What if you took a large SUV and made it bigger and heavier, more thirsty for fuel and as pricey as a house? Well, up until 2006, you'd have created a fantastic profit machine! However, the new realities of slumping home prices, tighter credit and soaring fuel prices have taken away many of the incentives to owning a home on wheels. Where does that leave RV manufacturers?
A rock and a hard place comes to mind. You know things are bad when your employer is selling its headquarters and borrowing against life insurance policies it holds on its employees. Well, that is what is happening at Coachmen Industries and Fleetwood Enterprises, two of the nation's biggest RV manufacturers. Now, I've never liked the idea of companies insuring their employees and then profiting upon their death, but this time around it may be the company the dies first. Twisting in the knife blade a bit further General Electric Co.'s consumer-finance unit announced last week that it would no longer offer RV loans.
Besides raiding corporate cookie jars, what can save these lumbering giants? Certainly more fuel efficient models will help. Remember those Dolphin RV's based off of small Toyota pickup trucks? I'd expect to see those scaled down vehicles popping up in dealer's lots once again. More utilitarian models with lower price tags will also curry favor with buyers. Let's not forget the classic and efficient tent trailer!
There will still be those folks who can afford to buy a motor home that swallows an entire Mercedes SLK , but there they won't be showing up at dealerships quite as often. Undoubtedly be some bloodletting will occur in the industry as well: National RV Holdings and Western Recreational Vehicles Inc. are gone for good. Craftier specimens of the breed will roll on to camp another day.
source: wsj
Wednesday, May 14, 2008
Singin' The RV Blues: Sales Fall Off a Cliff, May Drag Manufacturers With Them
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RV sales are alive and well in both towable and motorized up thru large diesel pushers in many areas of the country including parts of real estate ravaged Arizona where I live. The companies that are having financial problems have had them for many years and the current downturn is just the nail in an already prepared coffin. Believe it or not, for the most part, smaller fuel efficient rigs are no more in demand than they have been for the past three years. Fuel prices are high, but folks are taking shorter trips and staying longer. RV's are a recreational discretionary purchase...and even if tough times, people will not be denied. If you can afford a big screen TV, are you going to settle for a 32" when what you really want and have room for is a 47"?
Fuel would have to be $9.00 before it would be less expensive for a family of four to take a 7 day vacation, driving and eating out, and that includes the cost of ownership. You can read the study at RVDA. Yes, I sell RV's for a living, and I've got a 36' diesel pusher. I still use it every chance I have at least a weekend.
Thanks.
M.D. Morgan
Prescott Valley, AZ
myspace.com/thervlifestyle
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