Editor’s Note: The following is an excerpt from a conference call detailing the Spartan Motors Inc.’s third quarter financials filed yesterday (Oct. 26) with comments from President and CEO John Sztykiel on the company’s motorhome chassis interests.
In the first half of 2011, the RV market on the whole improved slightly, but those gains were primarily in smaller-sized motorhomes and towables where Spartan currently does not compete and I use the term “currently” as overtime we will.
Wholesale shipments of motorhomes fell 17.4% overall, in August Class A motorhomes fell 15.4% from August of 2010. In addition, as I mentioned earlier, motorhome sales mix has shifted from diesel to less expensive models in the Class A and Class C markets. As a result, our recreational and especially chassis market sale were down 34% in Q3 compared to the same period a year ago. Obviously that is not our positive data point, but there are several initiatives in place to address them.
In light of this recent softening in the RV market, the strategic relocations of motorhome chassis manufacturing operations to Wakarusa, which will take place in 2012 is an important strategic shift. This relocation is in line with one of our 10 strategic directives being customer centric, it provides us the opportunity to grow market share by being closer to our end customers and more responsive to their needs.
This facility is located in the heart of the motorhome or the RV production industry as more than 70% of our recreational vehicles are produced in northern Indiana. We will be within minutes of our customers and this is significant benefit. We also believe that it will provide other opportunities for other areas of growth in the RV industry beyond the typical Class A diesel where we currently participate. As we look at these opportunities, the location is perfect and we will take advantage of it as time goes on. Again, that move will take place in mid 2012.
The outdoor recreation market because I get that a lot, is why we are still there because it is a great industry and the demographic trends point towards its long term growth. What’s interesting, a recent survey of RV owners revealed that 53% intended to use their RV more this past year than what they did in previous years despite higher fuel prices. While 38% planned to use theirs the same amount and just 9% say they have used the RV lives. So, it’s interesting, people plan to use their RVs more often.
Another data point, 65%, one of the reasons is to take more mini vacations. I think if there is something which you are seeing in some of the long vacations three or four weeks, people are taking their RVs for a long three-day weekend. So, they using them more and that’s good for the industry. In addition, RV family vacations are an average 27% to 61% less expensive than the other types of vacations, according to a study by international travel and tourism expert carriers.
We know the strengths of this industry. We have the chance to identify emerging trends, identify and develop the right products and services that will win customers. It is also an industry of tremendous solid potential. Today the RV industry is an $8 billion market. It’s been in its high as $14 billion. But as you look over the next three to five years and it will be a challenging economy, the RV vacation is a very attractive from a cost point, plus it is the only lifestyle that gives you the ability to go where you want, when you want, at your direction and that is another reason that makes it so attractive.