The first quarter was kind to the recreational vehicle industry. Building on three years of continuous growth, the RV industry experienced an 11.2 percent gain in units shipped in the quarter compared to the first quarter in 2012. And that growth is expected to accelerate.
As reported by the Goshen News, the industry’s forecast issued earlier this year by Richard Curtin of the University of Michigan predicted a 7.5% gain in units shipped for 2013. That gain would mean 307,300 RVs would be sent by manufacturers to dealers. Such a gain would be a significant jump over the low year of 2009, when 165,700 units were shipped during the height of the recession. But a much larger gain would be needed to reach the record year of 2006 when 390,500 RVs went out the doors of local RV factories.
“Every year has been an up year since 2009 if you graph it out,” said Doug Gaeddert, Forrest River’s general manager and chairman of the Recreation Vehicle Industry Association (RVIA), which compiled the quarterly totals.
“One thing,” Gaeddert said of the reason for the continual gain, “is the economy is in much better shape than the media would lead you to believe.”
He said the bank industry has solved its credit crunch, which resulted in RV dealers being unable to finance inventory during the recession and consumers who wanted to buy RVs having to have the best of credit and lots of collateral.
Another factor in the resurgence of the industry is that more people in North America are reaching the ages where they want to travel and camp in RVs.
“The demographics are in the right place,” Gaeddert said. “So the sun and the moon and the stars are lined up real well.”
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This spring, Jenny Miller and her husband bought a trailer to take their one-year-old son camping, but the plan had been in the works long before that.
“We had been talking about buying one for a couple of years, and we were just kind of waiting for our finances to get in order so we could make the purchase,” says the 29-year-old Davenport, Iowa resident.
As reported by U.S. News & World Report, Miller is representative of a broader national trend boosting the RV industry. Recreational vehicle sales crashed during the recession as Americans lost jobs and savings, but now, buyers are back and ready to make the RV purchases they put off for so long.
RV shipments dropped by over 30% in 2008 and again in 2009, according to figures from the Recreational Vehicle Industry Association. Annual shipments fell from nearly 400,000 per year in 2005 and 2006 to below 166,000 in 2009, forcing many dealerships and plants to lay off workers and some to close. But the RV industry soon rebounded, posting 46% growth in 2010. Since then, the increase has leveled off but remained strong, with manufacturers shipping nearly 290,000 units last year.
It’s not just that Americans are feeling more comfortable shelling out $15,000 for a camping trailer or $100,000 for a motorhome, says one industry expert. Banks are also now more willing to help customers buy campers and motorhomes.
“This industry was impacted by the economic crisis, as far as the drying up of consumer credit,” says Phil Ingrassia, president of the Recreation Vehicle Dealers Association (RVDA). “As things have improved, the economy has gotten better and there’s more credit available for consumer purchases like an RV.”
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Two Elkhart, Ind., RV dealerships believe they are headed for a record year in sales. And, according to a report by the South Bend Tribune, based on the latest national numbers, that’s probably not a surprise.
Based on the April figures released Tuesday by the Recreation Vehicle Industry Association (RVIA), wholesale shipments of all RVs were up 10.8 % over March and were 19% better than April 2012.
Last year was the third straight year of increased RV shipments, and April marked the 16th consecutive month of increased shipments compared with the same month a year prior.
And since dealers don’t order RVs unless they believe they can sell them, shipment numbers are generally representative of sales numbers in the industry.
“The banks have loosened up,” said Dave Titus, owner/manager of International RV of Elkhart. “It’s still not like it was in the early 2000s, but it’s where it should be. The customer has to have some skin in the game as far as down payment. But if the credit is right and the income is right, the bank will give them a loan.”
Scot Moody, a salesman for Total Value RV of Indiana, in Elkhart, said pent-up demand and loosening of credit are two factors behind soaring sales. “It’s a record year here,” said Moody, who has been at TotalValue RV for six years. And it was a record the year before, too, he added.
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The number of recreational vehicles delivered to dealers’ lots is expected to reach a six-year high in 2013 as fledgling RV buyers such as Karen and Jim Smith, of San Jose, Calif., shake off the economic slumber of the past few years and prepare to hit the road this summer.
“There are just so many things to see that we’ve never seen before: Mount Rushmore, the Grand Canyon, Lookout Mountain in Tennessee,” Karen Smith said after writing a $21,000 check for her 18-foot 2014 White Water Retro Travel Trailer that came stocked with a queen-size bed, separate refrigerator and freezer, two-burner stove, microwave, full-size bath, shower and beds for three more people.
As reported by the San Jose Mercury News, the Smiths represent new hope for a U.S. RV industry that sustained a series of body blows beginning with the 2008 recession but now appears to be rebounding in the Bay Area and beyond.
The industry has not seen more than 300,000 RVs shipped to dealers around the country since 2007, the year before the recession took hold. But deliveries this year were up 11% in the first quarter and the RV industry now expects to see a total of 307,300 deliveries of motor homes and tow-able RVs. Towables make up the overwhelming majority of RV sales in the U.S.
The number of both registered motor homes and towable RVs had been steadily falling in California from a 2005 peak of 11,494 motorhomes and 34,032 towable RVs and may have bottomed out in 2009 with 2,633 registered motorhomes and 8,820 towables.
Last year, the number jumped to 3,785 registered motorhomes and 11,565 towable RVs, according to Statistical Surveys Inc., which tracks RV registrations across the country.
“Our industry is an economic indicator,” said Kevin Broom, spokesman for the Virginia-based Recreation Vehicle Industry Association (RVIA). “When shipments go down, they usually go down ahead of a recession. When shipments come back, they usually come back ahead of the recovery. Consumers in general are a little more confident they’ll have their job this year, next year and even five years from now. So they’re ready to make a purchase.”
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If you find yourself on the road this Memorial Day weekend, you might want to keep track of the recreational vehicles you see.
MSN Money reported that while not exactly a surefire economic bellwether, RV sales have been coming back after a disastrous recession for the industry, and they may be another indicator of a strengthening economy.
Elkhart, Ind., is the heart of the business, with about 83% of all North American RVs manufactured in the region. Unemployment in Elkhart soared to more than 20% in 2009 as the economic downturn deepened, RV sales plunged and several manufacturers closed their doors or disappeared through consolidation.
“When the stock market went to hell in a hand basket, when the ability to get credit went to hell in a hand basket, when your home (value) all of a sudden . . . went down so drastically, your wealth factor is pretty low. That stops motor home buying,” Richard Coon, the president of the Recreation Vehicle Industry Association (RVIA), said recently at an industry breakfast.
But according to the RVIA, a stronger economy has pulled the industry out of a ditch. The trade group predicts more than 307,000 recreational vehicles will be manufactured and shipped this year. That number is still below the pre-recession high of 353,400 reached in 2007, but it’s nearly twice as high as the low point of just under 166,000 in 2009.
Recreational vehicles come in a wide variety of types and price ranges. Units that fit on the back of a pickup and popup camping trailers start at about $3,500. They go all the way up to tour-bus-size “home away from home” Class A vehicles, which can run anywhere from $50,000 to the hundreds of thousands of dollars. And of course you need to factor in gas prices.
Richard Curtin, the director of the Consumer Research Center at the University of Michigan, says a combination of factors is behind the recent growth in recreational vehicle sales, including an easing of credit terms and better availability of consumer loans, as well as modest gains in household income.
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Editor’s Note: Robert W. Baird & Co. recently partnered with the Recreation Vehicle Dealers Association (RVDA) to contact 110 RV dealers regarding demand during the first quarter. The following is a summary of the results.
Early-season trends were strong, despite a later start to spring and slower traffic in cold-weather markets. Retail demand improved nicely, up 9% to 10% in both motorhomes and towables. Dealers consider motorhome inventory lean and towable inventory balanced. With dealer confidence soaring, higher absolute inventory levels are fine.
“We remain bullish on fundamentals and would look for a market correction to provide an opportunity to become more aggressive,” Baird concluded.
Solid retail despite later start to spring. Demand for motorhomes and towables improved roughly 9% to 10% in Q1, despite slower traffic in some cold-weather markets. (Raw survey results indicated 18% growth in motorhomes and 26% growth in towables, but we believe a number of multi-location dealers skewed preliminary data). Big picture, we continue to believe that negative equity among RV consumers has begun to evaporate, driving cyclical recovery. The passage of time (the market peaked in 2004) and better used RV values – along with better home prices and a strong stock market – all play a role.
Inventory appears lean-to-balanced. Dealers appear comfortable with inventory levels. Motorhome inventory appears lean as several dealers mentioned unfulfilled orders (consistent with production constraints manufacturers have reported). Towable inventory appears balanced. Recall that towable manufacturers offered large discounts to protect share on dealer lots, a bet that could pay off if retail remains solid. Based on the number of days of inventory reported, motorhome (113 days vs. 102 days) and towable (115 days vs. 106 days) are up.
Dealer sentiment still lofty. Sentiment remains near record highs as dealers anticipate a recovery. One dealer noted, “if sales continue to follow early trending, this could be one of our best years ever.” After a difficult recession, dealers that survived are enjoying better retail, fresh inventory and easier credit. Indeed, just 5% of dealers reported tighter retail credit trends – and no dealer reported tougher access to wholesale credit. Net, the surge in dealer sentiment helps explain the desire to accumulate inventory – a natural re-stocking effect.
Bullish on fundamentals. We remain bullish on RV fundamentals as a solid cyclical recovery unfolds. We believe that negative equity is evaporating, fueling spending in previously dormant markets (RVs, boats, motorcycles). Meanwhile, dealer inventory is lean-to-balanced, supporting a potential restocking effect and better earnings power. Investor momentum has begun to fade, which could provide an opportunity to be more aggressive.
The days of canvas tents, a gas lantern and a Coleman stove have long passed when it comes to camping. According to a report by The Courier, Waterloo, Iowa, innovations and technology have made camping in recreational vehicles a whole lot more comfortable.
From air conditioning to slideouts to outdoor kitchens and even more recently, RVs with 1 1/2 baths, the world of camping is ever-changing.
“Outdoor kitchens with refrigerators, stoves are the newest big thing,” said 28-year RV salesman Don King of Fogdall RV in Cedar Falls. “We’re also seeing RVs with two doors, one that leads directly into the bathroom. And slideouts and multiple slideouts, that has been the biggest thing in the last 10 years. More space is big, bunkrooms in the back so parents and kids each have their own individual spaces.”
Active travelers are also seeking trailers that have rear space to carry ATVs, motorcycles and other all-terrain vehicles.
While innovations have made RVs spectacular, the market for new RVs fluctuates because of the fickle economy.
“It changes so fast,” said Greg Heath of A1 Vacationland. “I’ve been doing this for 30 years and every time we think we have the answers for the RV market, believe me we don’t even have the questions.”
The Courier reported that locally, the results are mixed. Heath says business has been down, but service on older units is at an all-time high. At Fogdall, King says business is up 15%, the largest increase for Fogdall since 2008.
“Many of those are repeat customers, and probably 90% of our business is of the towable variety, which is more affordable,” King said.
While high gas prices have made consumers of RVs scale back on long trips, Heath and King say that isn’t a new trend to Northeast Iowa.
“We are so blessed with many great campgrounds in Northeast Iowa,” Heath said. “Campers can go a short distance, find a great campground and have a good time.”
Two campgrounds within the immediate area, George Wyth State Park and Black Hawk Park, are consistently packed on weekends.
“I would say most people who have RVs will camp within 50 miles of where they live,” King added. “That doesn’t mean all do it, but my guess is 75% of our customers stay within 50 miles.”
Another benefit to having great campgrounds in the area is business on two fronts.
“It is a huge benefit for our type of business because RV consumers typically do business within a 100-mile radius of their home,” King said.
For Heath and A1 Vacationland, where their service department has picked up the slack when sales have been slow, he has sent a lot of servicemen out to local calls and some as far away as Clermont, MacGregor and Marquette, which is part of a new trend — leaving an RV at a permanant location.
“We do a lot of service on campers where it doesn’t look like they’ve moved from their pad in two or three years,” Heath said. “I believe those type of campers are enjoying what they can without spending a lot of money to do it.”
For 37 years, Lazydays has maintained a grip on the Tampa, Fla., RV market with its ever-growing, expansive headquarters located within eyesight of Interstate 4 in Seffner.
According to a report by the Tampa Bay Times, customers from as far away as Alaska have traveled to the mini mecca to purchase everything from small pop-up campers to toy haulers and luxurious fifth-wheels.
A lot has changed since the days when a gallon of gas was a mere 45 cents. Diesel engines have increased fuel economy in the RVs. Technology, including convection microwave ovens, flat screen televisions and smartphone apps, have boosted the ownership experience. And competition for the leisure time dollar has grown.
As a response to these market trends, Lazydays opened the Better RVing Store on March 15.
Customers can expect to go beyond the car dealer look and find parts, upgrade options, services they have longed for or some they may not have known about.
“We got in the parts and service business not just to be in the parts and service business,” said Bill Tickel, parts and services manager. “We had customers who wanted to buy things that we just didn’t carry.”
Situated on 124 acres with a team of 492 employees, 221 service bays, 299 campsites and three restaurants, a retail store was a natural progression and one Tickel says the Lazydays team batted around for years.
So Lazydays renovated the former customer lounge and turned it into an open-design store. It also renovated a new customer lounge inside near the offices and training center.
Tickel said the layout was customer driven with a good shopping experience in mind, so don’t expect department store aisles or a cavernous warehouse feel. The Better RVing store carries necessities for any coach, as they are called.
It also offers items you might not expect such as outdoor camping accessories, pet owner needs and even some home-grown Florida crafts.
“We did not want to abandon our customers to an operation that could not supply them,” Tickel said.
The Tampa Bay Times reported that a main competitor is Camping World, which has an adjacent location and used to have a cooperation agreement with Lazydays to supply parts and accessories. Camping World terminated that agreement in June 2012.
Tickel said Lazydays wanted to make sure there was something available for every type of customer, right down to the toilet paper on the shelves for those who are visiting for meetings, rallies, educational seminars or vacations.
For every new flooring option, Lazydays also offers safety courses; for every recliner, mattress, cabinet and window shade there are “how to” classes. Lazydays, which operates a second location in Tucson, Ariz., has a pipeline to big manufacturers for special order “hard parts” needed for repairs.
Whether you prefer a Class A RV, or a towable, which Tickel says is the fastest growing coach segment, Lazydays offers its customers a variety of equipment and educates them on how to use it before hitching up and pulling away.
“We have a commitment to the customer experience,” Tickel said.
Although unemployment remains stubbornly high, sales of travel trailers and motorhomes have rebounded to some of their strongest levels in six years as consumers feel more confident about their personal wealth.
The Milwaukee Journal Sentinel reported that in Wisconsin, there were 6,100 travel trailers sold in 2012, the highest amount since 2007, according to Statistical Surveys Inc., a Grand Rapids, Mich., firm that tracks sales in the recreational vehicle and recreational marine industries.
Low interest rates and stable fuel prices have helped boost sales, along with pent-up demand for the products. High unemployment in some parts of the nation is about the only thing holding sales back, said Tom Walworth, president of Statistical Surveys.
“As long as people feel confident in their jobs, and interest rates remain low, they will continue to buy things,” he said.
Leisure-product market trends affect hundreds of Wisconsin businesses and help drive the state’s tourism industry.
A full recovery in motorhome and camper sales will depend on the economy and consumer confidence. But spurred by retiring Baby Boomers and young families buying their first camper trailers, the long-term prospects for the RV industry look good.
Experienced RV enthusiasts, many of them retirees, were among the first to return to the equipment marketplace – if they left at all. They’ve been followed by first-time RV users, many of them under age 40, who are now a little more comfortable with their spending since the recession ended.
The RV industry has always been a leading economic indicator, according to Walworth.
“People watch the industry to see which way it’s going,” he said.
Burlington RV Superstore, in Sturtevant, said it had a 40% sales increase in 2012 from the prior year, and that it expects another 10% sales increase this year.
“We are in a nice growth mode again,” said Burlington President Tim Wegge.
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The Florida RV Trade Association (FRVTA) just completed its sixth regional show at venues throughout the state and reported that attendance numbers have been strong, according to a press release.
A roundup of show results includes:
• The Fort Myers RV Show, celebrating its 28th year, featured 17 dealers from all along the Gulf Coast along with well over 100 vendors. Show Chairman Chris Morse reported that attendance increased about 1,000 over the the 12,300 patrons last year while dealers and vendors registered steady sales. Morse noted that the event also generated followup sales for dealers.
• The Ocala RV Show held the last week in January showcased 13 dealers and the supplier’s tent included representatives from campgrounds and resorts along with a parts and accessories store. Great weather the entire weekend brought in just under 5,000 people over the four days of the show. “This was the second year at the new location adjacent to the Super Flea Market, which gives us great visibility from I-75,” said FRVTA Marketing Director Dave Kelly. “It’s easier to get to and we are closer to town than the old location. I know the dealers like being closer to town and it appears the public does, too.”
• The 7th Annual Spring Clean-Out RV Show was held the second weekend in February and featured seven RV dealers and six vendors at Germain Arena, which fronts I-75. Held in conjunction with an annual home and garden show, the event attracted over 3,300 attendees despite a cold, rainy start. “We hold this show to reach down into the Naples market where there are lots of RV resorts, but no RV dealers,” said Region 1 President Dan Wylie. “From what I could tell, every dealer did well, moving both new and used products.”
• The Jacksonville RV Show returned for the fourth year to the Jacksonville Equestrian Center. Six participating RV dealers showcased product and the supplier’s area was setup so that the public came in and out right past the booths. Great weather again brought in a record crowd of over 7,300 people. “We renewed the promotion from last year’s show to get visitors to go to every dealer and have a card stamped that made them eligible for a drawing every day for a gas card,” said Region 6 President Tom Tibbitts. “This not only got people to visit every dealer, it also gave every dealer the chance to interact with every visitor.”
• The Central Florida RV Show was held at the Volusia County Fairgrounds in DeLand the last weekend of February. Seven RV dealers reported “good to great” sales from the close to 4,000 people that attended. “We dropped the admission price a couple of bucks to try and get a bigger crowd, and we were up about 400 people over last year’s show,” said Ken Prentiss, Region 4 president. “We will continue to look at ways to increase attendance and bring more buyers to this event next year.”
• The last winter regional show was held March 7-10 in West Palm Beach. Held in the parking lot of the South Florida Fairgrounds, and included nine dealers and 10 booth exhibitors. Drawing over 3,400 people, dealers enjoyed strong traffic, including Keith Waits from Palm Beach RV who reported selling both new and used units.
Still to be held is the 18th Annual RV SuperSaver Show in Fort Myers. Show Manager Jack Carver expects to have about 11 dealers and 10 exhibitors in this annual event that is aimed at local residents. “Depending on the weather, this show usually delivers about 3,500 people over three days,” he explained. “It’s the perfect time for our dealers to reach out to local residents as they prepare for the summer travel season.”
Kelly noted, “The bottom line coming out of the Florida winter/spring RV show season is that the attitudes of consumers are vastly more positive and the fact that most shows were either at or close to last year’s attendance means the interest in RV products is still strong and getting stronger.”
For more information contact the FRVTA at (813) 741-0488 or www.frvta.org.