Several RV stocks rode the shirttails of encouraging news from the Federal Reserve Board to close higher on Wall Street today (Aug. 12).
Six of the 10 publicly held stocks tracked daily by RVBUSINESS.com closed higher on Wall Street, led by Spartan Motors which rose 6.64% to close at $5.62. Drew Industries Inc., Equity LifeStyle Properties Inc., Flexsteel Industries Inc., Thor Industries Inc. Winnebago Industries Inc. and Navistar Internal Corp. also closed higher.
A more upbeat Federal Reserve is reassuring investors that they’ve been making the right bets, according to an analysis by Associated Press. Stocks bounded higher today after the central bank said the economy appears to be “leveling out” rather than simply shrinking at a slower rate.
The Fed’s more positive take on the economy compared with its assessment in June wasn’t surprising but it still bolstered hopes that the economy is in fact rebounding.
Today’s advance restarted the market’s summer rally after a pause on Monday and Tuesday. Major market indexes jumped more than 1%, including the Dow Jones industrial average, which jumped 120 points.
Investors drew reassurance from Fed policymakers’ comments. The central bank left interest rates unchanged, as expected, following a two-day policy meeting.
“They did really endorse the fact that we’re moving into recovery, not searching for the bottom,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.
Stocks have been rallying much of the past four weeks on expectations that the economy is strengthening.
The Fed also said it would slow the pace of its program to buy $300 billion worth of Treasury securities so that it will close at the end of October, rather than September as originally intended. The central bank has bought $253 billion of the securities so far. The program is designed to reduce rates on mortgages and other consumer debt.
“The fact that they are going to wind down the Treasury purchases I think leaves the clear impression that they are quite satisfied with the progress we are making in the recovery,” McCain said.
But some analysts are skeptical that the market can maintain its climb even with the Fed’s more optimistic words. The S&P 500 index is up 14% in little more than a month and 48.7% since it fell to a 12-year low in early March.
“I looks like a pretty sharp rise to me to have a lot of sustainability,” said Dan Cook, senior market analyst at IG Markets in Chicago.
According to preliminary calculations, the Dow rose 120.16, or 1.3%, to 9,361.61. The Standard & Poor’s 500 index rose 11.46, or 1.2%, to 1,005.81, while the Nasdaq composite index gained 28.99, or 1.5%, to 1,998.72.
Rising stocks outpaced those that fell 5-to-2 on the New York Stock Exchange, where volume came to a light 1.2 billion shares, flat with Tuesday. Light volume can skew price moves but is typical of late summer when many traders take vacations.
The gains came a day after the market posted its biggest loss in five weeks. The Dow fell 97 points as investors worried about the health of banks.
Two couples are appealing an Armstrong County, Pa., judge’s ruling that they must pay property tax on their park model trailers.
Both found the ruling unfair and argue in filings with the Commonwealth Court that their trailers are not permanent structures and can be moved from land they lease along the Allegheny River, according to the Pittsburgh Tribune-Review.
Judge Kenneth Valasek ruled in November that trailers owned by Keith and Valeri Lazor and Michael and Jeanne Gelormino are subject to real estate tax, upholding a decision by the county’s board of assessment appeals.
Valasek stated in his opinions that because the Lazors and Gelorminos have added porches, steps, landscaping and outdoor lighting, the trailers are more of a house than a recreational vehicle.
“There is no doubt that this model is not intended” to be moved often, Valasek wrote.
The Lazors and Gelorminos were two of four nearby trailer owners who appealed the board of assessment’s ruling to the Court of Common Pleas, Valeri Lazor said. Valasek handled the Lazors’ and Gelorminos’ cases while Judge James Panchik was assigned the hearings of Anthony Mariani and James Davidson, who have trailers not far from the couples’ on property owned by Davidson.
“All four of us agreed we would fight this,” Valeri Lazor said. “It’s wrong. They’re (recreational vehicles).”
The trailers are generally used as weekend getaways or summer vacation homes, all in Rayburn along the Allegheny River. The four trailers are registered as vehicles, the owners paid vehicle sales tax and all are winterized.
After the hearings, Valasek found that the Lazors and Gelorminos are subject to the tax. Panchik found that Mariani and Davidson are not.
That’s where unfairness comes in, Valeri Lazor said, because all four of the trailers are the same.
“It’s the principle of the matter – not about the money,” she said. “It’s wrong that they won and we lost.”
Keith Lazor said it would take a couple hours for him to ready the trailer, “and then I’d have it gone.”
The Lazors are contemplating packing up their trailer and leaving if the Commonwealth Court doesn’t rule in their favor.
Valeri Lazor said she and her husband had their trailer at its current spot for about a year when they were informed it was being taxed.
Her brother Michael Gelormino said “I wasn’t there 24 hours” when he learned that his trailer was subject to real estate tax.
He couldn’t believe that after paying vehicle taxes on the trailer that he’d have to pay real estate taxes for property he doesn’t own, he said. Gelormino finds the tax unfair because it doesn’t apply to every park model trailer in the area.
“They’re the same kind of camper as ours,” he said. “It’d be different if I owned this property.”
The Gelorminos have to be on watch constantly because the river might rise and their trailer could be damaged, Michael Gelormino said. It would take a couple hours to get the trailer ready to be moved, he said.
“It is still susceptible to flooding down here,” he said. “I’m not in a flood-free zone.”
The trailer is covered by the Gelorminos’ vehicle insurance, he said.
“This has a license plate,” said Jeanne Gelormino.
The Lazors’ and Gelorminos’ trailers sit on blocks, the wheels are attached and there is no permanent foundation, they said. Porch roofs can be removed and utilities disconnected to move the trailer, both couples said.
“You can’t live in this thing all year-round,” Michael Gelormino said.
If the Gelorminos lose the appeal, “they’ll see how mobile this is,” he said.
In ruling that Mariani and Davidson are not subject to the tax, Panchik wrote in a December opinion that analysis must “be on a case-by-case basis.”
He found that neither trailer was permanently attached to the land and the owners have no intent to do so.
“To find to the contrary would necessarily then make taxable every mobile home unit that hooks up at an overnight park,” Panchik wrote.
The Lazors and Gelorminos said the tax goes against making the county accessible for recreational opportunities.
“We bring to this town,” Jeanne Gelormino said, by buying things at local stores during their stays.
Valeri Lazor expects their cases to be heard in mid-October when the Commonwealth Court convenes in Pittsburgh.
Editor’s Note: This analysis was prepared by the tickerspy.com staff and was published Monday (July 27). Tickerspy is a free investing website where you can track multiple stock portfolios and compare against 250 proprietary indexes tracking themes from nanotech to agriculture to precious metals.
The automotive sector remains a laggard, but less practical modes of transportation are booming.
At some points during the recession, recreational vehicle stocks underperformed automotive stocks. At the time it seemed logical — people need cars, and therefore will find a way to buy them, perhaps at the expense of less practical luxury vehicles. Now that the economy is on the rebound, however, recreational vehicle stocks are outperforming by a long shot. Just what is driving these high-power, high-priced alternative modes of transportation?
Winnebago Industries Inc. unveiled its 2010 lineup last week, and the stock has since rallied by 20%. President, CEO, and chairman Bob Olson remarked, “Our 2010 model lineup is without a doubt the best we’ve ever offered.” He continued to note that the response from company dealers was “overwhelmingly positive.” As of October 2008, the company’s suggested retail prices for new motorhomes ranged from approximately $61,000 to $306,000. As of August 2008, nearly 50% of annual units sold were larger models, built directly on medium- and heavy-duty truck chassis.
Thor Industries Inc. is the Recreational Vehicle Index’s most popular component among professional investors. At the beginning of Q2 four Pros counted the stock among their top-15 U.S. listed equity holdings. The stock is a laggard over the last month, up 8%.
As of this writing, the Recreational Vehicle Stocks Index is among the top-10 performing tickerspy Indexes over the last month.
Marine Products will be reporting earnings tomorrow, (July 28). Investors have bid up shares by 24% in anticipation in just the last week. The company specializes in the manufacture and sales of powerboats, catering to everyone from recreational fishermen to high-rolling sport yacht buyers.
Harley Davidson is up by over 30% over the last month. Like Winnebago, the company also recently rolled out its line of 2010 vehicles. Nine new Harleys were introduced, the most expansive in company history. Earlier this month, the company announced a -30% decline in second-quarter sales, and a massive -91% drop in profits.
All-terrain-vehicle (ATV) players Arctic Cat and Polaris Industries are also having a strong month. Polaris announced a -28% drop in Q2 profit earlier this month on a -25% decline in sales. CEO Scott W. Wine said the company gained market share in the off-road vehicle sector. Investors will see how that affects Arctic Cat’s bottom line when it reports second-quarter numbers.
Meanwhile, popular traditional automakers Toyota and Honda are ahead by less than 5% in the last month. Ford is up by 26% in the period.
Patrick Industries Inc., an Elkhart, Ind.-based manufacturer and distributor of building and component products for the recreational vehicle, manufactured housing and industrial markets, announced Monday (July 27) that it has completed the sale of certain assets of its aluminum extrusion operation located in Mishawaka, Ind., to Patrick Aluminum Inc., a member of the UMC family of companies.
Net proceeds from the sale were $7.4 million and are subject to final transaction costs and certain closing adjustments. Approximately $4.4 million of the net proceeds were used to pay down principal on the company’s term loan and pay off its economic development revenue bonds related to this facility. The remaining funds were used to reduce borrowings on the company’s revolving line of credit.
El Monte RV, one of America’s largest RV rental companies, has created a comprehensive information website portal for travelers planning to visit U.S. national parks by RV.
This approach allows anyone from around the world arranging a trip to U.S. national parks, forests or federal recreation areas to find complete information on campsites, fees and area attractions quickly, according to a news release. A single page on the El Monte RV Rental site links to National Parks Service (NPS) web pages for every state.
In addition, the Los Angeles-based recreational vehicle rental firm provides information on the America the Beautiful National Parks and Federal Recreational Lands Pass, an annual pass available through the NPS that allows non-commercial vehicles access to sites normally charging a per-person fee.
By combining information on recreational vehicles available for rent with a comprehensive guide to U.S. National Parks, El Monte RV facilitates streamlined travel planning. With more than 60 RV rental locations, the firm hopes to encourage RV rental travel planning by making national parks tourism a more attractive option
Alpine RV in Morgan Hill, Calif., is the latest victim of credit market and general economic woes that have led to a string of auto dealership closures in this area south of San Francisco, according to the Gilroy Dispatch.
The recreational vehicle dealership that has been in business on Condit Road since 2006 closed its doors July 8. About $10 million in new and used inventory was cleared from the dealer’s lot and will likely be sold to other dealers, according to Alpine RV owner Michael Jacque.
“The economy has been a challenge,” Jacque said. He specifically pointed to the bank’s “unreasonable” tightening of credit and financing requirements since October that made it difficult for him to continue replenishing his stock of new vehicles.
“Our bank is now exiting the RV business and they’re no longer forthcoming” with financing for more floor models, said Jacque, who has been an RV dealer for nearly 30 years.
Jacque was at the former Alpine RV site Monday afternoon (July 20) cleaning out the dealership’s offices.
He hopes the 35 employees of Alpine RV will find new jobs with another RV dealer that might take over at the same location. One such company is Pan Pacific RV Centers Inc., which is based in the Sacramento area.
“We are contemplating coming to the (Morgan Hill) marketplace,” Pan Pacific President Jim Shields said. The most likely location for a dealership would be the former site of Alpine RV as the necessary infrastructure is already in place. But he noted that Pan Pacific is “at the mercy of the bank,” and if the company is able to acquire the RV shop it would not be able to open it for at least another 60 days.
Sales have declined steadily and significantly at Alpine RV since its peak in 2007. That year, the dealer made about $56 million in sales of new and used RVs. In 2008, sales dropped to about $38 million, and this year it was on pace to make about $18 million in sales, Jacque said.
That echoes nationwide trends. In the first four months of 2009, RV manufacturers shipped 43,700 RVs to dealers – a decline of 61.7% in the same time period last year, according to the Recreation Vehicle Industry Association (RVIA). In 2008, about 237,000 RVs were shipped to dealers – about 33% less than were shipped in 2007.
Sales of smaller RVs, particularly towable models, were still strong at Alpine RV when it closed, Jacque noted.
“It was just difficult to ride out the storm” that began in early 2008, Jacque said.
The city of Morgan Hill has suffered from the lagging sales of RVs, and automobiles in general. Sales tax revenues from transportation-related sales — which include sales of new and used cars, RVs, motorcycles and driving fuel — have taken a “nose-dive” the last two years, according to City Manager Ed Tewes.
At their peak in the middle of 2007, sales tax revenues in the transportation category topped out at $2.4 million. In the first quarter of 2009, the most recent date for which information is available, those revenues totaled about $1.6 million.
Transportation sales tax revenues typically account for a third of all of the city’s sales tax proceeds. “We are very dependent on that sector,” Tewes said.
The city was dealt a substantial blow to its transportation sales tax revenues when Courtesy Chevrolet closed in April. Furthermore, down the road in Gilroy, the Pontiac Buick and Ford Lincoln Mercury stores closed in mid-February.
Although Tewes said he cannot legally disclose how much sales tax revenue an individual business generates, he said Alpine RV has “consistently” been one of the city’s top 10 sales tax producers.
And the city had an “economic incentive agreement” with Alpine to refund a portion of the sales tax it generated if it met certain overall sales minimums each year, according to city Business and Housing Services Director Garrett Toy. The city receives 1% of all sales taxes generated by businesses in the city limits.
Under the agreement with Alpine, the dealership received a rebate from the city for almost $56,000 earlier this year, and it agreed to make property improvements on its Condit Road frontage. Those improvements included the installation of a wrought-iron fence and decorative landscaping in front of the lot, Jacque said.
The city had a similar agreement with the previous occupant of the same lot, the Dan Gamel RV Center. They also have an existing similar agreement with the Ford Store of Morgan Hill, which so far has given an estimated $155,000 tax break to the auto retailer.
To recognize its promotion of a voluntary carbon offset program, El Monte RV will be a featured AAA Northern California, Nevada and Utah (AAA NCNU) Greenlight partner during the Auto Club’s annual Alternative Fuels Awareness Month in November.
The month-long initiative highlights the efforts of AAA Show Your Card & Save (SYCS) partners to promote alternative fuels and environmentally sound fuel consumption practices to their clients, according to a news release.
El Monte RV offers RV rental customers the opportunity to purchase carbon offsets. A carbon offset represents the reduction of one metric ton of carbon dioxide emissions, a principal cause of global warming. El Monte RV works with TerraPass to purchase these carbon offsets. The reduction occurs as TerraPass uses the proceeds of carbon offset sales to fund carbon emissions reduction projects such as wind farms, methane gas reduction and others.
El Monte RV leads the industry in promoting “green” RV rental practices and is the first recreational vehicle rental firm to promote a carbon offset program. For more information on El Monte RV Rental’s green rv rental initiatives visit the El Monte RV Green RV’ing guide.
Headquartered in Los Angeles, El Monte RV is one of America’s leading motorhome and RV rental and sales companies, catering to both international and domestic travelers. The company has experienced rapid growth throughout the United States and is the only nationwide motorhome rental company to offer the larger Class A luxury vehicles for rent.
When Brian Brawdy goes camping in his recreational vehicle, he doesn’t have to search for an electrical outlet.
He hauls his own power with him.
Brawdy, a self-described adventurer and explorer, travels the United States in a “green” truck camper – a unit that he developed as a showcase for what humans can do to protect the outdoors, according to the Kansas City Star.
Looking for a way to harness the energy that nature provides, he went to work to fabricate an environmentally friendly RV.
Much sweat, many hours and many dollars later, he came up with a futuristic vehicle that features solar panels, a wind turbine, rain gutters and a water-filtration system, and biodiesel fuel.
The energy that he stores in four 100-amp batteries is enough to power an air conditioner, microwave, refrigerator and television – without hurting the environment.
“This is my mobile base camp,” he said while leaning on his green RV at the recent Outdoor Writers Association of America national conference in Grand Rapids, Mich. “With this, I can camp anywhere.
“To me, it’s a vision of the future. When I was a kid, I always wanted to be an astronaut and build my own spaceship.
“This is my spaceship.”
Brawdy started by purchasing a Ford F-350 topped with a Lance camper. Then he went to work to turn them “green.”
His adventure began in 2007, when he was diagnosed with a form of skin cancer. Doctors were able to remove tumors on his lip, but he was unable to speak for a month.
As he recovered, Brawdy did some soul-searching.
“It was a very humbling experience,” he said. “I got to thinking: I am 48 and my gig is half over.
“This was a wake-up call. It was time to go for the things I really wanted to do.
“I had loved the outdoors, but I wanted to do something different. I wanted to take adventure to a new level.”
Brawdy, a former police officer in upstate New York and television reporter in Chicago, found that niche in his RV.
He went on an extended road trip, living fulltime in his RV and traveling the country. He hit every one of the lower 48 states, covering more than 60,000 miles.
During his “Conservation Through Exploration” tour, he endured everything from 140-degree heat in Death Valley to camping next to alligators in the Florida Everglades.
“I slept 320 nights in my camper last year,” he said. “This is my home, my new address.
“It’s my mobile base camp. I have gone mountain climbing, hiking, kayaking, backpacking and mountain biking in places I never thought I would be camping.”
Brawdy had developed a passion for the outdoors more than 20 years ago after his dad committed suicide. That experience was hard on Brawdy, but he found peace in the outdoors, off by himself.
Many years later, he drew on that passion when he developed his green RV. He admits that coming up with such a unit wasn’t cheap: He estimates that he put $140,000 into it.
Still, he considers the RV a bargain. He points out that he saves on the cost of campground fees. And he has no utility bills in this home.
“I think there could be a future in this,” he said. “Companies like Lance have shown an interest in manufacturing a green RV.
“For me, this was a way of proving that we can enjoy the outdoors without depending on an outside source. I am concerned about the environment and what we’re doing to it.
“I wanted to do more than just recycle old newspapers. I wanted to do something different.
“We have the sun, the wind, the rain. Why not put it to good use?”
Ron Haynes’ 35-foot recreational vehicle has all the conveniences of home, including a roomy bathroom, recliners, satellite television and the same brand and style of mattress he sleeps on in his Pella, Iowa, home.
“So I sleep well,” says Haynes, an avid camper – ummm, RVer. Haynes, 52, and his wife, Carol, 54, take their Winnebago Chieftain on four trips a year. And most of the summer, the home on wheels is parked at Cutty’s Campgrounds near Grimes, Iowa, where the Hayneses spend weekends. “We love the comfort and freedom of the RV,” Haynes says.
Baby Boomers such as the Hayneses make up the largest number of RV owners, according to Recreation Vehicle Industry Association (RVIA). The typical RV owner is 49 years old, married, with annual household income of $68,000. On average, owners spend 26 days a year traveling in their RVs, covering about 4,500 miles.
Camping, even locally, is a chance to get away from the daily grind, if only for a weekend, says Nocona Mollendor, assistant business manager at Cutty’s. The RVs she sees at the campgrounds have become more elaborate over the years, now including washers and dryers, fireplaces, expensive countertops, built-in computer stations and more, she says. “Those are their second homes,” she says.
Many of the Cutty’s visitors park their RVs there all season, some year-round. Some take side trips with their motor homes, others never move them, she says. Haynes, who is semi-retired from the Culligan water systems dealership he owns in Pella, takes yearly treks to Door County in Wisconsin and to Florida, Arkansas and other locales.
The trips are easier because of the RV, he says. “You are taking your home with you,” he says. “When we visit relatives, we don’t intrude on them. With the RV, we have our own beds and shower.”
The family cat nestles onto the dashboard for long trips, and there is never a worry about hotel reservations or crowded restaurants, he says. His grandmother was able to join the couple recently on a trip to Florida because in the RV she could plug in her oxygen machine. And the couple bring along their Wii Fit program so they can get do their daily aerobic exercise while on the road, Haynes says. “We make sure the curtains are down,” he says. “It keeps us on track.”
Like many RV owners, the Hayneses started their camping career in tents about 15 years ago. From there, they moved to a pop-up trailer. “As our finances got better, we went to a motorhome,” Ron Haynes says. Three years ago, they “traded up” to the Winnebago Chieftain, which has two slide-outs, a spacious living room, bedroom and bathroom, a roomy refrigerator and two air conditioners. Haynes already is crafting his wish list for the next RV.
“The next one will be a little bigger, run on diesel fuel and have a washer and dryer,” he says. He also would like a one-touch system for retracting the awnings, a built-in wind meter for the roof and a desk area for a laptop. “I might as well get it the way I want it,” he says.
Touring the United States in comfort appeals to Baby Boomers, says Mark Polk, owner of RV Education 101, which publishes books and videos on owning and operating RVs. The sour economy is taking a bite out of large motorhome sales, he says. As the economy recovers from recession, a new generation of RVs will emerge, he predicts. “They won’t do away with amenities, but they will scale down in size,” he says.
“They will be more fuel-efficient and be smaller and lighter, like the European version.”
Linda Schinckel and her husband, David, of Grinnell take their large Holiday Admiral motorhome on jaunts to the Iowa Speedway in Newton on race weekends or to campgrounds with trails, where they can ride their horses. “It’s like having our home with us wherever we go,” says Schinckel, 56. “We love to sit outside our RV with our coffee and watch the sun come up.”
The couple pull a horse trailer or a smaller one toting their Harley motorcycles.
“We just throw in our clothes and go,” Schinckel says. Their retirement plan will include a bigger RV and more travel, she says.
“It’s on our bucket list.”
Tour de France cyclists face a difficult task riding for three weeks. But negotiating the race route across vast countryside, ominous mountains and often in several countries is not easy in any transportation mode.
Several hundred vehicles follow the race every day, and arguably the most difficult driving responsibility must be transporting cyclists in their motorhomes to the start of each stage. Each team has at least one large coach, while some teams prefer two smaller recreational vehicles. Some of the highest-budget teams have three or four RVs in varying sizes, according to examiner.com.
The RVs are all top-of-the-line, detailed to meet the cyclists’ needs and used in different races throughout the world at a team’s discretion. The vehicles always also serve as ideal rolling promotional billboards for teams’ sponsors. All of the motorhomes feature elaborate custom paint showcasing the same products and services riders promote on their cycling attire.
Drivers of the motorhomes on a daily basis negotiate major French motorways, country roads and tight, narrow finishing areas where massive crowds line the course.
But just like the cyclists, the most difficult task facing team motorhome drivers in the Tour de France is when the race advances onto the steep climbs and harrowing descents of the Alps and Pyrenees mountains.
It may not require great aerobic skill, but how the recreational vehicle drivers negotiate the winding, narrow road is as impressive as the cyclists’ efforts.
Is there a change afoot in the RV finance arena that perhaps reflects an overall prospect for improvement in the U.S. economy and the recreational vehicle marketplace?
That’s hard to say. Based solely on the fact that Bank of America Dealer Financial Services and GE Commercial Distribution Finance — the two big dogs in RV finance — are talking to the press lately after months of silence during the depths of the recession, it’s certainly beginning to look that way.
Ellsworth “Ellie” Clarke, president of B of A’s Dealer Financial Services, last week provided an overview of B of A’s programs and the RV market in an interview with Jeff Kurowski, director of industry relations for the Recreation Vehicle Dealers Association (RVDA), that was posted on RVBUSINESS.com. And only yesterday (July 1), GE Commercial Distribution Finance’s Pete K. Lannon, managing director and president of GE Capital’s Motorsports and RV Group, addressed modifications to GE curtailment policies in a wide-ranging interview with RV Business.
Lannon also fielded questions on an array of other related topics, the crux of which is as follows:
What can you tell us about finance rates in general? We’re told that they spiked for GE in March across the board – including both the RV and marine sectors. Do you anticipate any sort of an easing of interest rates?
There are a lot of factors that go into interest rates. Part of it is the macro-economic environment, the general cost of funds and what it takes to raise funds in the marketplace. Another component is our cost of operations, and then there’s a risk component. So, we’re attuned to all of these items, and we would make rate adjustments in accordance with what they are telling us.
The Small Business Administration is beginning to provide floorplan financing for RV retailers. Has this played into any of GE’s decision, announced yesterday, to moderate its curtailment interest rates?
I think it’s a little early to see exactly how it (SBA financing) is going to be implemented. The SBA is still concluding its regulations, formulations, etc. I think any additional (financing) capacity in the industry for dealers certainly is welcome, particularly for dealers that are challenged. We just need to see what the final formulation is from the SBA. It’s still somewhat uncertain.
We’re told that GE occupies about a 25-35% share of the RV marketplace’s wholesale financing. Is GE looking to increase that share?
We have a significant share. I’m not going to speculate as to the exact amount, but we know we’re a significant player in the industry. We look to increase business that makes sense, that’s profitable for both us and for our dealers. Whether that leads to market share or not … we’re still dealing with an industry that’s been heavily impacted, and I think most of us are thinking more about just getting to the right size versus getting into a market share ‘game’ at the moment.
‘Right size’ could be applied to the RV industry as a whole. Do you feel that there may in fact still be too many dealers, as some have argued, for a downsize market?
I don’t know about too many dealers… What we’ve got is a situation (where) there’s still an imbalance of inventory in the field to the sell-through at retail. I don’t speculate whether it’s too many dealers. I do know that there’s too many units available right now. It’s depressing the sales prices of the inventory dealers are holding, and there just aren’t enough customers willing or able to make the purchase at the dealer level. We need a better balance for the industry to get healthy again.
So, GE’s decision to eliminate the interest hike isn’t necessarily a reflection of the company’s more confident outlook on the state of the industry?
We do have a fairly confident outlook. Let’s put it this way: we’re ‘cautiously optimistic.’ At this point, I don’t know if we’ve found the bottom quite yet, but if we haven’t, we’re awfully close. We’re seeing some positive indications in our RV business with the way inventory levels have come down, and dealer performance metrics are improving. They’re not healthy yet – we’re not prepared to make that statement – but we’ve seen a couple of months of upward trends in some important performance metrics that indicate that we think we are near, or have found, the bottom.
If you want to take a step up and look across the entire economy, Jeff Immelt, GE’s chairman and CEO, was quoted in London today (June 30) on behalf of GE with an outlook that said, “things seem to be brightening.” Again, I don’t think anyone’s prepared to say that things are where they should be or that they are absolutely healthy, but I think overall in a lot of areas besides the RV industry we are seeing signs of improvement on a lot of different fronts.
Another leading finance provider is telling the industry right now that they are in it “for the long haul.” Is GE?
We are going to continue to invest in and support this industry. We’ve been a very long-term player in this industry. When you think about the predecessor companies that were acquired by GE, we go back in the RV industry at least to the late ’70s, and our intention is to make sure that we are here through this cycle and back when the industry is healthy again. We want to be a participant in that.
How many times have you thought about leaving a job, but hesitated out of fear of the unknown – or, simply, an aversion to change?
Sally Bethea doesn’t know that fear. In her career, she’s been a medical librarian, a financial analyst, a sociology professor and – today – the president of a recreational vehicle repair business, according to the San Antonio (Texas) Express.
Her secret? When a job gets stale, Bethea moves on. In her view, life is too short – and working hours are too long – for boredom. Her latest venture, Full Service RV, was born out of the RVing lifestyle she and her husband, Don Crawford, embarked upon almost by chance.
Crawford suspected the U.S. economic downturn was going to be lengthy and, more than a year ago, suggested downsizing to trim the couple’s budget. The plan including selling their Mahncke Park home, but three dogs made it difficult to show the house to prospective buyers.
The solution? Move out of their 2,000-square-foot traditional home and into a home on wheels. The RV residency was supposed to be temporary, but they found themselves enjoying the lifestyle.
“Life is simple when it’s not cluttered with so many ‘things,'” Bethea said. “Moving into the RV required getting rid of a tremendous amount of stuff. But it’s much easier to stay organized when everything you own fits into a closet and a couple of drawers.”
As Bethea settled into the RV, she noticed her that fellow RVers often needed help with repairs – either to the RVs themselves or to the appliances and fixtures within.
“If your RV’s air conditioner goes out in the summer in San Antonio, getting it repaired quickly is a big deal,” Bethea said. “And none of the appliances in an RV are ‘normal’ – you can’t buy standard sizes to replace them. Don has always had great mechanical ability. One day, I said, ‘How would you feel about getting into RV repair?'”
Crawford was keen on the idea and he enrolled in a repair certification program. While Bethea takes care of marketing, accounting, software and maintaining the company’s website, fullservicerv.com, he handles the labor. The company is in its infancy, but the phone is ringing with requests for air-conditioning, awning, plumbing, generator, refrigerator and vehicle breakdown repairs.
She notes on her website, “Now we have an equipped tool trailer, a good software package to keep track of everything, a website you can use to view your own service records, Facebook for a little fun and a commitment to doing the very best job for you we can.”
Bethea, meanwhile, already is looking to the future – and, possibly, another career change. “I’m putting together a 10-year plan,” she said. “Perhaps we’ll be able to sell the business at the end of that period.”
A dozen white motorhomes clogged Alaska’s Kenai Holiday gas station parking lot Monday morning (June 22), giving locals a rare glimpse at the kind of caravan that has been conspicuously missing from the summertime scene so far this year.
“Our visitation is down about 20% for June,” said Natasha Ala, executive director of the Kenai Visitors and Cultural Center on Monday.
Ala said the center doesn’t keep track of recreational vehicle traffic specifically, but that she doesn’t doubt that vehicle traffic is way down this season, according to Kenai Peninsula Online.
“We’re definitely seeing less people,” she said.
A couple blocks away from the center, Beluga Lookout RV Park owner Jerry Dunn said business isn’t booming.
“It’s been off to a slow start,” he said.
The caravan pulling out of Holiday earlier in the morning had stayed at his park the night before, giving business a much-needed boost. The caravan participants hailed from Germany, and Dunn said many of his guests this summer are foreign nationals.
“We get them from all over the world,” he said.
Dunn said his business is also heavily reliant on retirees, many of whom have seen their stock portfolios and retirement accounts depleted by the economic downturn.
“This year it seems like business if off because a lot of people lost money in their retirement accounts,” he said.
The downward trend in vehicle traffic is nothing new. According to the state’s Office of Economic Development, highway visitors to Alaska have declined in each of the past three years, including a 6.8% drop from 2007 to 2008.
From the Alaska Public Lands Information Center in Tok, the first town of any size for visitors entering Alaska via the Alaska Highway, manager Lisa Conrad said she can’t yet say whether 2009 will be another down year for border crossings. She said things seem slow, but because of a bureaucratic snafu the state has yet to see any numbers for this summer.
“We have not been able to get the border statistics,” she said.
Conrad said the Department of Homeland Security is in charge of the data, and the state has been unable to get the feds to pass the numbers on.
“All we can do is sit and wait,” she said.
A spokeswoman for the U.S. Customs and Border Patrol’s office of public affairs in Washington, D.C., said she was unaware of any delay in getting border crossing numbers out, but was unable to provide any figures by the close of business Monday.
Even without hard numbers, Conrad said things in Tok seem to be slow.
“Just talking to the local businesses, it seems like it’s been down,” she said.
With out-of-state visitors electing not to travel as much, local tourism marketers have had to get creative in trying to attract folks to the Kenai Peninsula, which juts southerly from Anchorage into the Gulf of Alaska. Natasha Ala said one way Kenai has been trying to get more visitors is by trying to entice Alaska residents to take what she called “stay-cations.”
“In tough times, the strategy is to beef up the marketing efforts that we do,” she said.
That includes marketing the Kenai Peninsula to places like the interior of the state.
“We’re kind of an exotic destination for people from Fairbanks,” she said.
Although the peninsula’s roads are far from clogged with recreational vehicles, the poor economy hasn’t stopped everyone from heading north. Visiting Kenai with his wife and another couple from Arkansas, retired Sears mechanic Jerry Russell said the group figured seeing Alaska on wheels would be more fun than flying up.
“We just wanted to see the country,” he said.
Thus far, Russell said the trip has been worth every cent.
“It’s really been an enjoyable trip,” he said.
He’s put more than 5,000 miles on his motorhome, with “at least” another 5,000 left to go. And while many penny-pinching travelers may have elected to stay home this year, Russell said he’s in no hurry to get back.
“When the money runs out we’ll go home,” he said.
The Good Sam Club, the world’s largest RV owners’ organization with nearly 1 million member families, today (June 10) unveiled model motorhome “lemon law” legislation, developed in conjunction with RV industry officials and the International Association of Lemon Law Administrators (IALLA), according to a news release.
If enacted by a state, the legislation will provide specific rights and remedies for motorhome buyers against product defects if the motorhome does not conform to material provisions of the manufacturer’s warranty. If the motorhome purchaser can demonstrate that a purchased unit does not conform to the statutory standards prescribed in the model law, the remedy available can include replacement or repurchase of the unit by the manufacturer.
Most states currently either provide no lemon law coverage for motorhome purchases or offer protection that is extremely limited, typically covering only the chassis. The proposed new model legislation would extend coverage to the structural integrity and functionality of major system components relating to the living quarters of a motorhome.
In 2007, the Good Sam Club joined the IALLA as a corporate sponsor in order to participate actively in this key IALLA project. IALLA presided over a series of conferences and negotiations with key representatives of the RV manufacturing and consumer communities leading to its eventual adoption of the proposed model legislation. The Recreation Vehicle Industry Association (RVIA) is also an IALLA corporate sponsor.
Pursuant to a series of conferences and negotiations sponsored by IALLA, both the industry and consumer representatives were able to agree on standards that would trigger lemon law liability for motorhome purchases, and provide consumer remedies through alternative means of dispute resolution.
“A new motorhome is a major life investment and new RVs are often used for both transportation needs and as living quarters for new buyers, meaning that any major product defects could present a serious hardship to the consumer,” said Sue Bray, executive director of the Good Sam Club. “It’s imperative that state ‘lemon laws’ protect the rights of new motorhome buyers. The model legislation is the first step in putting those safeguards in place for RV owners.”
The draft recreational vehicle initiative proposed by IALLA and the Good Sam Club acknowledges that motorhomes and RVs have components not common to cars and trucks and therefore should be protected by specific motorhome lemon laws.
The proposed legislation would require manufacturers to repair a new vehicle to the standards of the warranty if the product is defective or nonconforming to the warranty. It also offers a reasonable number of attempts clause, depending on the severity of the defect and/or repair. While the model legislation is designed to protect consumers who use their motorhome for recreational pursuits, full-time RVers who live in their motorhomes on an ongoing basis are specifically protected under the model act.
The next step is for those states interested in offering motorhome lemon law protection to their constituents to utilize this model legislation as a template. The Good Sam Club encourages all state legislatures promptly to enact this important new consumer protection for motorhome purchasers.
Led by Chairman Tom Gonser, the Good Sam RV Owners’ Advisory Council, a group of volunteers who assist the club and its members with RV industry relationships and policies, was heavily involved in resolving issues with both the regulators and representatives of the RV industry.
“We are delighted that the RV industry and the RV consumer were able to work out our differences and develop model legislation that will provide more equitable solutions for both sides,” said Gonser. “It’s most important that state legislators recognize that existing automobile lemon laws do not offer appropriate remedies for the many different working parts of both the living and chassis components of a motorhome.”
For complete text of the proposed legislation, please contact Sara Wacker directly at 619-533-7975 or firstname.lastname@example.org.
The Good Sam Club is affiliated with Affinity Group Inc. (AGI) which also publishes RVBusiness and RVBUSINESS.com.
A new loan guarantee is drawing praise from Southwest Florida boat and recreational vehicle dealers.
The Small Business Administration-backed floorplan financing program will be available July 1 through Sept. 30 of next year. It’s available to new car dealers as well as RV and boat retailers who meet certain criteria, according to Tallahassee.com.
“Our industry needs a shot in the arm. … The timing could be almost perfect,” said Tom Hansen, boat dealer and president of Southwest Florida Marine Industries Association.
Floorplan financing is a line of credit that allows dealers to borrow against their inventory, and then repay that debt as they sell their inventory.
Area boat dealers generally order new product in late summer and early fall, Hansen said. However, traditional sources of this financing have curtailed credit lines in recent months. Some have cut off dealers outright.
That doesn’t surprise Tom Nichols, owner of Bonita Boat Center in Bonita Springs: “Most of them, just like the banks, have been hit hard by repos and defaults.”
GE Capital, a mainstay of many local boat dealers, “raised the rates significantly, and the terms have become more stringent,” said Hansen, who’s general manager for the company that owns The Boat House at Boater’s World in Cape Coral.
A similar credit crunch hit RV dealers.
Last December and January, it was impossible to obtain new inventory “unless it was a special order and you had the money from the customer.” said Kathie Eppers, vice president of Skip Eppers RVs, a Punta Gorda dealership. She said things have eased up since then.
Nationally, RV manufacturers shipped out 237,000 units in 2008, down nearly 33% percent from 2007, according to the Recreation Vehicle Industry Association (RVIA).
The trade group attributes the decline to the tightest credit conditions in several decades, higher interest rates, falling household wealth, slower growth in real incomes and the crisis in consumer confidence.
On a more positive note, the RV association is encouraged by the Obama administration’s overall economic stimulus plan.
SBA-backed floorplan financing could help boat dealers, provided banks make loans to qualified consumers, Nichols said, noting: “Why would the dealer want to go through extra product he can’t sell?”
Across America, sales of new boats were down 30% last year and could fall another 20% this year, according to the National Marine Manufacturers Association.
But as summer approaches, some dealers and others in the industry are upbeat, citing low gas prices, plentiful bargains, low interest rates and an uptick in showroom traffic.
Even in Southwest Florida, where buyer demand fell hard in the wake of real estate and construction industry troubles, “I’m seeing a small glimmer of recovery,” Nichols said, adding:
“There are still people who were not devastated by the real estate bubble, who still want to have some fun and enjoy paradise.”