Price Increase

[twobjshelbys]

Originally Posted by Marc #561

For myself, I hope that both Kirkham production slows down AND that Shelby gets out of the business.

To what end pray tell? Any slow down from any manufacturer is a going out of business plan.

These are limited production, pretty much custom build to order cars, and are priced to what the market will bear. Remember Rolls Royce and Bently were built as "rolling framework" and turned over to a coach builder. Not too much different. Quality certainly demands a premium. And I'm sorry, a Cobra with a Jaguar rear end ain't a Cobra. Might look like one, but don't pass the rest of the tests. Built on a Mustang II frame? Ha.

[Marc #561]

The fewer cars produced makes ownership more exclusive. Look at the prices of the originals. I wish the Kirhams and CS all the best. But slowing down production or ceasing production for whatever reason is not always bad for values.

[twobjshelbys]

It's all about margins. A manufacturing business needs about 20%+/- to be sustainable. So you can either reduce your costs or increase your price. With the cost of raw goods going up (go ahead and continue drinking the government "inflation is under control" kool-aide) there only seems to be one option.

My estimate for inflation is something like 8-10% instead of the government advertised 2-3%. Most of it is health care and fuel being passed through. I haven't had a raise in 3 years (adjusting our salaries downwards) and even if I did my health care costs have gone up about 30%. That's about a 15% over all pay cut. And everything I buy gets more expensive. Bought a jar of peanut butter lately?

[fordracing65]

Originally Posted by Marc #561

The fewer cars produced makes ownership more exclusive. Look at the prices of the originals. I wish the Kirhams and CS all the best. But slowing down production or ceasing production for whatever reason is not always bad for values.

Where does slowing down production come from, the price of the roller increased, nobody said it was slowing down, it was a justified price increase, inflation is a *****.

[Got the Bug]

Originally Posted by RodKnock

At least 5 years later, they increase their price 22% and some folks think it's too much. Hmmm.

People forget that the employees of Kirkham occasionally require an increase to their compensation too.

It seems like a better strategy would be to make incremental price increases over time vs. waiting 5 years to increase the price. Regardless, this won't impact their business at all since they build such a great product and own the market that they cater to.

[cobra]

The dollar has lost much of its value and because the body is produced in Poland are also the costs of labor and the transport increased.

[mreid]

Why do they have a need to explain their price increase?

[1ntCobra]

Originally Posted by mreid

Why do they have a need to explain their price increase?

I don't think they need to explain the price increase either.

There are quite a good number of explanations suggested already, like:
- Material Cost Increases
- Exchange rate changes between US and Poland
- Shipping Cost increases (due to rise in fuel costs)
- Giving their employees raises
- They have held off on a price increase for a number of years.

Keep in mind that they are not a big manufacturer with a bunch of assembly line workers. All of their billet aluminum pieces need to be designed by engineer type employees. I for one certainly hope that part of their price increase allows for hiring to do more design work and getting more cool CNC tools. That way we may see more cool toys come out of the skunk works.

[big-boss]

So what! The price went up. Great mine is worth more.

I doubt if production will be going down anytime soon.

[JWheaton]

Why are all the current Kirkham's worth more now that the base model has gone up in price?

I guess that mean that ERA 002 and the first Factory Five is worth more because there cars have increased in price!!

What it means is that if you want a new Kirkham it will cost the purchaser more.

[froggyman]

Guys, these Kirkhams are in a league of their own. The Kirkham customer is unique and wants the product quality and expectation that the Kirkham Brand promises and delivers.

No comparison to any other replica brand needed here, just stating the facts. The price increase is fair for the Brand. I just wish I could afford one.

[RodKnock]

Originally Posted by JWheaton

Why are all the current Kirkham's worth more now that the base model has gone up in price?

In real estate, it's called the Theory of Progression (The Theory of Regression is the opposite).

If new houses become more expensive, then the used stock of homes in the neighborhood will trend up as well. Buyers who can't afford the new homes, then will look at the used stock more and thus the used stock will move or progress towards the price of the new stock because of increased demand of the used stock of homes.

[rphubbard]

Originally Posted by madmaxx

Alcoa Aluminiun and other commodities manufacturers have plumeted. It aint in the material cost, price should be dropping or they need to find another supplier.

If aluminum prices have dropped then why have my costs gone up on the raw aluminum I buy for my machine shop? My raw material prices have gone up 15-20% over the last few years. I buy quite a bit of material each month.

[xlr8or]

What's the big deal? If you couldn't afford one before, you still can't. If you could you probably still can.
If you can't there are still plenty of alternatives.

[RON N BKFLD]

I sold both of my Kirkhams last year. Used the money too pay my house off. One year of morgage interest was a hell of a lot more than the price increase on the rollers. It was a tough choice, but it was a very profitable one.........Ron

[Bill Bess]

Seems to me that many years ago a German rear engined sports car got very expensive overnight. The concept was ..why make more cars, just make them more expensive..we will make the same amount of profit on fewer cars.
For the most part, high priced cars arn't really that much more superior to the run of the mill , they just seem better, that way folks that like to spend more have better bragging rights.
Just the way I see it...they all have engines and go like hell, the real quality is the build it'self, the rest is strictly perception.

[Dimis]

Originally Posted by JWheaton

Why are all the current Kirkham's worth more now that the base model has gone up in price?

Theory of Progression - See Rod Knock's explanation above.

Originally Posted by JWheaton

I guess that mean that ERA 002 and the first Factory Five is worth more because there cars have increased in price!!

No... Not quite! This would only be the case if ERA002 was desired, & that may be the case in time if ever the boys in New Britain ever closed their doors, but unlikely otherwise.
I would assume that used Factory Five cars being a dime a dozen would not improve in price, regardless of any progression in other makes.

Originally Posted by JWheaton

What it means is that if you want a new Kirkham it will cost the purchaser more.

Yes, that's true, but watch how the used Kirkhams will follow up in price, because ultimately a Kirkham new or used is a desired commodity.

Economics 101 - Supply (Kirkham - limited) versus Demand (desire to own - high)...

[madmaxx]

pull up a high grade aluminium price chart, aluminium is the same price today as it was in 2005 and substantially lower than in 2008. Ignorance is bliss.

[JWheaton]

Originally Posted by RodKnock

In real estate, it's called the Theory of Progression (The Theory of Regression is the opposite).

If new houses become more expensive, then the used stock of homes in the neighborhood will trend up as well. Buyers who can't afford the new homes, then will look at the used stock more and thus the used stock will move or progress towards the price of the new stock because of increased demand of the used stock of homes.

Nice theory. Don't think that it will really hold up well with a car. If the theory worked on all goods then what an amazing world we would live in. Everything in essence would turn to gold and prices would sky rocket. With this theory you are basically constrained by the land the house is built on. I could buy a Kirkham from anyone in any state. Sure I have to pay for shipping but that is a small percent of the purchase price anyway.

Others have mentioned that the supply is limited. Which is true. The demand is limited as well. The demand will be even more limited with the price higher. It all evens itself out.

Current cars will be sold for many reasons and some will be sold for less and some will be sold for more. The used car market does not change because of the price increase.

[Dimis]

Originally Posted by madmaxx

pull up a high grade aluminium price chart, aluminium is the same price today as it was in 2005 and substantially lower than in 2008. Ignorance is bliss.

You're kidding aren't you?

Aluminum price chart, 2000-2011

'cos I don't see it?

I see "absorbing cost" as the price most probably calculated on 1990-2004/5 price avgs.