John North: Hi Mike, nice to hear from you. I don’t know if I necessarily deconstructed everything to give you a specific answer, so I will caveat appropriately. We’re a lot more concerned with gross and unit sales than revenue. I really spend very little time looking at our revenue, but understand the question and as you model things. My intuition is that it really is just a function of inflation. Pricing has gone up overall both on the wholesale and the retail side. And I mean, if I had to guess, I would say 2019 compared to 2023, you’re probably looking at a 30% to 40% increase in the cost of most everything. And so my suspicion is just as we worked through – and I think we were ahead of maybe others in the industry in terms of the 2022s, and so the ’23s have become a greater percentage of our mix in the second quarter in particular.
And I think you’re seeing just, frankly, inflationary cost, which is probably what’s driving that. Because when you look at the grosses and the margins, you’re not seeing a commensurate growth there. And so I think it’s really just kind of raising the overall transaction value as a function of ’23s comprising more of the mix.
Mike Swartz: Okay. That’s great. Thank you. And then just – I think you had mentioned the model year ’24 pricing is kind of flat to down versus model year ’23. I assume you’re talking about invoice pricing from the OEMs. But I guess a broader question is, how do you think about affordability in the RV space? And I guess, is there kind of a sweet spot for where you think kind of net pricing needs to go before we start to really see a rebound or a pickup in the retail environment?
John North: Yes. I think you’re correct in your first statement. What we were alluding to was the invoice cost of the units appear to be flat or down in most cases as it pertains to ’24. So that is correct as a clarifier. What’s the right price for the consumer? I guess I look at that through a couple of lenses. The first is that one of the reasons we’ve been focused on used is because in times where affordability is more difficult for a consumer, you see a natural shift toward more used demand. People effectively trade down to match to a payment. And I don’t know the absolute percentage, but my suspicion is 90-plus percent, 85-plus percent of people are thinking of a payment when they’re thinking of a purchase here. So I think there’s that lever that gets pulled first.
The other one that comes to mind is just our financing penetration. So pre- kind of Fed interest rate moves, we were north of 70% in terms of the financing penetration on the units we sold. And that number is now in the mid-60s. And so I think for the higher-end purchaser or the more affluent consumer, I think we’re seeing a natural inclination to pay cash. And certainly, if someone can finance at 4%, they may decide to leave more money in their retirement account or in their equity portfolio or in their home equity line of credit. Now that interest rates on an RV are going to have a seven or eight handle even for the best credit quality customer, I think you’re seeing more people elect to just pay cash where they have that optionality. So I think for them, the affordability is probably less important.
