Editor’s Note: The following is a column by Doug Gaeddert, chairman of the Recreation Vehicle Industry Association (RVIA), that appeared in the Winter issue of RVIA Today.
As we kick off 2013, our industry is enjoying rising shipments and incredible reports from RV dealerships and shows throughout North America regarding attendance, sales numbers and strong interest in RV ownership. That’s great news. But, I believe this news is even more encouraging when you consider the degree of consolidation that our industry has experienced since 2008; how close we really are as an industry to “storm adjusted” shipment highs for the last 10 years; and what this might mean to us all.
To begin, let’s examine the degree of consolidation the RV industry has experienced. If we take a look back to August 2008 just prior to the economic catastrophe caused by the dramatic bursting of the “credit bubble” and then fast forward to September 2012, the shift in numbers in the manufacturing and supplier segments of the RV industry is dramatic. In just over a four-year span, the number of RV manufacturers in the U.S. has declined nearly 35% with suppliers tracking at a nearly identical pace, declining by approximately 34%.
The reasons for the reduction in the number of “players” in the market are twofold. First and foremost, many companies were casualties of the severe economic downturn. Secondly, the consolidation of the RV market has been driven by the acquisition of both operating companies that were able to stay in business as well as the purchase of assets of those companies that failed.
Based on conversations with RVDA and RV dealers, I believe there has been similar consolidation in the retail market. Even though the number of retail locations might not have declined as much, the number of ownership positions certainly has. The number of dealers either moving to a multiple location strategy, or those that had multiple locations expanding their “footprint” has been substantial and that trend is continuing.
Meanwhile, the fourth key sector of the RV market – the finance sector – is expanding, not consolidating. After bottoming out in 2008 and 2009, the number of companies participating in the wholesale and retail credit markets is on the rise. With tightened credit practices and better margin spreads, those that stayed active in the RV market are profitable, enticing new lenders to jump into the arena.
Let’s also consider the wholesale shipment numbers. When looking at RVIA’s industry shipment totals between 2003 and 2012 there is an intangible that needs to be considered. How many shipments were actually “storm- or disaster-related” over this period?
The industry recorded a high of 390,500 shipments in 2006 and a low of 165,700 in 2008. The grand total for the 10-year period was 3,002,225 units, an average of 300,225 annually.
Everyone vividly remembers hurricanes Katrina and Rita, but disaster-relief units also were shipped in 2003 and 2004 as a result of various hurricanes, tornadoes, floods and other disasters. Although impossible to pinpoint the exact number, if we use a total of relief related units over the 10-year period of 250,000, the annual “adjusted” average would be close to 275,000 and the “adjusted” peak would probably be in the low 300,000 range.
With an industry finish of 285,749 units in 2012 and a forecast in the 290,000-unit range for 2013, our industry is enjoying steady growth. My personal opinion is that the 2013 forecast is too conservative and that we’ll break the 300,000-unit mark in 2013 and challenge what would be an “adjusted” 10-year high either this year or next!
So, what does this combination of consolidation, more competitive and readily available credit, and industry shipments approaching a 10-year “adjusted” high mean to all of us? With fewer “cats to herd” (easier to agree on things!) and a “growing pie”, I believe it means that if we continue to communicate well as an industry and focus on mutual objectives that are not “competitive issues”, we can realize levels of success that our industry, consumers, dealerships, and companies have never experienced!
In business and life, the key is finding the right groove. As an industry, we seem to have found our groove after some tough years. Pete Liegl, the “Wise Man” that I’ve worked for a long time, has a great saying that he’s used with me several times over the years. It seems to apply to just about anything. “Gaeddert, old boy, there are two things that will kill a guy…greed and chickens*%#!”
I’ll close by leaving you with that “Pearl of Wisdom” to ponder as to how you can apply it to your business or life along with my continued best wishes for success in 2013 and beyond!