RV industry may be doing a U-turn
Lured by bargains, buyers are slowly returning
Robert and Barbara Nicolson, retired supermarket employees from Sedona, Ariz., recently traded in their 2006 motor home for a new Tiffin Allegro Bus that lists for $355,000. Amenities include a dishwasher, washer and dryer, full-size refrigerator and 11⁄
“How nice is it? Well, I’m having a hard time convincing my wife that it’s time to go home,” quipped Robert Nicolson from a Petaluma, Calif., campground.
The couple — he’s 72, she’s 68 — “were very happy with the deal” of unspecified proportions that they negotiated, in which they unloaded their old 40-footer, Robert said. Added Barbara: “We figured, ‘What are we waiting for? We’re both healthy. Let’s enjoy it.’ ” RV manufacturers and dealers would love to see more people like the Nicolsons. During the last few years, the recreational vehicle industry suffered along with consumers because of record-high diesel and gasoline prices, the recession and the credit crunch. Now, U.S. retail sales of RVs have risen, although by only 3%, to 92,974, in the first six months of the year compared with year-earlier sales.
Experts and RV dealers attribute the increase to relatively stable fuel prices, the improved economy and the cautious easing of credit, especially for motor homes that sell for $100,000 and less. On top of that, many dealers are offering hefty discounts to get the big buggies moving again.
Joe Altman, president of Altmans Winnebago, said consumers were still holding back. The number of people calling and visiting the Carson
dealership and hits on the dealership’s website have increased 10% to 12% over last year, but sales are only inching up. That’s despite some large markdowns at Altmans, such as a 2010 Winnebago Vista reduced to $82,939 from $103,716 and a 2008 Winnebago Chalet discounted to $74,939 from $107,755.
To get customers to buy, “they have to have a feeling of wealth in the equity of their homes and investments. They have to feel that their income stream is secure. And if they already own an RV for a trade-in, it’s good if it’s worth more than they owe,” he said.
Altman has been pushing for sales at the lower end of the market.
“RVs above $100,000, we’re avoiding those. It’s still tough to get a loan for them,” Altman said, adding that customer service is more important than ever even when people leave the dealership without buying.
“When they do decide to buy, I want them coming back here,” he said.
The RV industry is coming off the worst sales period since 1979-81. Then, it was a matter of high unemployment, fuel shortages and long lines at filling stations, double-digit interest rates and the implementation of the 55 mph speed limit.
Through the first six months of 2008, sales of recreational vehicles of all kinds totaled 135,451. That was a month before diesel prices topped $5 a gallon in some parts of the U.S. and gasoline rose to more than $4 a gallon. In the first half of 2009, sales dropped to 89,839 vehicles, a decline of nearly 34%.
Those numbers tell only part of the story. The two most expensive classes of RVs fell further than all the rest. Sales of the roomiest and most luxurious Class A motor homes, vehicles that can cost as much as $400,000, declined by more than 45% in 2009. At the next level, unin-tuitively labeled Class C, motor homes that cost as much as $140,000 saw a sales drop of 42%.
The RV industry’s ups and downs played out at Fleetwood Enterprises of Riverside.
One of the oldest names in the business, Fleetwood was declared the industry sales leader in 2007. In 2008, it was shuttering factories and slashing its payroll by 70%. In 2009, Fleetwood filed for Chapter 11 bankruptcy protection, and its assets were sold. Fleetwood’s motor home division was acquired by a private equity firm, American Industrial Partners.
Many long-standing RV owner groups have disappeared. The California chapter of the Fleetwood Travelcade Club, founded more than 50 years ago, was attracting so few RVers to gatherings that leaders decided to disband last March.
“We used to get 500 RVs at our events. The last one we held, in Yuba City [Calif.,] in March, had 78 RVs. That was the swan song of our club,” said Kathy Sexton, whose husband, Mike, served as the group’s last president.
Sexton said some of the old members would try to stay together in a new group they have dubbed California Dreamers. A planned get-together in Hemet is expecting to attract just 10 couples.
“We’re not expecting to have more than 20 rigs at our events,” Mike Sexton said. That’s in spite of the fact that the new club will welcome owners of all makes and models of RV, not just Fleetwoods, as the old group had.
Even now, as sales recover, most of the increase has come in cheaper segments of the RV market. Motor home sales are strongest among Class B offerings, which top out at around $74,000, while the generously appointed Class A varieties are still on the decline compared with 2009, with sales down 8% through June to 5,242 vehicles. That was half the number recorded during the first six months of 2008.
Those who have been buying during this period have been frugal types willing to be patient and fight for a bargain.
Chuck and Alice Jarocki of Clovis, Calif., bought a “pop-up” folding trailer camper about a year ago on E Bay for just $5,500 after a dealership grew weary of trying to sell it for nearly $9,000.
The Jarockis are avid campers who decided it was time for a step up from tents and sleeping bags on the ground.
Their trailer has a heater with a regular thermostat, a refrigerator, a three-burner stove, an outdoor shower and a portable toilet. Best of all, the Jarockis say, it has a queen-size bed.
“That sleeping bag just wasn’t cutting it,” said Alice, 73. Chuck is 80. “You can stay in this trailer for a week and still be comfortable.”
HOUSE HUNTING: Barton Holcomb, a Murrieta retiree, checks out a new motor home at Mike Thompson’s RV Superstore in Santa Fe Springs. Holcomb already owns an RV and was thinking of trading up.
READY TO ROLL: Motor homes in several shapes and sizes await shoppers at Mike Thompson’s RV Superstore in Santa Fe Springs. Sales of the least expensive models are driving the market now.
THAT NEW RV SMELL: Salesman Patrick Henry, right, assists shoppers Karin Meyer and Barton Holcomb of Murrieta at Mike Thompson’s RV Superstore.