With the RV industry starting to pick up a little momentum, some 140 dealers gathered in Middlebury, Ind., this week (June 22-24) for Jayco Inc.’s ”Homecoming” to be followed Thursday and Friday by dealers handling Starcraft towables and Entegra Class A motorhomes.
”Dealer attitudes have been extremely positive,” Jayco President Derald Bontrager told RVBusiness during a break in the action at Jayco’s main complex on Ind. 15. ”The biggest negative we are facing this week is the availability of product. Our lead times have grown with the orders we’ve taken in the last 30 to 45 days, which is a good problem to have.”
Jayco, operating its Jayco, Starcraft and Entegra divisions with a 1,200-person workforce that is about 45% smaller than a year ago, is offering new 2010 Jayco products that include the Precept Class C motorhome, the newly redesigned Baja folding camping trailer and Recon ZX sport utility RV.
New Starcraft products include a redesigned Lexicon fifth-wheel and the redesigned Starcraft 36RT folding camping trailer.
The dealer gathering included factory tours and a ”meet-and-greet” Amish-style awards dinner Monday night at Das Dutchmen Essehnaus restaurant in Middlebury. ”The dealers really enjoy being here in Middlebury,” Jayco Chairman Wilbur Bontrager said.
Jayco’s management, at the same time, is convinced that the RV industry is beginning to slowly emerge from the nation’s deep recession, but still faces wholesale and retail lending challenges.
”Retail lending from national lending sources has eased considerably from where it was,” reported Jim Jacobs, vice president of sales and marketing. ”But I think most dealers have simply found another alternative if that’s what they needed to do. We hear a lot of credit union talk out there, and in fact, some of the credit unions are being very aggressive with their retail lending.”
An uptick in retail traffic is equally evident, Derald Bontrager said. ”Six months ago, they (dealers) couldn’t get anybody to walk though the door hardly,” he said ”Today, some dealers are seeing record days on their lots in terms of the number of customers coming through the door. Pent-up demand is real.”
On the wholesale side of the equation, Jayco continues to take a wait-and-see attitude. ”Our immediate sense is that it’s certainly gotten better, but it’s not back to the atmosphere that it was 18 months ago,” Jacobs said. ”Lenders have eased a little bit and they’ve given us more availability with dealers.
”But I think the flooring companies are going to play a critical role in the fall and winter markets,” he added ”How willing they are to allow dealers to inventory product is going to be a key component of what goes on this fall.”
Despite media reports that have tended to make the RV industry appear ”irrelevant” during the global recession, Wilbur Bontrager contended the RV lifestyle is not going to go away.
”I maintain that as long as people take vacations, our industry will not be irrelevant,” he said. ”The long term outlook is very good. (The industry) may come back at a slower pace than it has in the past. It will gradually recover. I don’t want to put percentages on increases, but we should see increasing strength and recovery over the next two or three years.”
Nonetheless, there may be more industry fallout due to the economy. ”There could be more of a contraction, not only manufacturers, but suppliers also,” Wilbur Bontrager said.
Given the bankruptcy of Fleetwood Enterprises Inc. and the purchase of bankrupt Monaco Coach Corp.’s assets by Warrenville, Ill.-based Navistar International Corp., Jayco’s luxury Entegra motorhome division is well positioned for a recovery, according to Jacobs.
”Frankly, with the two largest Class A manufacturers out there in complete disarray, we actually feel good about our position with that product,” Jacobs said. ”The next six to nine months probably will be a very slow ramp up for us with (Entegra). But long term, we know we can position ourselves as a very viable, very strong player in that market.”
”On the retail side, (dealers) are very concerned about aligning themselves with manufacturers that they believe are going to be here long term,” Derald Bontrager said. ”We talked about it in our opening remarks. We will be here.”
With regard to the Starcraft brand, Jacobs said Jayco wants to make it ”an all-inclusive” brand.
”We want to create a brand that dealers can look at and say, ‘I do not have any holes in this offering and it is something that I can build my entire dealership around.’ We have made huge strides in that arena in the last several months.”
A small but influential group of RV manufacturers and state executives met Thursday (May 21) in Elkhart, Ind., to hear a proposal to bring the “Invest in America” program to the RV industry.
Hoping to copy a program that has paid some dividends for the beleaguered domestic auto industry, Drew Egan, president and COO of CUcorp, a subsidiary of the Michigan Credit Union League, led the informal gathering at the RV/MH Hall of Fame and explained how the program could be adapted to the RV industry too.
It involves harnessing the marketing potential of credit unions, which typically finance about 15% of Chrysler’s auto loans in Michigan but upped that share to 40% in January thanks to the “Invest in America” program and still held a 25% share through March.
After successful pilots for GM and Chrysler in December, a nationwide program was launched Jan. 8. Through March over 85,000 vehicles have been sold for GM and Chrysler, he said.
“This was done during some of the worst economic conditions in our history and during months that are considered the slowest for the auto industry,” Egan said
Michigan auto dealers have made statements that, “were it not for credit unions, some of them would be out of business right now,” he indicated.
The meeting, which Egan told RVBusiness was “very preliminary” in nature, helped him make some early conclusions about how “Invest in America” could help the RV industry. For Egan, who has owned an RV but confessed he didn’t know that much about the industry itself, it was a learning experience too.
Trying to mirror the auto program for the RV industry “is not going to work,” he said. “There aren’t many similarities between the way their business models are structured.”
For starters, RV dealerships are not generally franchised as they are in the auto industry, he said.
“In the auto industry, it’s our contract with Chrysler and General Motors that drives this program. It’s the manufacturers that CUcorp has a contract with.”
“In the RV industry, what came out of the meeting yesterday, the RV manufacturers are in really tight circumstances and they think the dealers would be in better position to drive the ad pools and discounts. And it came out that manufacturers don’t put the amount of dollars into advertising on a percentage basis as the auto industry does. It’s driven (in the RV industry) by the dealer base.”
Egan said he had hoped for more dialog from the RV manufacturers present at the meeting but soon realized, “I’m not going to get a lot of feedback from these guys in public because they are competitors with each other.”
Other attendees included state association executives from Indiana, Michigan, Pennsylvania and Florida and an unnamed RV dealer, he said.
He said he has great hope that his idea can be implemented to help the RV industry. Like Detroit auto manufacturers, Egan said, “We’re not giving up. We’re just retooling.”
Egan said he will either reach out on an individual basis to a few large manufacturers to get a base to start with or go to key states, like Florida, California, Texas and Michigan, to brainstorm how he might adopt this program on a dealership basis rather than at the manufacturer level.
He said he will hold a conference call next week to follow up on this week’s meeting.
In his original proposal that was distributed with help from the Recreation Vehicle Industry Association (RVIA), Egan proposed to have CUcorp “use its marketing structure to leverage the existing relationships with over 1,400 credit unions nationwide to promote an RV discount to over 50 million members. The affinity and trust between these credit unions and their members will provide needed financing sources and increased sales of RVs. This is particularly valuable during the current economic recession where consumers are looking for needed financing and value in their purchasing decisions. Credit union members trust their credit union to provide them with REAL discount purchasing offers.”
He noted that credit unions are organized around occupational groups that are prone to support U.S. companies. “We are leveraging off of that patriotic sentiment to boost sales for U.S. employers. With a foundation of 1,000 large credit unions, the “Invest in America” program will quickly launch results for the RV industry through a partnership with CUcorp.”
Other recent examples of the “Invest in America” program include include AAA Michigan, Sprint/Nextel, Blue Cross/Blue Shield and FIS Card Services.
The partnership with AAA has helped AAA Michigan build the second‐highest market share for auto insurance in the state of Michigan through the offering of credit union member discounts to Michigan’s 4.4 million credit union members. Over 70% of AAA’s auto insurance business can be attributed to the successful credit union member discount program, he said.