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FMCA: Price, Trust, Credit Big Factors Today
Posted By Sherman Goldenberg On March 26, 2010 @ 4:53 pm In Breaking News,News In Focus | 3 Comments
That’s the message from an array of companies exhibiting their latest offerings at Albuquerque, one of two national rallies that Cincinatti-based FMCA is hosting this year for its members. The next one is Aug. 11-14 in Redmond, Ore.
Last week’s FMCA convention drew 1,781 family coaches, according to sources close to the Albuquerque rally. That’s a number that might have prompted disparaging remarks prior to the recession, but is more than likely viewed as a decent showing in the aftermath of a downturn that saw motorhome shipments dive a daunting 53.4% in 2009. FMCA spokesmen were unavailable for comment.
On the other hand, most agree, the market is seeing an impressive reversal that started in the last third of last year, and it is in that context that the March 22-25 convention was held.
Decatur, Ind.-based Fleetwood RV Inc. is experiencing a strong upswing in demand for its Class C’s and entry-level Class A’s, Mark Inkrote, national sales manager for those two product categories, told RVBUSINESS.com in Albuquerque.
In fact, Fleetwood, which introduced an entry-level Encounter Class A at last winter’s Louisville Show, has hiked its production rates to keep pace with the demand for its motorhomes, which, according to Inkrote, ranked first in national Class C retail sales for January. “We haven’t been in that position in a long time, and we expect the same success to continue through February and March,” said Inkrote, whose new Indiana-based company is a successor to California-based Fleetwood Enterprises Inc., which filed Chapter 11 last year.
What qualifies as a low-priced motorhome in this post-recessionary era for Fleetwood, which builds Tioga, Jamboree, Sport and Ranger-brand C-bodies, are Class C’s retailing for around $75,000 to $80,000 and Class A’s that sell for not much more than that. “We are seeing an MSRP on our Encounter of under $100,000 – a transaction price average of $80,000 to $85,000, which is where that customer is coming in and looking for a used product right now,” said Inkrote. “We’re saying ‘Look at the used, but you can also buy a new one for the same price.’”
By the same token, Justin Humphreys, national sales manager for Fleetwood’s American Coach line, sees some growth beyond the low end. “We are seeing an improvement on what we would consider the lower side of the high end market,” he said. “Our Revolution actually doubled sales versus February last year and that’s a good-apples-to-apples comparison because we weren’t in the reorganization period yet. We are seeing a lot of people who had some 45-foot, big heavy diesels trade down into the Revolution, and it offers a great value as well.”
Having been out on the road extensively visiting dealers, Newmar Corp.’s senior management is focused on maintaining long-term relationships on the assumption that those are the key ingredients for future stability and growth.
“This is a continuation of something that we started last September,” said John Sammut, vice president of sales and marketing for the Nappanee, Ind., company. “We decided we were going to get out in front of our dealers during the tail end of what has been a very terrible time in our industry, as well as look for prospective dealers in markets where we’re currently unrepresented.
“We’re just re-emphasizing the fact that Newmar did what it had to do during this last 18-month period,” he added. “We made some tough decisions, but they were solid decisions. The company is still strong and well capitalized and we’re running five days a week production. We’ve been fortunate enough to be doing that since September. A large part of that is due to the face time we’ve spent with our dealers and acquiring new dealers for our products in markets that were vacated by some attrition that has happened in the dealer network over the last year to 18 months.”
Looking back at those conversations with dealers, Sammut adds, one of the most consistent messages is that the credit crisis continues, despite the market’s tentative resurgence. “The biggest problem dealers have got is with the banks,” Sammut told RVBUSINESS.com. “Hopefully, sometime in the future, the banks will loosen up. We still hear all kinds of horror stories about customers that come in, have great credit scores, but they don’t get financed.
“That’s probably the biggest concern the dealers have,” he noted. “But that hasn’t kept us from signing up new dealers. And we’re setting them up with more of our entry-level product, but even our high-end is starting to come along, too.”
Newmar Chairman and CEO Dick Parks agreed that the credit situation has not eased to the extent that anyone would like. “That’s absolutely true,” said Parks. “We would be selling a lot more higher end product if credit was a little bit more relaxed. The banks were too loose at one point, and then came the big downturn, and now they are too tight. We’d like to see them get into the middle someplace.
“I don’t think the banks understand our business,” he noted. “They want zero liability. Basically, that’s how they are running their businesses now. They want zero risk – retail and wholesale – and they are trying to tell dealers how to run their business, strictly based on the fact that they don’t want any risk.”
On the other hand, Newmar President Matt Miller points out that the recession is perceptibly lifting. “No question,” said Miller, son of Newmar founder Mahlon Miller. “We’ve definitely come through the worst of it. The market is not as strong as we’d like to see it. But like Dick was saying, the main problem is the banking situation. If the pendulum were somewhat closer to the middle, our business would be much stronger.”
“The biggest thing that has changed from a year ago that we’ve seen in 2010,” adds Sammut, “is that consumer confidence has improved and their willingness to get serious and talk about the purchase of a recreational vehicle product has greatly improved from a year ago. Again, the single limiting factor about how quickly or how gradually our industry recovers is in the hands of the financial institutions.”
Jim Jacobs, recently named general manager of the Jayco Inc.’s Entegra Coach and Starcraft operations after serving as vice president of sales and marketing for the Middlebury, Ind.-based firm, says he’s been seeing “fantastic” retail show attendance, even if those attendance figures don’t always equate with sales totals. Having said that, Jacobs noted, the Middlebury, Ind.-based manufacturers is doing well.
On the towable side of the business, less expensive products are performing best – including lightweights – while higher-end fifth-wheels are still a bit soft. “It’s not where we want it to be,” said Jacobs. “But, overall, we’re pretty pleased about where we are in the markets.
“On the motorized side,” he continued, “we’re doing pretty well. In fact, we’re pleasantly surprised. We just announced we’re putting a significant addition onto our Class A plant and it’s going to boost our production capabilities well beyond where we are today. And we need that. Quite frankly, we’ve got a backlog on the Entegra Coach side that is much bigger than we are comfortable with.”
Although Jayco is fairly new at the Class A game, Jacobs pointed out, things are going well with it in the early stages – a time during which Jayco has signed some high volume and reputable dealers. “We think that (Entegra) is going to be a significant growth opportunity for Jayco,” said Jacobs, adding that the key to navigating today’s “tough” motorized market is “trust” as the recession lifts.
Toward that end, Jacobs maintained, it seems as if the history, strength and reputation of Jayco are boosting the company’s new Entegra Coach division.
“And we’re seeing the same carryover onto the retail side of it,” maintained Jacobs, whose company had a brief foray into the Class A business seven years ago. “People are extremely familiar with Jayco, and when they walk in our Entegra Coach product, they are very accepting of the fact that this is a good long-term company that bought out the assets of Travel Supreme, and Travel Supreme had a pretty good reputation in the industry as well. It’s been a good marriage for us.”
Convincing wholesale and retail customers that Jayco is in the Class A market for the long haul is the key, said Jacobs. “What we’ve done with our Entegra Coach, the commitment we made to brick and mortar by adding on to our manufacturing facilities, I think people are really starting to come around to the idea that we are serious about the Class A market and won’t relive 2003 all over again and we will be a long-term player in the Class A market.”
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