South Florida RV Dealers Hit Hard by the Recession
The recession has hit RV dealerships in South Florida harder than in most areas of the nation.
A year ago, nine dealers were selling new motorhomes or towable trailers on the Treasure Coast and in Okeechobee County. Four have since closed their doors, according to TCPalm, West Palm Beach.
Nationwide, about 5% of 3,100 dealerships have succumbed, said Kevin Broom, spokesman for the Recreation Vehicle Industry Association (RVIA) in Reston, Va., while about 10 of 105 U.S. RV manufacturers have stopped production.
Industry experts say the lack of financing and withered consumer confidence have caused people to stop buying big-ticket items such as motorhomes and travel trailers. Those who do buy, demand steep discounts. High fuel prices restrict people’s travel habits, but the credit crunch has squeezed dealers from both ends.
RV production and sales are at their lowest point since 1980, when fuel shortages and high inflation cut deep into all aspects of the travel industry, Broom said.
Surviving dealers might get some help soon from the federal government.
The U.S. Small Business Administration announced a 15-month trial program set to begin July 1 that will provide guaranteed floorplan financing for eligible auto, RV, boat and other dealerships. Floorplan financing is like a revolving line of credit that dealers use to maintain an inventory.
John McCluskey, owner of Florida Outdoors in Stuart, said he hasn’t looked closely at the SBA financing plan, but “at least the government is trying to find ways to help make the RV industry healthier.”
RV dealers were given a painful reminder in the past year that, unlike automobiles, motorhomes are a luxury item people will put off buying during hard times.
For 25 consecutive years, RVs had been a growth industry. Even when the market began to soften in 2007, that year was still the fourth best for RV sales since 1980. The RV market softened further in 2008 when the credit market tightened, resulting in a 33% drop in sales from 2007.
This year, projections are for a 40% drop from 2008′s low sales. The 136,500 units manufacturers are expected to produce is the lowest since 1980. The bigger the vehicle, the sharper the decline.
“Towable trailers are selling better,” said Oliver Copley Jr., owner of Copley’s RV Center in Hobe Sound. “Anything over $100,000 is not selling as well. The problem now is we’re selling more used than new and trying to get more used stuff because we’re not getting trade-ins.”
Most Treasure Coast dealers agreed buyers are looking for more-affordable used RVs and smaller units.
Jim Runte, RV general manager at the Motor Home Superstore, which is part of the Vero Beach Chrysler, Jeep, Dodge dealership, said he recently added towable trailers to the product line for the first time. Runte said being part of the larger dealership helps lower overhead, but “we still have to work smarter and harder.”
Jack Miller, owner of Interstate RV in Fort Pierce since 1991, cut his overhead by reducing staff from 15 to six. He used to carry three times the $1 million inventory he has now.
“We’re still selling motorhomes, but we couldn’t make a profit on them because of bargain hunters,” Miller said. Most of his sales are lightweight trailers.
When other dealers closed, the market became flooded with vehicles discounted 30% or more.
Sales are down, but rentals are up, Broom said, indicating Americans still want to use motorhomes and trailers.
“Every study that’s been done shows RVing is the least expensive vacation you can take,” McCluskey said.
Paul Weimar and his wife, Kay, own Coastal RV Rental in Stuart. The Weimars own about half of the 17 vehicles they rent; he helps owners of the others get some income when they are not using them. Weimar used to have a bigger rental fleet, but “when gas prices went up and rentals went down, so many people sold their motor homes our fleet was reduced.”