience because of more information, better service because of a national service network, a better unit because it is newer and it is built to the customers specs and at a lower price. Do not let anyone tell you different, if you can get all those benefits to buying from a factory direct, you should do it!

 

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4 Comments (Open | Close)

4 Comments To "Nexus’s Donati on the Merits of Factory-Direct"

#1 Comment By Adam On October 3, 2011 @ 12:48 pm

Wow. I appreciate your business model, but should you be picking a fight with every dealer out there? This could have been approached differently with the same results in my opinion.

Harsh verbage like “failed horribly with supplying customers with the service support they need” is probably unneccesary.

#2 Comment By Bob green On October 3, 2011 @ 1:30 pm

the above view is very shortsighted. the RV industry would not have grown and thrived if not for hundreds of local STOCKING DEALERS showing and representing RV’s. nor without their wide variety of service centers not just a few but hundreds.
and lets not forget about the thousands of sales people, parts people, service tech’s and counter personal that spread the RV industry message of why buy and RV. all without the likes of factory direct start ups wouldnt even have a chance and without the committment of the industry very likely wont survive. There may be a few customers that may choose the direct approach but the largest number of our customers want and need the services that local dealers provide.

Bob

#3 Comment By Steve Savage On October 3, 2011 @ 3:40 pm

I really wish we could all get beyond the idea of trying to lock consumers into dealerships and look for creative ways for all of us to work together to improve the experience of owning an RV.

Telling a customer service may be limited to specific dealerships seems a poor sales technique when selling a product that allegedly provides owners with the opportunity to range over wide areas of the country. I bet a quick run through with a few “focus groups” would lay this idea to rest quickly.

#4 Comment By Claude Donati On November 29, 2011 @ 7:17 pm

The comments above illustrate the political challenges and the unfortunate state of affairs with the dealership/manufacturer relationship.

Steve, my assesment of the current dealer-manufacturer business model spreads blame over the entire industry and does not place the blame solely on the dealer network. In fact, the nature of most customer issues arise from the adversarial nature of the dealers vs. manufacturers. Our business model allows us to handle the customer through the entire process. If we fail there is no one to blame but ourselves. Also, remember my comments were a response to harsh words about service centers that have been covering for manufacturers and dealers alike that were not in a position to take care of our mutual customers. Any criticism regarding those “no rolling stock” dealers was unnecessary.

Bob, my contention was not to suggest that having an option for customers to buy from local dealers be restricted. I concur that the local dealer model has a significant role in the development of the industry. My point is that the franchise dealers restricting manufacturers in any way to protect themselves and not support the retail customer is not wise. That arrogance is foolhearted and shortsided. 100% of my effort goes to making customers happy and making sure they are getting what they need, there is not confusion or finger pointing with my role with my customers. I either fulfill their expectation or not. No games and wasted energy.

Steve, I agree free trade and eliminating any type of restriction to create a happy customer will help our industry grow.


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