Snowmobile Prices: Why They Cost So Much
Posted by FAST TRAC on
Let’s face it; snowmobiling is not a cheap sport. It provides access to some unique remote terrain not achievable by foot, and the fun factor makes it worth the time and money. The past couple of years has seen the sport get expensive faster. We are here to break down the costs manufacturers invest in delivering you a state-of-the-art machine.
What you can expect to pay for a new snowmobile in 2023
Snowmobiles come in three basic tiers: lower, mid, and high-tier. For lower-end units, you can expect to pay between $7,500-$10,000 all said and done. Middle tiers will cost you $11,000-14,000. The high-end, latest and greatest machines will cost you $16,000-$25,000 for 2023.
What goes into the price of a new snowmobile:
Many factors determine the price of a snowmobile, and so many inputs can increase the cost of the sled. We break down the main ones that cover most expenses between an idea and a snowmobile in your trailer.
Before a snowmobile is built, it starts as an idea. These ideas require highly skilled engineers to build expensive prototypes and see if theories can be translated to the real world. If you look at a snowmobile from 20 years ago, they are almost unrecognizable. The snowmobile consumer demands consistent improvement to keep buying new models yearly. The number of recent innovations is astonishing, and the trend of more electronics keeps being added to these machines making them advanced pieces of machinery.
The main cost of research and development is engineer wages and prototype costs. The manufacturers take a large amount of risk investing in new ideas, hoping it will pay off with higher vehicle sales.
When a new generation of snowmobiles was released, a massive investment in tooling was made to manufacture the 7000 parts that go into a snowmobile. The plastic molds required for a new chassis cost hundreds of thousands of dollars alone and need multiple years of sales to break even. Tunnels are a significant factor in tooling costs as most change with a new chassis. If you buy a first-year model sled, chances are the manufacturer is still in the red on the tooling costs.
Creating a snowmobile takes a lot of plastic, metal, and rubber. Manufacturers must raise prices when these raw goods go up to preserve margins. Call it greed, but if they do not make money, there are no incentives to produce a snowmobile.
The last few years saw a lot of interruptions in the supply chain. The Texas freeze of 2021 had a significant effect on the factories where base ingredients for rubber and plastic were made. This took a lot of plants offline for about four weeks creating a massive hole in the supply chain already struggling with record demand.
Steel and aluminum also saw drastic price increases over the last two years.
While making everything in-house sounds like a great idea, it’s not realistic. Some parts have low volume but require expensive machinery or workforce to create and would not be viable in-house unless you want to pay $40K for a new snowmobile. Many parts are outsourced, like gauges, wire harnesses, and ECM. These products also usually come from overseas, so shipping costs also factor into bringing these in-house.
Now that we have all the parts, it’s time to put them together. In the factories, these machines are built at is a work of art. Each area is well thought out to improve time and efficiency. Without the people to power it, there would be no snowmobiles produced. Many workers are highly skilled and demand a high wage. In addition, many factories are located in remote areas with lower populations, so it’s more difficult to attract workers. They may have to incentivize higher wages, bring people in from out of town, and cover their housing. It’s an expense that is well worth the price as it benefits and supports many families in the area.
If you build it, they will come into a total farce regarding marketing. You may think that since there are only four leading snowmobile manufacturers, not much marketing needs to be done to sell these snowmobiles, but that couldn’t be farther from the truth.
Each year’s launch videos have to be produced to show off new features, dealer meetings have to be put together, and brochures printed. All these factors into an average cost to get a customer to buy that snowmobile. Marketing entails everything from trade shows to dealer education and advertising itself. Without it, fewer machines would be sold, and the cost would be even higher.
The company needs divisions and infrastructure to operate, similar to marketing as an expense unrelated to the production of the machine itself. This can be seen as insurance, leases on a property, and software licenses. These can add up but are supported by all Powersports segments, bringing down costs.
It costs money to bring your snowmobile from point a to b, and you are paying for it by purchasing a new unit. Diesel fuel has reached all-time highs and is drastically more than in previous seasons. A trucker shortage doesn’t help the scenario either! Some manufacturers are charging extra to cover these costs this year with various fees. Still, the likely hood of these going down or going the way is the highest out of all the expenses.
You may think the warranty on your snowmobile is free, but it is baked into the cost of the new machine. Some departments forecast the potential cost for warranty of all of the model year’s units and come up with a number to include in the price. Factors they consider are historical fail points, average mileage ridden, and the previous year’s warranty liability.
You may think your dealer is making a fortune with the price of these machines ranging from $8,000 to $25,000. The truth is that the dealer has a small margin, and expecting a significant discount is unrealistic. Dealers make the majority of their money on services and parts. The dealer is probably making between $500-$1,500 on a machine.
MSRP and out-the-door pricing are two very different things. Figure to pay $500-$2,500 in sales taxes to call that snowmobile yours. Many states collect sales tax on used snowmobiles when you register and get to double dip on that one machine. Unfortunately, there is no beating getting out of this one unless you want to risk jail time.
Used snowmobile market
The cost of a new snowmobile has a significant effect on used prices. There is a concept called replacement cost, and it’s used as leverage in the pricing of used vehicles. When new inventory is high, and the OEMs are offering a lot of rebates, that puts a lot of downward pressure on used prices. When demand and inventory are low, it pulls prices of used prices back up. This works because each buyer has a threshold for what they will pay for a snowmobile. If a used one is priced close to a new one, the person will sway to a new snowmobile. If the prices of the new sled go up, that window just went up for a used machine. Right now, the climate is favorable for the sellers as new production is still limited, and floor models face extra market condition fees.
Why are prices rising faster than normal
There are many factors driving costs up for new snowmobiles. It all ties down to supply and demand. We are not talking just the demand for snowmobiles but the raw goods it takes to get them from point a to b. There are limited supplies, and the raw material goes to the highest bidder. The manufacturers are left with either no or less product or raise prices to accommodate the higher bids.
Other factors are the cost of energy. With the mess in that industry driving rates up, it is more expensive to operate a factory and transport products. While these are spread over numerous units, it’s still a bill that needs to be paid.
We still think supply will be constrained for 23-24 model years, but demand may be reduced enough to ease the tension. Raw goods will be easier to come by. Still, chip demand as a whole is making things very difficult to make products with electronics. We haven’t seen any leftover deals since the fall of 2020 because price drops are not needed to sell them. There may be potential for smaller leftover deals come spring.
It’s an excellent time to own a snowmobile and upgrade. Remember, don’t sell your current one until the new one has been delivered. You don’t want to be left without a ride come snow season!